Galileo on the Brink: Delay Builds Tensions

Europe's proposed Galileo system has become the focus of mounting political pressures from inside and outside the European Union (EU), which has spent more than seven years investigating whether to build a civil counterpart to the U.S. Global Positioning System.

At a December 7 council meeting, EU transport ministers adjourned debate without reaching a decision on whether to authorize 550 million Euros to match recently approved funds from the European Space Agency (ESA) to begin building the system. The ministers also failed to act on a proposed regulation to create a "Joint Undertaking" by the European Commission (EC), ESA, and private industry to manage development of the system. Opposition to approving the funds was led by the United Kingdom, Germany, and The Netherlands.

Just over a week later, the European Council comprised of 15 EU heads of state, called on the transport council to continue its work so as to reach a final decision on funding by March and on a plan for management of the project by June. Underlining the multidimensional splits within EU over the issue, the research ministries of the 15 EU nations had unanimously endorsed Galileo only a few weeks before the Transport Council met.

A study of the financial and business implications of Galileo, prepared by a team headed by PriceWaterhouseCoopers (PWC), had gone to the transportation officials in the weeks preceding the meeting. That study estimated the total cost to develop and deploy Galileo as 3.4 billion Euros, slightly higher than the EC's 3.25 Euro estimate.

With a net present value on cumulative revenues of 17.8 billion Euros, the study projected a benefit-to-cost ratio of 4.6 for the program from 2008 to 2020, which the PWC authors characterized as "a strongly positive ratio" in comparison with other public sector transport projects. Annual revenue of 515 million Euros in 2020 was significantly higher than previous EC or ESA estimates due to PWC's assumption of a 5 percent royalty on Galileo chipsets.

EC President Romano Prodi decried the transport ministers' inaction and EC Vice-President Loyola de Palacio, who also heads the Directorate-General for Transport and Energy, threatened to withdraw the Galileo project from consideration if an unambiguous approval did not come soon.

In a state of the union address to the European Parliament on December 11, Prodi said, "The boulder blocking the road to the development of Galileo, an essential initiative and technology for the growth and competitiveness of the European economy, is only the latest on a list of stumbling-blocks that is simply too long."

The issue threatens to undermine not merely a project, but substantive efforts by the EC and ESA to develop a closer cooperation on European space policy and programs. By the end of next year, the two organizations hoped to negotiate a "framework" agreement to advance the process of developing future space policies as well as ESA's additional role as the "implementing agency" of relevant EU programs. Cooperation on Galileo and the space-based system of Global Monitoring for Environment and Security program were to provide guidance for further efforts.

Pentagon Weighs In. Shortly before the Transport Council met, Deputy Secretary of Defense Paul Wolfowitz sent a letter to EU defense ministers expressing his "concerns about security ramifications for future NATO operations if the European Union proceeds with Galileo satellite navigation services that would overlay spectrum of the [GPS] military M-code signals."

As reported by Agence France-Presse (AFP), Wolfowitz's letter argued that Galileo overlays "will significantly complicate our ability to ensure availability of critical GPS services in time of crisis or conflict and at the same time assure that adversary forces are denied similar capabilities." He reportedly encouraged EU defense ministers to convey his concerns to their respective transport ministers before the transport council meeting.

The U.S. defense department's intervention may actually increase support for Galileo in some sectors. Observed one private European consultant deeply engaged in the Galileo program: "The fact that the U.S. brought pressure to bear on the European governments just before the last Council had certainly the reverse effect, [that is,] to confirm to the European Governments the strategic interest of Galileo and, therefore, a strong need for political support at the highest level."

Speaking December 18 on the 40th anniversary of France's national space agency (CNES), French President Jacques Chirac referred to the Galileo dispute in a warning that lack of investment in space research threatened to make Europe a "vassal" of the United States.

Lobbying Intensifies. Following the transport council meeting, Galileo advocates reasserted their support for the program. The final draft of an EC communication to the European Council and European Parliament, "Towards a European Space Policy," which was issued on December 7, gives a prominent role to Galileo in the EU's future aerospace initiatives. On December 10, the European Council ratified the conclusions of the policy document.

In a joint statement December 13, the European Association of Aerospace Industries (AECMA) and Eurospace (the association of the European space industry) said, "A clear decision to proceed [with Galileo] is urgently required." The organizations asserted that delaying the program will have a"severe impact" on employment within 100 aerospace companies throughout Europe, imperil the provisional frequency allocations granted to Galileo by the World Radio Conference of 2000, undermine "the confidence of future investors," and risk the development of downstream applications and services. AECMA has identified Galileo as one of its top 10 priorities for 2002.

Meanwhile, a letter signed by 160 members of the European Parliament and presented by parliamentary President Nicole Fontaine called on the European Council "to overcome the differences shown during the last session of the Transport Council of Ministers in order to be able to launch the satellite navigation system Galileo without any further delay."

The letter argued, "Heads of states and governments must seize this opportunity to demonstrate their political will and their vision of the future of Europe. Galileo is a unique opportunity today when the EU wants to prove its independence in aeronautics and space policy but also in technology and skilled jobs."

European Council's Counsel. On December 15, the 15 EU heads of state at a European Council meeting in Laeken, Belgium, approved a statement reaffirming the "strategic importance" of Galileo and called on the transport council to "continue its work with a view to taking a decision on the funding of the development phase by March 2002 and to decide on the Regulation by June 2002, taking account of the audit report by PriceWaterhouse Cooper."

The careful wording of the heads of state pronouncement did not entirely remove the uncertainty surrounding the program, although Galileo proponents gave it an optimistic interpretation. In a December 17 speech to the European parliament, Prodi said, "The European Council has once again confirmed that the Galileo satellite navigation project is strategically important and also a catalyst of innovation and competitiveness.

"It could hardly have done otherwise, seeing that just a month ago the Member States of the European Space Agency (13 of whom are also Member States of the European Union) committed e550 million to this project. Any other decision would have given a conflicting signal to the project, which is vital for our future.

"The European Council has clearly set out dates and objectives for the first half of 2002; so, it really is time to move ahead. Further delay would damage the credibility not only of the project but also of the [Transport] Council and the European Council. The Commission is ready to help ensure that the member states stick to their commitments and actually implement the project."

In comments in Madrid on December 18, de Palacio deplored the American pressure on EU governments and argued that June was too late for a decision to enable operation of Galileo by 2008. She said she "will begin analyzing alternative use of the [Galileo] funds," if the current indecision lasts beyond March.

An EC administrator who has worked on the Galileo program for years, told GPS World, "Strategic decisions are always painful in Europe having in mind the large number of actors concerned. Space is also quite a new experience for the EU. I still believe the program will be launched."

Also on December 17 the EC released 70 million Euros to continue work on Galileo. Activities covered by the allocation include Galileo "services," signals, security aspects, and applications. It also directly relates to preparatory activities for the validation phase of the program. The money comes from 100 million Euros in trans-European transportation network funds approved last April by the Transport Council.