US embassy cable - 05PARIS6874

UNCLAS SECTION 01 OF 03 PARIS 006874 
 
SIPDIS 
 
DEPT FOR OES, EUR/WE 
WHITE HOUSE FOR OSTP 
DEPT PASS NSF/INT/GOMBAY/SLIMOWITZ 
DOE FOR OFFICE OF SCIENCE 
USDOC FOR NOAA 
 
E.O. 12958:  N/A 
TAGS: TSPL, EFIN, KSCA, TPHY, FR 
SUBJECT: FRENCH RESEARCH GETS A BUDGET BOOST 
 
REF: (A) PARIS 1081 (B) 04 Paris 7224 
 
1.  Summary:  With an additional one billion euros for 
research and 3000 more jobs, the Research and Higher 
Education Ministry (RHEM) looks like one of the few winners 
in the 2006 French budget process.  Roughly one-third of the 
increase is allocated to public research labs and university 
research; one-third will serve as a fiscal incentive to 
promote innovation; and one-third will go to the recently 
established National Research Agency (NRA, ref A) to fund 
specific research projects in accordance with GOF 
priorities.  Still anticipating the Research and Innovation 
Bill and a multiyear financial commitment, some in the 
science community remain skeptical.  End summary. 
 
New Budget Bottles... 
--------------------- 
 
2.  On September 28, the GOF set out its 2006 budget. 
Because of a new Budget Law (septel), this budget is 
presented in a new format.  Allocations are no longer 
associated with specific ministries but rather are presented 
by missions, programs, and specific actions.  The 2006 
budget includes 34 missions, a number of which involve more 
than one ministry.  The "Research and Higher Education 
mission" is entrusted to a new entity, the interministerial 
Commission for Research and Higher Education (ICRHE), 
overseeing both the civilian budget for R&D and the Higher 
Education Budget.  ICRHE in turn supervises 13 different 
programs-the `metes and bounds' of which are still to be 
worked out-affecting seven ministries.  The new budget tool 
is designed to provide a more holistic vision of scientific 
research funding and facilitate parliamentary oversight of 
the use of public funds.  For the moment, however, with few 
disaggregated figures, the new budget presentation makes GOF 
comparisons with previous years difficult. 
 
Just the figures 
---------------- 
 
The ICRHE 2006 budget amounts to 20.7 billion euros, which 
amounts to a 4.4% increase over 2005.  (This overall figure 
includes the Higher Education budget that was not within the 
purview of the Research Ministry in 2005 (ref B).  The 2006 
research (and higher education) budget is as follows in 
million of euros: 
 
- Higher education/univ. research   10,125 (+10% vs. 2005) 
- Scientific and technical research  3,602 (-02% vs. 2005) 
- Space research                     1,248 (+01% vs. 2005) 
- Energy sector research               658 (+07% vs. 2005) 
- Industrial research                  527 (+24% vs. 2005) 
- Other                              4,527 
------------------------------------------- 
Total                                20,700 (Approx.) 
 
 
(Detailed budget breakdowns are unavailable for either 
research disciplines or public research agencies.) 
 
4.  The 2006 budget is in line with President Chirac's 
commitment in 2004 to increase spending for government 
research by an additional one billion euros annually from 
2005 to 2007.  The budget increase for 2006 will be 
allocated as follows: 
 
- 389 million euros will serve to reinforce/augment funding 
for traditional public research agencies and university 
research; 
 
- 340 million euros are earmarked as tax incentives to boost 
industrial research in the private sector (1.2 percent of 
GDP presently); 
 
- 280 million euros will be used to fund priority 
(public/private) research programs within the framework of 
the policy defined by the GOF.  This money will be 
distributed via the NRA (see para 6). 
 
"Priorities:" Merit-based Selection, Competitiveness, 
International Attractiveness 
--------------------------------------------- -------- 
 
5.  The GOF will devote an additional 50.3 millions euros to 
reinforce its "most successful teams" in public research 
agencies.  Part of the extra money is also earmarked for the 
development or modernization of national scientific 
equipment--such as SOLEIL (Synchrotron under construction at 
Saclay near Paris), GANIL (high resolution gamma-ray 
spectroscopy)-- and help France meet its international 
commitments (e.g. CERN, and European Southern Observatory 
ESO). 
 
National Research Agency - New kid on the block 
--------------------------------------------- -- 
 
6.  The GOF has begun an ambitious effort to rethink its R&D 
strategy, organization, evaluation, and funding as reflected 
in the forthcoming Research and Innovation Bill.  The 2006 
research budget reflects the increase in importance of the 
NSF-style National Research Agency (NRA) - in French, Agence 
Nationale de la Recherche (ANR).  Its 2006 budget amounts to 
590 millions euros, a 70 percent increase over 2005.  It 
will be used to encourage basic and applied research 
programs selected on the basis of a competitive, merit-based 
review system; to help develop public/private partnerships; 
and to facilitate technology transfer to the economic world. 
 
Not forgetting industrial research. 
----------------------------------- 
 
7.  The annual budget of the Agency for Industrial 
Innovation, also established in 2005, is to increase 
significantly.  The cumulative total funding for industrial 
innovation from 2005-2007 is to equal 2 billion euros.  A 
more attractive version of the tax incentive for research 
(Credit d'Impot Recherche, or CIR) will be offered to French 
companies, together with specific tax relief for "Young 
Innovative Companies" and companies carrying out R&D in 
newly designated "competitiveness clusters."  Subcontracting 
costs and expenses related to the hiring of young 
researchers will be taken into account (reduction of social 
security charges). 
 
Public-private cross-fertilization 
---------------------------------- 
 
8.  To encourage "cross-fertilization" between public and 
private research, the government will grant public research 
labs working in partnership with the private sector a 
specific label and additional subsidies (40 million euros to 
be distributed to these labs by NRA in 2006). 
 
Adding Scientists to the payroll 
-------------------------------- 
 
9.  The French government also announced the generation of 
3000 new permanent posts in 2006: 1876 in universities (1079 
teacher-researchers, and 797 engineers, technicians, and 
administrators); 1100 in public research agencies, and 24 
for higher education in the agricultural sector.  This 
effort will reportedly be "further pursued" in 2007. 
Research grants for junior researchers (PHD/postdoc), 
presently under the guaranteed minimum wages (or SMIG) in 
France, will be increased 8 percent in 2006 and again 8 
percent in 2007. 
 
But no multiyear financial commitment in sight 
--------------------------------------------- - 
 
10.  Aware of the deep discontent and growing expectations 
in the science community, PM Dominique de Villepin announced 
on September 29 that the 2007 research budget will benefit 
by a similar hike as in 2006 and promised that "the public 
effort in favor of research and higher education will 
increase to 24 billions euros in 2010," representing a 26 
percent increase over 2004.  Research Minister Goulard said 
that the GOF plans to devote an additional 19 billion euros 
to research between 2004 and 2010, which should "act as a 
powerful lever on the industrial sector and permit it to 
realize the EU 2010 commitment of 3 percent of GDP to 
research."  However, French authorities have also been heard 
to say that the new research bill package will not include 
additional financial commitments beyond 2007. 
 
11.  Comment: Beyond the somewhat opaque 2006 budget figures 
themselves and the usual controversy about whether tax 
incentives should be considered as real budgetary funding, 
the science community awaits the final draft of the Research 
Bill.  Many fear that it will blur the distinctions between 
research and industrial policy.  While the science community 
at large does not appear ready to return to the streets, it 
remains watchful of the government's every move. 
STAPLETON