A preliminary affirmation: we would not actually be discussing the Galileo project, its chances of succeeding and its difficulties, if the EU did not exist. No member state on its own or coalition of member states would have launched such an ambitious project. It was devised and fiercely defended by François Lamoureux, director general at the time, and then unhesitatingly supported by the vice president of the Commission, Jacques Barrot. Without the European Commission there would be no Galileo project. This point has been agreed but what has happened along the way is that uncertainties have arisen and many questions are still pending.
“Alternative proposals” in September. The facts speak for themselves. The private consortium that should have funded most of the first phase of the project (purchase and satellite launch) was unable to agree on the financing conditions or cost sharing. Mr Barrot then proposed public funding to the Council, on behalf of the Commission, preferably out of the Community budget (with possible support from the European Investment Bank, EIB). The Council has still not replied and some governments are more favourable to financial contributions from member states instead of using the European budget. At the end of last week, the Council went only as far as asking the Commission to present it with detailed “alternative proposals” in September, which cover all options, not only the first phase (26 satellites still to launch) but also for the exploitation phase and system management.
A succinct précis of the situation was published in EUROPE 9437. Points that were then considered as being agreed upon by the Council are essentially three in number: a) the Council confirmed the political will to deploy the system in the given time frame (end of 2012); b) by then most of the finance will have been taken charge of by the public sector; c) Galileo remains a “strategic project” for Europe.
Two embarrassing questions. Events along the way have raised a number of questions. The first that comes to mind involves the behaviour of the private sector. The eight companies involved are obviously of a colossal size: EADS, Thales Alenia Space (formerly Alcatel), Finmeccanica, Inmarsat etc. Did they know from the outset that they would be unable to assume the risks involved in launching 34 satellites? Certain commentaries give this impression. We can read, for example, that public funding represents “a simple return to logic”. For this commentator, the project was “dressed in the mantle of the public-private partnership…Provider and user candidates appeared to believe this” and drafted plans and deadlines adapted to this hypothesis. The deadlines, however, for Galileo to effectively become profitable were incompatible with “the demands for rapid results presented by today's shareholders”. Nonetheless, before admitting this, “Galileo needed to be sufficiently engaged upon for its abandonment to be felt as a political defeat for Europe and for member states to feel obliged to fill the gap”. The author of the previous lines (André Dumont, AirBr engineer and senior lecturer at the Free University of Brussels) had also supervised Belgium's industrial participation in developing the Ariane launcher. The situation was clear regarding this project: industrial leaders had suitable public funds for developing it and that it was not until after the first successful launches that its operational exploitation was handed over to a commercial company (Arianespace). The situation affecting Galileo now is quite simply “a return to the logic” and the industrial companies involved in Galileo, “will be relieved to resume their natural construction role paid for by their client”.
Second question: if Mr Dumont's hypothesis is correct, were the European Commission and ministers at the Council aware from the outset of the unavoidable turn of events and the need to revise the rules of the game, at a given time, so that that project would not be buried? I don't have all the facts at hand to reply. Competent and knowledgeable commentators are now affirming that the project management was absurd and that failure was on the cards from the beginning. According to this thesis, the two initial consortia, one in charge of building the infrastructure on the ground, as well as the satellites (ESNI) and the other, in charge of deploying, managing and exploiting the system, as well as providing the services to the users (Galileo Operating Company, GOC) were set up in complete disregard to industrial rules. In effect, they merged with the companies they were competing with, so that they could please everyone, especially the different member states from which these companies came. Jacques Blamont, physicist and member of the Academy of Science, wrote in Le Monde, that the decision to merge the competitors went “against industrial logic and good sense”.
This resulted in bringing together “irreconcilable enemies, paralysed by their rules on governance and without an arbitrator”. The weak point in these affirmations is obviously that they come a posteriori, when the situation is already known. It is easy to criticise when there are difficulties.
The real fundamental question. Some observers consider, however, that the political leaders, particularly Jacques Barrot, had reasons that were more than valid for pushing the project forward in Europe's general interest, even if the modalities were unconvincing and certain difficulties could be foreseen. Michele Cercone, spokesperson for Mr Barrot, declared at the end of May that “no project of this kind and scale has ever been funded from private money. It is not surprising that the public authorities are taking charge of the totality of the infrastructure”.
Let's leave aside the two embarrassing questions. The authorities certainly have to ensure that companies are not only concerned about grabbing a maximum amount of money from the public as possible; some shareholders may agree that the profitability of their investments are more reasonable than recent financial capitalist returns. We can certainly still expect conflicts between the different national interests in the September/October negotiations. But fundamental questions naturally change to become a little like the following: do all member states acknowledge that Galileo is a strategic project for Europe's future? Are all reasonably possible efforts justifiable to achieve this end?
I am not going to find the answer in the official declarations or interviews with such and such a political figure. I will simply describe what was written in one of the harshest criticisms of past mistakes by Jacques Blamont, who I've already quoted. “Galileo is a strategic programme. It is clear that the applications and satellite localisation/navigation will upset entire areas of the economy and also our daily lives”. For the time being, the world only has the US GPS, controlled by the military. According to Blamont, we need to know whether we must depend on “the goodwill of the US military to ensure a function that will become crucial in the functioning of society. Russia, with the Glonass system and China with the Beidou-Compass system are allocating considerable public resources to the aim of providing themselves with such an infrastructure”.
Based on these considerations, Blamont explained on 12 May what Europe, in his opinion, should do. This involved a certain anticipation of what Jacques Barrot announced a few days later: a) reaffirmation of the strategic character of this European commitment; b) preference for public funding from the Community budget, managed by the Commission through an ad hoc structure; c) cancellation of contracts and dissolution of the current consortium; d) putting the European Space Agency (ESA) in charge of directly managing system implementation, call for competitive tenders between companies and setting up, at an appropriate time, a body in charge of the exploitation and provision of Galileo services via a new call for competitive tenders.
High but justified cost. This outline was undoubtedly established following meetings with political figures from the EU and some member states, as well as the industrial and financial players concerned. It is now up to the European Commission to officially formulate its “alternative proposals” that do not just focus on financial matters but also on the management of the system. At first glance, the figures are quite impressive (additional public funding of €2.4bn for 2007-13) but Jacques Barrot had already pointed out at a press conference on 16 May that the annual charge of €400 million a year (out of a European budget of €126bn) corresponded to the construction cost of 400km of motorway (EUROPE 9428). Experts have also pointed out that funding from the Community budget that is not used up is sent back to member states every year, some of which could easily be used for covering the costs of Galileo.
The real difficulties. It therefore appears justified to consider public funding not as an insurmountable problem and that rather, the real difficulties are political, industrial and scientific. Do all member states agree on the importance for Europe of obtaining a system that is autonomous from the US system (which will soon be modernised)? Do they agree to take into consideration the military aspects too? The divergences are still considerable with regard to the industrial and scientific fall-out for each individual country and for the EU as a whole but can they be overcome?
Informal discussions, between the political authorities and the industrial groups are actively being pursued. The Commission is obviously taking them into account in the preparation of its proposals and the European Parliament should be involved in them as much as possible. The Council will then have October to discuss them and the summit will then be able to explore them afterwards.
(F.R.)