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$86M Budget Clawback Puts Pinch on French Space Spending

CNES President Yannick d'Escatha said the budget clawbacks demanded by the French government in late 2012 went beyond CNES’s annual reserve budget. Credit: CNES photo by Pierre Kolko

PARIS — The French space agency, CNES, on Feb. 4 said the French defense and research ministries in late 2012 insisted on large, unanticipated budget clawbacks that forced CNES to withhold monies from numerous programs, including some unrelated to security or defense.

CNES officials said they were obliged to raid the budgets of nondefense-related programs with the understanding that these would be paid back in 2013 with incoming funds from the French Defense Ministry.

In an illustration of the complexity of CNES budgeting, the agency received unexpectedly good news from the 20-nation European Space Agency (ESA), which is where about half of CNES’s total budget goes each year. Because ESA had not needed as much CNES money in 2012 as it had anticipated, CNES was able to reduce its debt to ESA by 42 percent, to 218 million euros ($294 million), CNES Financial Director Laurent Germain said.

CNES keeps its ESA budget separate from its other spending, so it cannot use unspent ESA payments to compensate for cash shortfalls in its non-ESA budget, Germain said.

In a press briefing here on the agency’s 2013 program, CNES President Yannick d’Escatha, who is retiring in mid-March after 10 years in office, said the budget clawbacks demanded by the government in late 2012 went beyond CNES’s annual reserve budget. This reserve is set aside each year in anticipation of mid- or late-year budget cutbacks by one or both of the two government ministries — defense and research — that provide the CNES budget.

In 2012, both ministries insisted on late-year budget cuts, a decision d’Escatha said was not unexpected given France’s government budget strains. But the total amount demanded, some 64 million euros, was more than double the reserve budget of 26 million euros.

CNES is the designated technical manager for most French military space programs, and each year receives funds from the French arms procurement directorate, DGA.

In late 2012, French defense officials demanded that CNES return 41 million euros, even though some of these funds had left CNES in the form of contracts to French industry or research laboratories. The French Research Ministry, which finances most of the CNES budget, asked for 23 million euros.

The result was that, including the ESA payments, the total CNES budget in 2012 was flat compared with 2011, at just over 1.5 billion euros.

For 2013, d’Escatha said, the budget is expected to total 1.61 billion euros, including the ESA payments of 799 million euros; CNES’s national program, at 743 million euros; and the 2013 allotment to CNES of 71 million euros from a government bond fund, called the Program for Investments in the Future.

France’s government budget picture has not much improved in recent months, but d’Escatha declined to speculate on the likelihood of a repeat 11th-hour budget raid by the two ministries.

The French Defense Ministry in the coming weeks is expected to publish a rethought defense white paper on overall military strategy and procurement. It is unclear what role space programs will have in this document.

Retired French air force Gen. Henry de Roquefeuil, who is CNES’s military adviser, said the agency has proposed a host of new satellite programs in electromagnetic and optical surveillance, telecommunications and missile warning. While all of these figured in the previous French military strategy, France has not proceeded with the development of any of them except optical surveillance to succeed the French Helios optical and infrared reconnaissance spacecraft.

CNES has budgeted 90 million euros in 2013 on security- and defense-related programs. The French Defense Ministry is expected to decide this year whether to privatize its next-generation military satellite communications system, called Syracuse. It is studying this and other alternatives including a conventional procurement or partnerships with Britain or Italy or both.

The Defense Ministry has long harbored ambitions of building an operational electronics surveillance satellite, called Ceres, but has not moved toward procurement of the system. De Roquefeuil said he remains hopeful that Ceres will retain a place in the new French defense strategy.

France and Germany are by far ESA’s two largest contributors. Through CNES, France subscribed for 2.3 billion euros in new investments approved by ESA government ministers at a November conference in Naples, Italy.

A dedicated ESA ministerial is scheduled for mid-2014 to provide multiyear commitments to the international space station and to development of new launch vehicles.

At the Naples conference, France declared that its annual contribution to international space station operations would be capped at 275 million euros per year for 2013 and 2014, with the same ceiling to apply through 2020 when ESA’s formal commitment to the station ends. At that level, France would need to commit in 2014 to spending 1.65 billion euros to the station.

In addition to this, France has about a 50 percent share of the Ariane 5 ME rocket, an upgraded version of the current Ariane 5 ECA, which is expected to require another 1 billion euros from ESA governments in 2014 to complete its development with a first flight in 2018.

Finally, CNES is expected to take a 50 percent share of the new Ariane 6 rocket, whose development is scheduled for approval in 2014, with a budget of at least 4 billion euros through 2021 and an inaugural flight.

Asked whether France was ready to sign commitments in 2014 totaling 2.5 billion euros just for these two rocket development efforts, d’Escatha said French Prime Minister Jean-Marc Ayrault had signed off on the CNES proposal Nov. 12 before the ESA ministerial conference.

“Budgets are voted every year, of course, but this it is the will of the government” to commit in 2014 to both programs, he said.

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