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[] FT: Double blow to EU's Galileo satellite project,

INTERNATIONAL ECONOMY & EUROPE: Double blow to EU's Galileo satellite
Financial Times; Feb 8, 2002

The European Commission yesterday suffered twin setbacks in its bid to win
support for Galileo, an ambitious Euros 3.6bn (Pounds 2.2bn) satellite
navigation project it sees as essential if Europe is to stay independent
of the US.

At a private meeting, the Commission and its consultants failed to
convince doubting member states that the 38-satellite project would make
commercial sense, while the European parliament voted against the
Commission's plans for a "joint undertaking" to run the project.

The issue has divided the three main actors in the European Union - the
Commission, member states and parliament - but Galileo's supporters argue
that the project is crucial in diminishing the EU's dependence on the US's
global positioning satellite system.

But without EU-wide agreement some enthusiasts for Galileo, such as
France, Spain and Italy, could then proceed with the programme on their
own. In December, France's President Jacques Chirac warned that Europe
risked becoming a "vassal" of the US if Galileo was not approved.

"Galileo is indispensable for European industry, for technological
capacity, but also for other issues. .. such as autonomy and
sovereignty," Loyola de Palacio, the European commissioner responsible for
the project, told MEPs this week. "This is one of those moments when we
see if there is political will to move forward with a Europe that counts
in the world."

However, a hard core of member states, led by the UK, the Netherlands and
Germany, are concerned at the cost and profitability of Galileo, which the
Commission insists is a commercial project.

In particular, they were alarmed by a PwC report in November that said
Galileo would cost the public sector at least Euros 2.5bn, but would
provide almost Euros 18bn of benefits - an assertion dissenting member
states thought questionable.

In December, ministers failed to release Euros 450m for the development
phase of the project, leading the Laeken summit of heads of government to
ask them to resolve its financing by the end of March.

Ms de Palacio has warned that she will withdraw the plans if agreement is
not reached by March - by which time parallel funding from the European
Space Agency will also expire.

The Commission is also contending with member states' criticism of its
proposal to include private companies in the joint undertaking that would
run Galileo. Yesterday, this reservation was backed by the European
parliament, which voted to keep private companies outside the undertaking
for fear of a "conflict of interest" with groups lobbying for work in the

Copyright: The Financial Times Limited 1995-2002

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