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Galileo seeks new financing
By Matthias Gründer
 The decision as to how the European satellite navigation system should now be financed will not be taken until the autumn. But German companies are already worrying that work which they had been counting on may not be forthcoming.
The news regarding the forthcoming funding decision came from the German Ministry of Transport, and the talk was of “resource reallocations in the EU budget” or “subsidies to ESA”. Another option briefly mentioned was that individual or even all the EU states should be required to pay some more money into the joint coffers – this was skirted around with the fancy imported word, “intergouvernemental”. It is likely to end up coming to this, as both the EU and ESA budgets are fixed and by the third quarter of a year there is little that can be done in the way of reallocations or contributions. So will the disputed system be more expensive than originally planned?
Meanwhile in industry circles there is some uncertainty about the future allocation of work on construction of the system. Contrary to the previous assumption that the German satellite builder, EADS-owned Astrium, would get the biggest share of the multi-billion programme of the work, it now looks as if the EU may revert to the normal practice of Europe-wide competitive tendering. But this could result in other competitors getting the biggest slices of the cake. This would be a heavy blow for the German space industry, which is only just finding its way back from a long period in the doldrums induced by the politicians.
The EU transport ministers decided on 8 June in Luxembourg that the negotiations with industry about their role in the system had failed and should be terminated. They now demanded “more competition” if the navigation system was still to be a success. At the same time they asked the EU Commission to submit detailed financing proposals by September for the order phase, the letting of contracts to industry and the subsequent operational phase.
Meanwhile EU insiders are also saying that it was the formation of a single industry consortium which had removed the competition element. Apparently they have learned their lesson from this bad experience. But was it not precisely the Brussels politicians who had forced the European suppliers to join forces in such a consortium?
Seldom has Europe made such a fool of itself as it has done over this, the most important infrastructure project of the Union over the next few years, and it was the politicians who made the basically flawed decisions – although industry has not exactly acquitted itself with distinction either.
At the conference of ministers, who did not exactly take a united stand either, it was stated that there is funding shortage of €2.4 billion for the construction phase. We are told that those present were insisting on an “equitable allocation of work in the placing of contracts” for every country. Behind the diplomatic language, this means that the Italians and French, for example, want to get more back than they have paid in. At any rate, now that the finance ministers have entered into the deliberations, the number of people arguing has increased still further.
On the other hand the space industry of Germany, the country which pays the largest contributions to the EU, would like a mixed financing solution, with funding from the EU and ESA, and for the work to be allocated on the basis of how much each country has contributed.
For the fact is that the merger of satellite builders from Alcatel and Alenia under the umbrella of Thales has created a serious competitor to EADS which would have a good chance of winning the contract for the multi-billion project under EU tendering procedures. The Germans would then still be paying the largest contribution to the EU coffers, but the French and Italians would be pocketing the profits.
It is hardly surprisingly that German industry is now urging Transport Minister Wolfgang Tiefensee to block such a course of action at all costs. Since German Chancellor Angela Merkel will no longer be President of the EU in September, no one will venture to make any kind of prediction today as to what will happen.
It is becoming increasingly clear that Galileo is a political and industrial flagship programme which will cost taxpayers enormous amounts of money. On the other hand the citizens of Europe, who are currently using the American GPS system, are not actually bothered. For them the important issues are that GPS is free of charge and will also be available in the future, whereas under certain circumstances they might have to pay for Galileo signals. According to a survey recently published by the EU, almost 60 percent of those questioned had never heard of Galileo, although 63 percent of the rest were in favour of spending the billions required to implement it.
From FLUG REVUE 8/2007
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