Brussels, 26/03/2002 (Agence Europe) - The EU reached full agreement on Tuesday over the Galileo project that aims to provide the European Union with a global satellite navigation system by 2008. Fifteen minutes of discussion were enough to reveal that all the Member States had finally agreed on a compromise after more than a year of deadlock (which had led to speculation that the project might be dropped). The Member States agreed to release the EUR 450 million needed for the Galileo development phase from 2002 to 2005. They also agreed to set up a common venture to manage the project over this period. A French diplomat hailed the formal launch of the project after the issue of when the private sector would be allowed to get involved (the final point to be settled) was decided by the EU Permanent Representatives on Friday by means of a half-way house compromise. Private companies can be involved in the common venture, but only from the end of 2003 onwards, once the results of the call for tender to set up the consortium of companies carrying out the later stages of Galileo (the deployment and start-up stages) is known. This compromise won the approval of the UK, the Netherlands and Denmark, which were very reluctant to agree to the entire project, but which finally agreed after Germany managed to get most other Member States to agree last month, wanting to avoid any conflict of interests, at least, in the common venture.
The acting President of the Council, Francisco Alvarez Cascos, and the Transport Commissioner Loyola de Palacio, welcomed the "particularly important" agreement. The Commissioner stressed that Galileo now had the go-ahead and the agreement, which had not been easy to obtain, had come about "in time". She added that Europe had decided not to simply consume services supplied by others. Both the Commissioner and the President of the Council stressed the EU's desire for Galileo to be compatible and inter-operable with the US' GPS system. The United States hold a virtual world monopoly with GPS and oppose the launch of Galileo. The French transport minister Jean-Claude Gayssot said that the US had applied serious pressure for the decision over Galileo not to be taken. Charges will be made for Galileo's services, but will it be competitive vis-à-vis GPS, which is being updated and expanded? Loyola de Palacio again argued in favour of the EU project, admitting that some services would be charged for, but would be accessible to other sectors and not reserved for the military. Galileo is a civilian programme under civilian control state the conclusions adopted on Tuesday by the Council, but the EU has not ruled out military use. Services would be open to all, with the military or civilian nature of the services being secondary, explained the Spanish minister. This is also a highly sensitive issue, with the countries that were reluctant to agree to the project, particularly the UK, insisting the programme should remain a civilian venture. GPS is predominantly a military programme.
Details of funding arrangements - Separate regulation on common venture
The Council conclusions on Galileo are a verbatim repetition of the text drafted for the EU Permanent Representatives Committee meeting on Friday, but the UK, the Netherlands and Denmark expressed a general reservation on the text ahead of the Council discussions on the details of the statue of the common venture (see EUROPE of 23 March, p.9). The Council conclusions, in addition to agreeing to the funding of the development phase and the launch of the common venture, give important details on, for example, funding. No direct contribution will be requested of the Member States (half of the EUR 1.2 bn for the development phase will come form the Community budget and half from the European Space Agency). The document notes that there should be as little public funding as possible for the remainder of the project, and certainly no more than one third of funding for the deployment stage, with the remaining finance coming from the private sector. The Commission estimates that the deployment phase will last two years (2006/2007) and cost around EUR 2.15 bn. The Council will meet at the end of 2003, once the results of the call for tender are known, to decide on the funding of the remainder of the project. It will then take the necessary decisions, notes the agreement, on the deployment and operational phase, including on the maximum Community funding available for these phases to ensure health financial management of Galileo over time.
The conclusions insist on the need to negotiate an agreement with the USA on the interoperability of the two systems. A "Security Council" will consist of representatives from Member States and will be created this year as part of the follow-up to the implementation of the project. The Commission explained that, "It will take at least a month or two before the common venture is up and running, the time for putting all the necessary measures into place". As well as the general conclusion on the project, Transport Ministers also approved a specific regulation on the common enterprise. It will be created for a period of four years (this could possibly be extended), that corresponds to the development phase. It will be based in Brussels. The common venture will aim to ensure a unified management and financial control project structure during the project development phase and obtain the necessary funding for the programme. The enterprise will therefore manage the development phase and pave the way for the following stages. One of its main tasks will be to manage the public tenders at the end of the programme whose results are awaited by the Council, at the end of 2003, as we have already indicated. What kind of regulation will be chosen at the time of the offers for tender is still unclear but all diplomatic sources indicate that it would be sensible to appoint a consortium of companies that will benefit from concessions to manage, deploy and launch the Galileo project. Founding members of the common venture are the European Union and the European Space Agency. The European Investment Bank could also take part in the project. Companies wishing to take part in the venture as from the end of 2003, will have to invest at least EUR 5 million, with a possible reduction to EUR 250,000 for SMEs. They will have voting rights at the Administration Council I accordance with the amount of funding they contribute, in the knowledge that the Commission and the ESA will each have at least 30% of the votes. It still remains to be seen whether companies will participate in this private venture. For the instant, companies in the space sector are saying they're against it and those that manufacture equipment and applications have not made any clear statement on the matter.
Reaction of USA: discussions with the Union in next few months
The USA Mission in Brussels provided the following comments on the results of the Transport Council; "We have continuously indicated that the decision to go forward with the development of the Galileo system is a European matter. Ministers from the EU Transport Council have taken this decision today. The USA is interested in co-operating with the EU in order to ensure that the Galileo system is interoperable with the US Global Positioning System (GPS) and benefits users in the whole world. We look forward to continuing talks on GPS-Galileo co-operation, which we suggest begin in the next few months. During these discussions with the European Commission, we also hope to touch on the different aspects of the Galileo Project, which impacts on trade related, technical and security aspects.".