Avoiding the unthinkable. I believe that cautious optimism is still justified concerning the relaunch of the Galileo project. I am not overlooking the few worrying symptoms emanating from certain formations of the Council, mainly concerning the sources of funding and the distribution of the industrial consequences among the member states; however, these difficulties need to be placed in the context of the habitual attempts by any negotiator in the final phases to obtain the maximum advantages. It is a well known tactic: attempting to wrestle the most favourable position in the final compromise. It seems to me unthinkable, from the point of view of European construction and the technological and industrial future of member states, that after so much effort the EU would withdraw from an activity in which: the USA has had such a headstart on its competitors and is working actively to remain at the vanguard; China (while also participating in the European project) and Russia are clearly committed to developing their own equivalent national projects; several other third countries, both in Europe and outside, have asked, and in some cases (Israel) already been given the go-ahead, to be involved in Galileo. And Europe is supposed to just give up, for reasons which are almost entirely insignificant compared with what is at stake?
The true danger. The real danger would be if the reluctance on the part of two member states - the UK and the Netherlands - were political in nature and implied opposition to, or at least a lack of interest in, the principle of the matter, that is to say, if they believed that the American system is sufficient for the Western world. The USA, having been openly opposed to it, then seemed to be resigned to Europe developing its own system, and they have shifted the competition to another sphere: scientific, technological and industrial competition. Europe reproached the military nature of the American system, which meant that the signal could be scrambled at any time at the request of the military authorities. Now suddenly the Americans have practically eliminated that possibility. Galileo would have been more advanced in technological terms, particularly signal precision. Suddenly the Americans have undertaken improvements to their own system, so that Galileo's precision advantage is being reduced daily. The entry into service of Galileo, planned for 2012, would also coincide with the launch of the first improved American satellites (GPS III). Despite this, Galileo still stands a chance, as it will take at least three years from 2012 to replace the current American satellites.
The deadline of 14 December. But the EU must act quickly. The deadline is the date of the European Council: 13 and 14 December, and the leg work must be done beforehand. According to some indications, Vice-President of the European Commission Jacques Barrot, who is directly responsible for the project, has said that if no agreement is reached by this deadline, he will abandon his attempts to find a compromise and invite the Commission to withdraw the project. This would be an abdication on Europe's part, and a downsizing of its ambitions.
Budgetary compromise possible. The debate last week at the Economy/Finance Council did not overcome the differences on how to fill the “financial hole” of €2.4 billion, but it did manage to avoid the complete impasse which had been a concern before the meeting. Germany confirmed its reluctance vis-à-vis funding the project entirely from the EU budget and its preference for the participation of the European Space Agency (ESA). Why? Because the agency, being an intergovernmental body, is better placed to guarantee respect for the “juste retour” rule (which consists of granting contracts to industry in a country, roughly corresponding to the country's level of funding of the project). But the Portuguese presidency is said to have indicated, unofficially, that Germany was practically alone. The reservations on the financial arrangements placed by Jacques Barrot, in conjunction with Budget Commissioner Dalia Grybauskaité, were numerous, but will not contest the principle of EU funding; they are more to do with budgetary technicalities. The Commission formula does not imply changing the ceiling of the financial perspectives 2007-2013 (which would be unacceptable for the majority of member states), but rather moving some resources from one sector to another, primarily using the available margins in agricultural spending (which for a long time have not reached the level written into the annual budget, and which will decrease further as a result of the global price increase for basic agricultural products). Some expected reluctance on the part of France to this aspect, but the Agriculture Minister Michel Barnier has just declared that if CAP credits are not used up, the fact of diverting them to Galileo rather than returning them to the member states “is a principle of good management”.
Key role of the Parliament. The issue is not resolved, several member states are grimacing (the finance ministers would naturally prefer that the unused credits be returned at the end of the year…), others are demanding clarifications. The Budget Council will discuss the aspect relating to the 2008 budget this very Friday; as I write this column I do not yet know the outcome. But we should not forget that the approval of budgets is very much dependent on the European Parliament, and that the Parliament does not intend to approve the 2008 budget next month in the second reading if the issue of Community funding for Galileo is not resolved. The Parliament Socialist group has recently taken a strong position, even announcing that it has a plan to resolve the difficulties.
Following the Budget Council, other Councils will still have an opportunity to discuss the matter, notably the Transport Council at the end of the month. The summit on 13-14 December could resolve any controversial issues which remain, or approve the Galileo agreement after the signing of the new treaty in Lisbon.
A project with industrial benefits. It is true that the budgetary aspect is only one element of the issues raised. The industrial element is just as significant, if not more so. On this subject, too, Jacques Barrot has taken an initiative designed to appease both German fears and the fears of smaller member states which do not have industrial giants of their own. The Commission vice-president's scheme consists of dividing the realisation of Galileo into six or seven industrial “units”, with strict rules on the granting of each sector to this or that company. No industrial company would be able to be “chef de file” for more than two lots. Moreover and more importantly, each “chef de file” would have to sub-contract almost half of the contract granted to it. The maximum number of European enterprises involved in the space industry would thereby have an opportunity to participate in the project, including enterprises from small and medium-sized member states, on the condition that they have the necessary knowledge and technology (they exist, that much is known).
Clearly, the criterion of fair distribution of contracts must not go beyond certain limits: efficiency, competence and quality remain the priority conditions; concessions to a balance between the member states are a secondary consideration. In the meantime, the giants and semi-giants of the industry concerned (EADS, Alcatel-Lucent, Finmeccanica, Thales, Inmarsat, Aena and a few others) are pursuing their negotiations amongst themselves. This list contains enterprises from all of the large member states, including the UK; several are multinationals (Alcatel-Lucent is Franco-American). According to some observers, Finmeccanica, Thales and Alcatel have been doing their utmost to change the share of the work planned for EADS; however, those involved deny this interpretation and have expressed a wish to confirm the arrangements already made “without changing the overall distribution of tasks”.
It is perfectly logical and understandable that the enterprises are discussing amongst themselves and each defending their own interests to a reasonable degree; but they should be aware that in case of failure they will lose everything: orders, know-how, experience. The Germans know that it is through Galileo, not any other way, that they will be able to catch up their lag in the area of satellites; this is just one example.
Those who have understood. Why, ultimately, do I believe that Galileo will survive? Because at a higher political level, the majority of those responsible seem to have understood what is at stake. Following the last Franco-German summit, Angela Merkel and Nicolas Sarkozy stressed their common desire to carry Galileo through in the planned timeframe. The Transport Council in October, while not hiding the differences cited above, adopted conclusions reaffirming the political, strategic and economic importance of the project, and the session's Portuguese president, Mario Lino, spoke of a “strong political signal” (see our bulletin 9514). I will not repeat the considerations which I developed in some detail in this column last month (three editorials in bulletins 9513, 9514 and 9521). I will simply confirm that the only real obstacle resides in the risk that the UK and possibly the Netherlands will oppose the project for reasons of principle (even if they have budgetary objections).
A British newspaper has published a letter from a reader stating that Galileo means spending five billion euros for reasons of “prestige” and concluding: “I would ask Wolfgang Tiefensee and Dominique Bussereau, the transport ministers in Germany and France, to stop thinking of their egos, or simply finance the project from their own pockets - and not mine”. The reader's opinion is legitimate and is not a serious matter; but that the letter be published in full is significant.
In case of failure, I believe that the EU should consider without delay the possibility of carrying out Galileo leaving aside the member states which do not wish to participate, which would also, naturally, be excluded from the industrial benefits and future profits. It would be complicated, but it would allow us to see more clearly.
(F.R.)