European ministers conceded failure on Friday in their search for private funding for the struggling Galileo satellite navigation system and said they would have to cough up more cash from public coffers.
But they did not agree whether the money to plug the 2.4 billion euro ($3.22 billion) shortfall should come from European Union states or the EU's collective budget and they were still open to private funding if it is offered, EU President Germany said. "We realised that the concession-based model was heading nowhere," German Transport Minister Wolfgang Tiefensee said after a meeting of transport ministers.
"For that reason we want to try out all the possibilities of public sector financing including financing via the European Space Agency," he said, referring to the body which is funded by 17 mostly EU countries and which oversees Europe's space programme.
"If we can get private commitments then we will look seriously at that possibility." The 30-satellite project is meant to rival the US-built Global Positioning System (GPS) but it has stalled since a group of aerospace and engineering firms balked at the costs.
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.
Critics say Galileo is too expensive and there is little point in replicating the US system. Even European Industry Commissioner Guenter Verheugen has called the project "stupid", though he later said he meant it had limited use.
Its supporters, including the EU's executive Commission, say the system will be far more accurate than its US rival and create thousands of jobs. It could also be used by the military.
Building the satellites and setting up the navigation system will cost around 3.4 billion euros, according to the Commission, but media reports have speculated the amount will be far higher. The Commission, the European Parliament and most EU states want the extra funds to come from the EU budget, diplomats say.
Each year between 3 and 10 billion euros of EU credits for projects are unused and return to national coffers, they argue. But Britain, Germany and the Netherlands have wanted individual states to help plug the shortfall by making contributions to the European Space Agency budget, an option they believe would limit the Commission's influence over the project and broaden the scope for industrial applications. EU ministers will formulate a funding plan in the autumn. The navigation system is expected to start operations by 2012.