Galileo satellite navigation system off course?

Will it end up in a blind alley?

What may have passed by the uninitiated as a fairly mundane budgetary review from the European Parliament’s Budgetary Committee was in fact the latest round in a tussle between institutional and intergovernmental structures over the survival of the ill-fated Galileo programme.

Uncertainty over the commercial market value of Galileo - which envisages the creation of a thirty-strong satellite network and associated ground control stations for satellite navigation purposes similar to the free US Global Positioning System (GPS) – has already led to the withdrawal during the summer of the private consortium of firms originally expected to fund the bulk of the system.

Envisaged from the outset as a public-private partnership - with one third financed from the EU budget and two thirds by the private sector - European institutions and individual national governments need now to agree over the ways for salvaging the programme or, indeed, whether they want to salvage it at all.

In the latest manoeuvre employed to see the Galileo project through, the European Parliament’s Budget Committee approved on Monday (8 October) a draft 2008 EU spending plan which proposes to increase financial commitments by a massive amount with an extra 739 million euros.

In what has been seen as a move to force the Council’s hand to accept further negotiations, MEPs have also advocated a reduction of next years’ Common Foreign and Security Policy (CFSP) budget by 20 per cent. The cut is effectively a fictitious one, as a funding mechanism known as the ‘Flexibility Instrument’ would be used to cover any lost funding for the CFSP. Nevertheless, this manoeuvre would ultimately give the European Parliament greater bargaining power over the Council. If adopted by the wider European Parliament during its plenary session on 23 October, negotiations with the Council are set to begin in late November, with a view to the resolution of a matter which ultimately requires the agreement of both Parliament and Council.

On 2 October 2007 in Luxembourg, EU Transport ministers had already failed to find an agreement over recent European Commission proposals which would equally like to see Galileo funded publicly. EU Transport Commissioner Jacques Barrot has suggested funding the envisaged shortfall of some 2.4 billion euros from the EU agriculture and administration budgets. Such a proposal would, however, imply revisiting the painstakingly achieved EU 2007-2013 financial framework agreement.

Some of the EU’s key governments are opposed to reopening negotiations over the EU’s long-term financial plan, but for different reasons. While the United Kingdom and the Netherlands would like to see the contracts for Galileo awarded competitively without recourse to public funding, for Germany there lies the expectation that juicy industrial contracts will follow the principle of juste retour (a proportionate return on investment). Existing agreements effectively stipulate that German firms would be system leaders in satellite building, but with contracts potentially being re-advertised competitively, Germany fears that foreign competitors could usurp their position. With Germany a chief contributor to Galileo’s funding so far, there are clear expectations that the German space industry has to be heavily involved.

A lack of political consensus amongst Member states of the European Union often stems from disputes about funding mechanisms. While the Galileo satellite navigation system was initiated with a sense of grand strategic enterprise - looking to provide Europeans with an independent capability which otherwise forces them to rely on the United States - the viability of the entire venture seems today to be called into question. Whether these institutional and national barriers can be overcome over the coming weeks may well determine the future of the Galileo project per se.

Alastair Cameron
Head, European Security Programme



The views expressed in the above article are the author's own and do not necessarily reflect those of RUSI.



Alastair Cameron

Associate Fellow

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