Pie in the Sky?

The European Union last week took a calculated leap into the unknown, but if all goes well, it will one day know precisely where it landed. The $3 billion Galileo project, Europe’s answer to the American-run Global Positioning System, or GPS, finally received a qualified yes from transport ministers of the 15 member states — something they failed to give it just four months ago. Over the next eight months, the European Commission hopes to elicit enough interest from private companies to make a reality of what E.U. transport Commissioner Loyola de Palacio calls “one of the most ambitious technical projects ever put forward at the European level.”

No one doubts the ambition of the Galileo project, a network of some 30 satellites to be launched by 2008. But ever since European leaders first endorsed the concept of an independent, civilian navigational satellite system seven years ago, there have been persistent concerns about whether Galileo is necessary and how much taxpayers should pay for it. The transport ministers released a first $90 million in E.U. funds for development last week, and the European Space Agency has already allocated another $90 million. But when they meet next December, the leaders of the 15 member states could still refuse to sign off on the further $1 billion in public funds needed to start putting the system into orbit and on line.

At this stage, though, it appears unlikely that anyone will press the eject button on a prestige project with the unequivocal backing of France — along with Spain, Italy, Belgium and the Commission. The chief argument for Galileo can be couched in terms of economic independence, political sovereignty or commercial necessity: that Europe cannot prudently continue to rely on GPS, whose originator and chief steward is the U.S. Department of Defense. The Russian glonass system, also military in origin, is currently in a feeble state with less than half of the satellites needed for global coverage in orbit. Talks with the Americans on cooperation have stalled; the Russians, who have less to offer but presumably more to gain, are said to be more receptive. But with or without the assistance of other states, the Commission argues that a system run by European civilians would round out the picture nicely.

While European officials stress the military nature of GPS, they know it is the backbone of a massive civilian market. Its signals not only pin down locations for surveyors, sailors, truckers and hikers, but also provide the precise timing needed to synchronize Internet transmissions. Says Richard Langley, professor of geodesy at the University of New Brunswick: “It would basically take a nuclear conflagration before they’d turn it off.” Still, Galileo advocates argue, the Pentagon, which doesn’t charge for its signal, can’t be held liable should civilian service be curtailed. Galileo, on the other hand, would be financed by service charges and governed by contracts. It would offer better coverage in the Nordic regions, where GPS is spotty. And, oh yes: the Commission argues that Galileo will generate $56 billion in economic benefits by 2020, create 140,000 new jobs and enhance the “international influence” of the E.U.

Such a deal? Well, the governments of the Netherlands, Germany and the U.K. aren’t so sure. “So far there is absolutely no interest from private financiers to participate with risk capital in the first phase of Galileo,” Dutch Finance Minister Gerrit Zalm wrote last month. Bernd Gottschalk, president of the Association of the German Automotive Industry, said last month that drivers (i.e. taxpayers) shouldn’t be asked to pay for the project, since GPS was “completely adequate.” In response, the Commission rounded up $180 million in development funding from European companies late last month. And the transport ministers agreed that their heads of government would define a cap on public spending in December. Most of the money for deployment, they reiterated, and all of the money for operations after 2008 is supposed to come from private companies.

“Market risk is still the big unknown,” says John Gallimore, who is developing a business plan for Galileo Industries, a consortium formed from European space companies Astrium, Alcatel Space Industries and Alenia Spazio — all eager to secure the contracts to build, launch and operate Galileo. He hopes that users will consider Galileo’s increased accuracy and integrity worth paying for. European taxpayers might reasonably expect that calculation to be made before Galileo reaches critical mass and becomes too big to fail.