EU defends Galileo satellite project, seeks funds

The European Commission admitted on Wednesday mistakes in handling the Galileo satellite navigation system, but insisted the project was vital and sought 2.4 billion euros ($3.3 billion) in public funds to complete it.
Galileo, meant to rival the US Global Positioning System, has fallen into political and industrial disarray after the companies charged with building the 30-satellite system balked at the costs and risks involved.
Transport Commissioner Jacques Barrot, who said the project was essential for the EU despite concerns that it would not be profitable, presented a proposal to take it over, a move that will require support from the European Union's 27 member states.
"We are determined to assume the full responsibility for this major project," he said. "Experience has proven that the (industrial) consortium was not willing to take on any risks." He said the EU would have to cover 2.4 billion euros in costs on top of the 1 billion in public funds already invested.
A Commission document that will be submitted to transport ministers admitted that a lack of clarity about the public sector's roles and responsibilities had contributed to the project's problems. It also said the EU had been too optimistic in setting a timeline and cost structure.
"The EU has taken an assumption that Galileo could be developed and deployed in a much shorter time and with considerably less public financing than it took the US for GPS," the paper said. "Although admittedly GPS has particular requirements, the EU assumption may have been optimistic."
Barrot said the overall cost to taxpayers would not go up though, because the EU would not have to refund capital and interest covered by industry. He said the new plan was like buying the system upfront rather than leasing it. The proposal would mean the end of the current consortium of European aerospace heavyweights, though many of the companies are likely to remain involved as contractors of the European Space Agency.
The consortium included aerospace giant EADS, France's Thales and Alcatel-Lucent, Britain's Inmarsat, Italy's Finmeccanica, Spain's AENA and Hispasat, and an eighth member that includes Deutsche Telekom and the German Aerospace Centre. EU transport ministers will discuss the proposals at a meeting in June. Current EU president Germany has indicated its support for the EU taking a bigger role, but may have to convince some governments to back taking on the extra costs.