Galileo and EU technology institute must wait for funds

The German government will not be able to strike a deal with MEPs over how to fund the Galileo satellite navigation system and the European Technology Institute (EIT), before the end of June, according to EU diplomats.

MEPs are insisting that EU governments provide new money to pay for Galileo and the EIT, which together are estimated to require €2.7 billion more than originally estimated.

Germany wants to sew up a deal on finding an extra €309 million for EIT before the end of its six-month EU presidency, but officials say that getting agreement with MEPs will take longer and will be wrapped in with the debate on the 2008 budget and the funding for Galileo.

The European Commission wants to take the €309 million from the margin allocated to growth and competitiveness in the seven-year spending plans starting in 2007, but the Parliament is insisting on increasing the total amount of funding for 2007-13. MEPs are angry at attempts by the Council of Ministers to redirect funds from other schemes such as the 7th framework programme for research, which has already been reduced by EU governments in the negotiations on the 2007-13 budget.

EU governments are deeply opposed to increasing budget lines as money is always unspent at the end of budget years. Officials also warn that if the 2007-13 spending plan is reopened, reaching a deal could take a very long time. One compromise being floated by the Commission is to use unspent funds in the margin for the initial stage of the EIT, when its funding needs are smaller, in return for a pledge to re-examine the amounts in each budget line when the 2007-13 budget is reviewed in 2008-09. But this idea is also likely to run into opposition from EU governments.

Yesterday (13 June) the chairman of the European Parliament’s budgets committee German centre-right MEP Reimer Böge ruled out any attempt to finance Galileo using national funds. MEPs have to approve funds being taken from existing programmes and so could veto any moves to rob existing projects to pay for the satellite system.

Last Friday (8 June) EU Transport Ministers agreed to find new ways of finding the estimated €2.4bn needed to get the project up and running after a consortium of eight companies failed to meet the EU’s requirements for raising the necessary investment.

The UK and Dutch ministers warned that the project should not be funded solely with public money but through public-private partnerships with business and industry investors.

The UK’s Transport Minister Stephen Ladyman said: "The UK government expects a full cost and risk assessment before any decision is made on the future of Galileo. I welcomed the presidency’s recognition that the project would have to be ended if it is not affordable and their willingness to inject private finance."

The German government will not be able to strike a deal with MEPs over how to fund the Galileo satellite navigation system and the European Technology Institute (EIT), before the end of June, according to EU diplomats.