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Galileo stitch-up

Posted by Richard Friday, May 13, 2005 ,

Not my words, but those of Paul Betts writing for the Financial Times. It was all so predictable, he says. The competition to build the Galileo satellite navigation system - Europe's answer to the Pentagon-controlled Global Positioning System - has ended in a classic political fudge.

As we left it in January, permission had been given to build the Galileo system and two rival consortia were vying for a contract to deploy and operate the equipment. Bids were submitted in February but then, when the result was expected in March, the competition was deferred.

According to Betts, it was a phoney battle anyway. The competitors for the €7 billion contract were France's Thales and the Franco-German EADS, against a consortium composed of Italy's Finmeccanica, France's Alcatel and two Spanish companies.

But when the competition was postponed in March, the EU commission claimed that the contest was so close it could not make up its mind. It argued that a further extension would allow the rivals to improve their offers.

The real reason, we now know, was to persuade the two rivals to join forces and put forward a single offer, thus avoiding the risk of political conflict - the last thing the EU and leading member states want as they struggle to win popular approval for the new European constitution.

Betts tells us that the French have applauded the decision to combine the offers as a sign of pan-European co-operation at its best, mirroring the success of Airbus. Yet even if one consortium had been chosen, the losers would probably still have been awarded specific parts of the project. This would also have avoided turning the long drawn out bidding process into a farce.

Technical this may be, but isn't it interesting that, when writing of EU affairs, one invariably ends up using words like "stitch-up", "fudge", "farce" and "phoney". That, I believe, should tell us something as well.