France Unveils €450M Defence Fund to Address Security Issues

• French citizens to have opportunities for long-term investments: Lombard
• France is at the forefront of rearmament efforts in Europe.
• The French government is encountering notable obstacles in fund collection.

PARIS: On Thursday, Finance Minister Eric Lombard announced that France’s public investment bank, Bpifrance, will establish a defense-focused fund worth 450 million euros (approximately $490 million). This announcement comes ahead of his address on financing military expenditures.

This fund is part of France’s strategy to increase military spending in response to concerns over potential Russian aggression and uncertainties regarding future U.S. defense commitments.

“French citizens will have the chance to invest their money long-term in amounts starting at 500 euros,” Lombard said in an interview with TF1.

Following indications of a possible thaw in relations between Washington and Moscow, France has stepped up its efforts in European rearmament, driven by fears that Russia might extend its influence to the west.

However, considering the already stretched French budget, the government is grappling with significant hurdles in achieving its defense goals.

Francois Villeroy de Galhau, a member of the European Central Bank (ECB), stated on Thursday that while there is a pressing need for increased defense spending in France, such spending cannot be unlimited due to the nation’s substantial public deficit and debt. “We cannot adopt a policy of unrestricted spending when it comes to defense,” Villeroy, who also leads the Bank of France, remarked during an interview with BFM TV. He underscored that the approach to military financing should differ greatly from the behavior seen during the COVID-19 emergency, which saw France mobilizing vast financial resources to bolster the economy.

According to both the finance and defense ministries, French defense firms will require over five billion euros in additional equity capital in the coming years.

President Emmanuel Macron, who previously initiated a plan to double France’s defense budget throughout his two terms, has set a higher goal, advocating for defense expenditure to rise to 3-3.5% of the country’s economic output from the current 2%.

($1 = 0.9184 euros)