Squabbling between Germany and Italy threatens programme, but Brussels plans to start without waiting for ESA funds

The European Commission (EC) is preparing a fallback plan to ensure the delayed Galileo satellite navigation system programme goes ahead on schedule, despite arguments among its state backers.

Aworkshare dispute between Germany and Italy has delayed the release of €550 million ($550 million)- half the first year's budget - by the EC's partner in the programme, the European Space Agency (ESA). This means the original plan to set up a "joint undertaking" joint-venture company can no longer wait for ESA's contribution, as by the time the money is released, the EC's funds will have been swallowed by other projects.

Instead, sources say, the EC plans to establish the joint undertaking without waiting for ESA's funds, effectively buying the organisation's fractious members another six months to reach an agreement. Operating on the EC's contribution alone, the joint undertaking will be able to function until July, by which time, the EC hopes, ESA will have agreed to release its share of the funds for the first year's work.

The EC says officially that there is "no plan B" to the original joint funding proposal, and its president Romano Prodi recently urged the German chancellor and Italian prime minister to make progress on the issue. Both countries want to be seen as the project's lead country, which would bring 25.5% of investment and subsequent workshare. Prodi has yet to receive replies from the two national leaders, and EC sources within the Galileo team are now only "semi-optimistic" of a deal between the two countries before the year end.

Francisco Salabert, part of ESA's EC liaison team, says that until now the delay has not affected the project. However, up to four operational satellites have to be launched by 2005 in order for the Galileo system to be allocated radio frequencies before the operational launch in 2008.

Source: Flight International