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Mouth but no money

Posted by Richard Thursday, October 06, 2005

For all the crowing from the EU about its prestige Galileo satellite navigation programme, Flight International is now reporting that the project faces suspension as the cash “starts to dry up”.

This follows on from our posting on 25 September when we reported that Pascale Sourisse, the CEO of Alcatel Alenia Space – one of the consortium members which is building the system – had told Le Figaro that a further €400 million was needed before the system could be launched.

Another €1 billion had been needed to cover the costs of commercial operators in the early days of the system, but the European Space Agency and the EU commission had contributed €600 million, leaving EU member states to finance the rest.

However, Sourisse had warned that the talks were difficult as an agreement required the unanimous agreement of all parties. That was being made difficult by Berlin which wanted more German companies involved in the project.

Talks are now ongoing but the Flight International report adds further detail, stating that Finland, Germany, Spain and the UK are blocking a vote to resolve the issue and the participants are looking to a meeting of the European Space Agency on 13 October to see if the logjam can be cleared.

Failure, says an ESA source, will mean "we will have to reconsider the situation very seriously as there is only enough money to support the work for a few more weeks". He says one of the options will be "to freeze the programme until we have agreement".

A source within the UK Industrial Space Committee has confirmed to FI that failure to resolve the issue in October could be "disastrous", but adds: "We're optimistic. The brinkmanship has gone far enough. None of us wants to be the only one blocking the programme." The source adds that the extra funding "must be there by Christmas, or there is a real danger the programme could stall".

But this is only one area where the cracks are beginning to show. Recently, France and Italy announced they were to go ahead with a prestige joint frigate-building project, Europe's largest naval construction project involving the building of 27 warships, 17 for France and 10 for Italy, all to a common design.

Known as the Renaissance project in Italy and the FREMM (European Multi-Mission Frigates) project in France, it has now ground to a halt after the Italian Finance Ministry had failed to release the funding necessary to begin.

Finance Minister Giulio Tremonti, struggling with Italy's public debt, had not released the €120 million needed to kickstart the project in time for a planned signing ceremony during the Franco-Italian summit in Paris on 4 October.

Berlusconi has assured Chirac that the money will be forthcoming soon and, in the meantime, French Defence Ministry spokesman Jean-Francois Bureau is saying that the Italian delegation had backed out of signing the agreement on 4 October due to “a technical delay of an administrative nature between Italian ministries.”

However, readers will recall that, in February of this year, the impoverished Italian defence ministry announced that it was having to raise €1.2 billion by selling off military barracks and other property, in order to meet its current spending commitments. Even with that cash injection, though, it was saying that it had no spare funding for planned procurement programmes, of which the frigate project was one.

All this is a far cry from 8 June, when French defence minister Michèle Alliot-Marie (left) told an international symposium organised by the Conseil Economique de Défense that Europe needed to boost its military spending by billions of euros a year not only to remain competitive with the United States and to maintain credibility on the world stage.

Currently, EU member states spend around €160 billion per year on defence. This represents 1.5 percent of the EU-25's GDP. France and Britain are among the four European states that spend two percent of GDP on defence. The respective figure for the US is over three percent.

Despite NATO secretary-general, Japp de Hoop Scheffer, telling European ministers that "defence spending is not up to standard in this alliance" it seems that, when it comes to putting their money where their mouth is, the EU has the mouth – but not the money.

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