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Digging deep

Posted by Richard Saturday, July 30, 2005

At the recent Heritage Foundation seminar in Washington, one speaker observed that, while EU military ambitions for new and increasingly expensive hardware matched those of the United States, member states were unwilling to find the funding develop it.

That was Yossef Bodansky, former Director, Congressional Task Force Against Terrorism and Unconventional Warfare. His view was that, China was hungry for new military technology and was willing to enter into co-operative arrangements with the EU. China, therefore, would become the paymaster – and beneficiary – of the project to equip the European Army.

No better example of this dynamic can be found than the EU's €3 billion Galileo satellite positioning system, upon which the EU is relying to give its European Rapid Reaction Force "autonomy" of action. Without Galileo, it would have to rely on the US "Navstar" system, which could be closed down if the US felt its national interests were being threatened.

Yet, despite the importance of the project to the "colleagues" – which the EU commission claims will "definitely" become operational in 2008 – when it actually comes to paying for the thing, they are proving a tad reluctant to put their hands in their pockets.

So far, Galileo has been funded jointly by the European Space Agency (ESA) and the commission, which has been raiding the research budget. But, on 1 July, the project moved out of the research phase and into the first of four development phases, managed by the Galileo Joint Undertaking (GJU).

In order give firm contracts to the consortium building the satellites and ground facilities, the ESA thus needed to put some money on the table but, when it put its hand out, enthusiasm for the project suddenly evaporated.

At the heart of the argument is the fourth and final phase of the project. This follows the deployment of the full constellation of 30 satellites, when the operating costs will be in the order of €220 million a year and revenues will be minimal. To tide the operating concessionaires over this lean period, the commission proposed bunging them €1 billion for the period 2007-2013. It is this sum that the member states have not approved.

Yet, without a guarantee of future revenues, the earlier phases are at risk because the contractors are unwilling to sign a contract until they know that a funding stream has been secured. That was supposed to have been agreed on 18 June and no the commission is setting a September deadline for the member states to come up with the dosh.

By contrast, one of the most sources of funding has been the Chinese government, which has now committed €242 million (up from its original stake of €200 million) to the project. It may therefore be no coincidence that, last week, the commission signed contracts with a group of Chinese companies to develop a range of "commercial" applications for the satellite system.

In what smells distinctly like a "sweetener" to keep the Chinese locked into the project, the companies have been asked to "develop a land transport system based on accurate navigation information provided by Galileo", while another contract focuses on upgrading communication and navigation for China's fishing vessels.

The announcement is likely to ruffle feathers at the US Defense Department, which like this Blog, strongly suspects that the Chinese will be using the system for military purposes. With the present contracts, few imagine that the "land transport system" will not find its way into a fleet of green-camouflaged, tracked vehicles, while the "fishing vessels" will be painted grey, with turrets and pointy things sticking out the fronts.

Anyhow, as long as the Chinese are kept happy, the "colleagues" will not have to dig so deep in their (our) pockets, and Yossef Bodansky can at least have the satisfaction of telling us, "I told you so".