Member states wary of giving kiss of life to troubled Galileo

Jacques Barrot, the European commissioner for transport, sparked outrage last week (19 September) with his attempts to secure funding for the Galileo satellite navigation project.

Some member states, particularly the UK, Germany and the Netherlands, were already wary of plans to fund the prestige project with public money. But, far from reassuring doubters, Barrot’s attempts at budgetary sleight of hand, involving a nifty reshuffle of ‘virtual money’, merely served to heighten suspicions.

Barrot’s plans may have appeared suspect, but are perfectly legitimate under arcane rules for the 2007-13 budget agreed by all member states, according to Reimer Böge, a German centre-right MEP and chairman of the European Parliament’s budget committee. Böge says that articles 21, 22 and 23 of the multi-annual financial agreement for 2007-13 make possible reshuffles of the type described by Barrot last week.

Barrot was left scrabbling for public funds earlier this year after plans for a public-private partnership to develop Galileo fell through. The collapse of private sector involvement in the project left a funding shortfall of €2.4 billion. Under last week’s plan, surplus money will be skimmed from the budget line for agriculture (€2.3bn) and EU institutions’ administration funds (€220 million). An additional €300m would be released from funds already secured for Galileo under the EU research fund, the seventh framework programme (FP7). Money released would go towards Galileo and another cause often derided as a white elephant project, the European Institute of Technology.

MEPs on the budgets committee in June voted overwhelmingly in favour of public funding for Galileo. Pushing for a community solution to the impasse, in the form of EU funding, would appear to be their way of ensuring they retain a say in the project’s future. Böge rejects outright an alternative solution that would have channelled national funding through a beefed-up European Space Agency. "They want to exclude Parliament," he says of member states advocating an inter-governmental solution. "From an institutional point of view they can forget this."

Approval of the budget revision which provides cash for Galileo will largely depend on how national industrial interests are catered for in the final structure of the project. Member states that have already pumped millions into companies participating in the project want to ensure that they end up with their fair share of the Galileo pie. That share would include contracts for setting up and operating the project, thousands of jobs and, assuming Galileo actually generates any revenue, profits.

Although Barrot’s paper does mention the need to balance "diversified supply under competitive conditions" with "past decisions", it seems that the tendering process for Galileo contracts will be thrown open to companies in all member states. "There is a delicate balance between competition and industrial interests," says Böge. "High-level political agreements are needed on competition rules and on what we do with the political and financial arrangements that have already been agreed with member states."

Achieving consensus on both the budget revision and the project framework by the end of the year will be a tall order. The UK, the Netherlands and Germany intend to block the budget reshuffle, citing the threat of bad precedents. "Does this mean the financial perspectives should be re-opened every time we need money?" says an EU diplomat. Another diplomat speaks of the need to take a simpler route, that of raiding competitiveness funds earmarked for research and innovation projects. "That would be easier as it would only involve one category instead of reviewing the whole budget," he says.

Parliament would be vehemently opposed to a re-distribution of competitiveness funds, having already battled to win cash for programmes such as lifelong learning and for the European Research Council. "We will fight to protect these programmes that would suffer a lot. It’s clear that the majority of Parliament is not prepared to open these programmes and reduce the amounts in year two of the financial perspectives," says Böge.

MEPs will tackle the review on 23 November, as part of the conciliation process with the member states for the 2008 budget. Extra funds would also be allocated to aid projects in Palestine and Kosovo.

The Portuguese presidency is optimistic of a high-level final agreement at a meeting of EU government leaders in December. One Portuguese diplomat claims that the budget review would not be so unusual, citing previous occasions when it was cracked open in 2000, first to make space for 2004’s big bang enlargement and again to aid the reconstruction of Kosovo. The Portuguese presidency will discuss the matter with MEPs and Commission officials on 16 October, after a meeting of transport ministers at the beginning of the month (2 October).

The Galileo project will need a green light by the end of this year if it is to be operational by 2013 as planned. The complexity of the issues at stake, however, points to a longer battle. Barrot’s funding suggestions, although legitimate under EU rules, seem to have aggravated the already heated debate over the project’s future. Even though last week’s paper provided a skeleton framework for the project, much analysis is now needed on how to turn a tangle of competing national interests into a truly European project with fair returns for all.

Jacques Barrot, the European commissioner for transport, sparked outrage last week (19 September) with his attempts to secure funding for the Galileo satellite navigation project.