Barrot tells member states to spend or bury Galileo

Transport Commissioner Jacques Barrot yesterday (19 September) delivered an ultimatum to member states on struggling satellite navigation system Galileo: agree to spending plans this year or bury the project.

New funding plans for the showcase project would involve siphoning off unspent money from the EU’s agriculture and administration budgets. Over the next two years a total of €2.3 billion will be taken from agriculture and €220 million from administration.

Re-jigging the margins of the EU budget is a sensitive exercise. Fearful of incurring the wrath of sceptical member states, Barrot was at pains to signal that he will not be raiding unspent money that would normally be returned to national coffers.

The money is to be allocated from the so-called margins between the budget ceilings and hypothetical spending figures. Member states would normally be refunded the difference between hypothetical and real spending.

Barrot will also release €300m from his department’s research budget that had already been earmarked for Galileo, bringing the grand total of available funds to €2.72bn. The cash would be allocated to Galileo and the European Institute of Technology.

Galileo, which was originally a public-private partnership, had already been allocated €1bn from the EU budget for 2007-13. A consortium of eight companies - AENA, Alcatel-Lucent, EADS, Finmeccanica, Hispasat, Inmarsat, TeleOp and Thales - was supposed to provide an additional €2.4bn.

The companies dropped out of the project earlier this year, however, after a series of politically-motivated squabbles. Barrot was left scrabbling to make up the shortfall in funding.

Scepticism over the purpose of the project, a putative rival to the US Global Positioning System, could yet thwart Barrot’s determination to secure community cash. In June, the Netherlands and the UK drafted a joint communiqué warning that financing the project with public money would probably increase long-term costs instead of reducing them.

Galileo’s future is to be decided by MEPs and finance ministers, who need to approve the EU’s budget, by the end of the year. Barrot is hoping, against all odds, that his funding plan will be rubber stamped at a meeting of government leaders in December.

What next?

• Assuming that Barrot’s funding plan is approved by the end of the year, work on Galileo could resume towards the end of 2008. The system would be up and running by mid-2013, according to plans unveiled yesterday. Four out of the 30 satellites planned are now in orbit and control centres are under construction in Germany and Italy.

• Squabbles over the location of control centres, potentially major sources of jobs and revenue, were partly to blame for the disintegration of the private-sector consortium last year. Spain complained that it should have been given a centre of its own.

• Detractors wonder whether the €3.4 billion project will ever turn a profit. The free availability of the US rival system GPS makes it difficult to see how investments in Galileo could be recouped.

• Doubting member states could be moved to support public funding plans were Galileo equipped with military capabilities. Countries such as France have in the past expressed concerns about the EU’s unhealthy dependence on GPS. Yesterday’s funding paper, however, focuses solely on civilian uses for the system.

Transport Commissioner Jacques Barrot yesterday (19 September) delivered an ultimatum to member states on struggling satellite navigation system Galileo: agree to spending plans this year or bury the project.