LONDON Differences between member states could scupper the European Union's plans to salvage funding for the ill fated Galileo satellite navigation system after private companies earlier this year decided not to back the project as originally intended.
French plans, backed by some other countries, to bail out the Galileo project with a Euros 2.1 billion ($3 billion) raid on the EU farming budget are being strongly resisted by other countries, notably the U.K. and Germany.
The European Commission said it could move money within the bloc's 2007-2013 budget to come up with Euros 2.4 billion ($3.3 billion) needed to bail out Galileo, as well as Euros 308 million ($427 million) to start up the planned European Institute of Technology.
But critics fear the attempt to seize spare taxpayers' cash after private investors pulled out would break every budgetary rule in the book – and set an alarming precedent.
Galileo was conceived seven years ago as a rival to the U.S. operated Global Positioning S system and touted as a key high-technology venture for the EU. But it stalled earlier this year after a group of eight companies charged with developing the system disagreed on how to share out work and failed to make headway.
The companies involved were European aerospace giant EADS; France's Thales and Alcatel-Lucent; Britain's Inmarsat; Italy's Finmeccanica; Spain's AENA and Hispasat; and a German group led by Deutsche Telekom.
The consortium said it was reluctant to take on the economic risks, and missed the deadline in May 2007 to come forward with a single company structure to run Galileo, a chief executive and common negotiating position.
The Commission then proposed EU member states should finance the project.
Public funds originally were set aside to cover about one-third of the construction of Galileo, with the private sector expected to provide the rest. The total price has been estimated at between Euros 3.4 billion and Euros 3.6 billion ($4.7 billion to $5 billion) by various EU institutions. The cost would rise should the project suffer more delays.
European governments must now decide whether to accept the latest Commission proposal and carry on with the project, which is not expected to be up and running before 2013. EU transport ministers will debate the issue again in October.
"Galileo is a strategic project for the EU. We don't want to depend on the GPS signal, as the United States can step in at any time for military reasons," EU Transport Commissioner Jacques Barrot told a European Parliament committee when unveiling the funding proposal. He said a final decision on funding must be made by the end of the year if the system is to be in orbit in 2013.
Conceding the proposed scheme would require the EU to overcome a taboo, Barrot suggested this may be the only way of ensuring a future for the Euroean satellite navigation system. "I am still convinced that Europe needs Galileo," he said.
The plan to rescue Galileo by diverting money from surpluses in the agricultural budget threatens to plunge the community into its biggest funding row since Brussels fixed its last six-year budget.
Galileo will consist of 30 satellites, giving precision locations to within a meter. GPS is accurate to 10m – although the Americans plan an upgrade that is likely to improve its accuracy by 2013.
Well behind original schedule, only one of the Galilleo commercial satellites has been launched since the end of 2005, with the second one built missing its Autumn 2006 launch data due to technical hitches.during final testing.