Face to face: France, Germany and the future of the European defence industry

France and Germany agree on the need to further European defence-industrial cooperation, but boast radically different preferences on how to structure such cooperation. Why? To answer this question, we introduce the distinction between the two faces of market size–the first exclusively related to defence, the second including the broader commercial-industrial base. Since Germany is, overall, more competitive than France in the commercial sector but less competitive in the defence one, it will advocate for a full-fledged integration of the European defence market but seek to protect its less competitive defence industry from France by championing autonomy in ad-hoc arms programmes. In turn, France would prefer to leverage its defence-industrial advantage by injecting efficiency on arms programmes but resist pan-EU initiatives to integrate the defence market, which would benefit Germany more over the long-term. To test our argument, we examine French and German preferences towards the European Defence Fund and the Future Combat Air System.