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| PNT MEDIA ITEMS                                                       |
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| [**www.pnt.gov**](http://www.pnt.gov/)                                |
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Oct. 11, 2007

Battle looming with Council over Galileo and flexibility

11 October 2007

[Agence Europe](javascript:void(0))

Brussels\-- After long debate, the European Parliament budgets committee
managed to agree, on Tuesday 9 October, its recommendations on first
reading of the draft budget for 2008.

According to the budget amendments voted through by the committee, it
will be necessary to revise the financial perspectives if the EU wants
to ensure the launch of Galileo, and the flexibility instrument will
have to be used to fund aid to Kosovo and Palestine. The European
Parliament will carry out its first reading of the draft budget in
Strasbourg on 23 October. The second reading by EU finance ministers
will take place on 23 November 2007.

Total expenditure. The total payment appropriations called for by the
budgets committee would be more than 0.98% of the EU27\'s gross national
income (GNI), a sharp rise on the first reading of the Council (0.95% of
GNI) and even slightly higher than the European Commission\'s initial
proposals (0.97%). This is logical because the EP has taken on board the
funding required for Galileo and additional aid for Kosovo and
Palestine.

Flexibility instrument. The PES and EPP-ED groups agree on using the
flexibility instrument to provide €87 million in commitment
appropriations, €40m for the Common Foreign and Security Policy (CFSP)
to achieve the amount recommended by the European Commission and
endorsed by the Council, namely €200m; €20m to provide some of the aid
for Kosovo (€436m in total), €20m to provide some of the aid for
Palestine (€300m in total) and €7m to complete funding for two
programmes: €3m for an information programme for outside the EU (radio
programmes in Farsi (the language of Iran) out of a total of €7m) and
€4m for the fund to fight AIDS, tuberculosis and malaria (of a total of
€50m for the fund). The Flexibility Instrument (FI) makes it possible to
find an extra €200m under a heading to which all the money had been
allocated.

The Council has always been very hostile to using the Flexibility
Instrument. The budgets committee cut the funding for the CFSP by 20% to
fund various programmes under the \'external actions\' heading, in other
words €40m. The committee suggests filling the gap by providing the
missing €40m from the Flexibility Instrument, also as a way of
encouraging the Council to negotiate with the EP over use of the FI.

Galileo. While awaiting the European Commission\'s suggestions, the
Council only earmarked €151m in commitment appropriations for Galileo.
According to the EP amendments, Galileo\'s budget for 2008 should be
increased to €890m in commitment appropriations (and €400m in payment
appropriations).

Like the Commission, the EP wants the EU budget to provide all the
funding needed to bring Galileo on stream. Through its amendments, the
EP would also like to get the member states to negotiate a revision of
the financial perspectives (the EU\'s budget) proposed by the Commission
(see Europe 9519 on the most recent Ecofin discussions on this issue).

For the European Technology Institute (ETI), the budgets committee
recommends providing €2.9m funding for the ETI\'s board (in commitment
appropriations and payment appropriations) and to create a new budget
line to fund \'communities for knowledge and innovation\'. The ETI\'s
running costs have been transferred from the Education and Culture
heading to the Research and Innovation heading.

The MEPs amended the reductions made by the Council in first reading to
Heading 1a (competitiveness for growth and employment) - particularly
funding for research and innovation - and Heading 1b (cohesion) by
re-introducing most of the spending levels initially foreseen by the
European Commission in its Preliminary Draft Budget for 2008.

SUSPENSE OVER GALILEO PROJECT FUNDING

11 October 2007

[Europolitics Transport](javascript:void(0))

Long hours of discussion may be needed before the EU\'s transport
ministers will come to an agreement on a future financing scheme for
**Galileo**, the European satellite navigation programme. Gathered at a
Council meeting in Luxembourg on 2 October, they agreed on a text of
conclusions made up of six short sentences in which, broadly speaking,
they reaffirm their interest in the programme and the confirm Council\'s
willingness to reach an integrated\' decision on its future before the
end of the year.

Integrated\' means that it will cover aspects linked to funding and
governance at the same time, as no compromise on means of funding the
programme can be found for the moment. The conclusions acknowledge the
work of the European Commission, which resulted in the report presented
on 19 September advocating funding entirely from Community sources for
the construction and deployment of the thirty satellites which will make
up the system.

However, the same conclusions say nothing regarding the additional €2.4
billion necessary to continue the project. This comes as no surprise: it
was clear, since before this Council, that Germany would oppose a text
formulated in such a way that it would rule out any contribution from
national public funds, while it wants a budgetary gap to be filled, at
least partially, by direct contributions from member states, for example
via the European Space Agency (ESA).

According to the rule of fair return\' in force in the ESA, Germany
would ensure tremendous benefits for its manufacturers. The Portuguese
EU Presidency will need all its outspokenness to dispel Germany\'s
reticence over the idea of adopting the conclusions. But the Portuguese
Transport Minister, Mario Lino, was anxious for the Council to make a
clear political message in favour of **Galileo**, which he now believes
is that case.

\"We have every reason to be optimistic since the Council of transport
ministers has decided to allow this programme to go forward,\" he said,
while Transport Commissioner Jacques Barrot believed that **Galileo**
had \"received further encouragement today\". Questioned on the absence
of an agreement on the nature of the necessary funding - solely
Community or allowing national contributions - they said that that was
not the goal of this Council session.

**According to the Portuguese minister, the Transport Council on 28-29
November this year should take the necessary decisions.** Before then,
the Commission\'s proposals will have to be discussed in the Ecofin
Council and perhaps in the General Affairs Council. And it is \"highly
likely that the European Council on 13-14 December will want to reach a
decision itself,\" said Marino Lino.

GALILEO FUNDING PLAN TO DRAW FULLY ON COMMUNITY RESOURCES

11 October 2007

[Europolitics Transport](javascript:void(0))

The European Commission has proposed to the EU\'s 27 transport ministers
to take from the EU budget, by 2013, the total monies needed - €3.4
billion - for the funding of the last development phase and the entirety
of the deployment phase of **Galileo**, the EU\'s satellite navigation
network.

This change of direction would not be at the expense of other Community
initiatives. One billion euro have already been budgeted for **Galileo**
in the Financial Perspectives 2017-2013 - it is therefore a question of
finding €2.4 billion more.

According to the proposal to review these perspectives, which Budget
Commissioner Dalia Grybauskaité presented on 19 September, the operation
will consist, firstly, of recuperating unused funds from the Common
Agricultural Policy for 2007 and 2008. To do this, the Council of
Ministers and the European Parliament are invited to transfer into the
**Galileo** line - part IA (competitivity) of the perspectives - €1.7
billion from unused 2007 monies (out of a total of some €2.1 billion)
and €0.5 billion in unallocated 2008 monies.

Added to that €2.2 billion purse reallocated in this way would be €220
million in unallocated administrative monies (€120 million in 2007 and
€100 million in 2008) and another €300 million provisionally planned for
R&D activities between 2011 and 2013 for the future\... **Galileo** 2.
(The total amount to be collected exceeds the €2.4 billion needed - €300
million will be allocated to financing the future European Institute of
Technology.)

Therefore, not only has the Commission signed the final death
certificate of the public private partnership which, at the project\'s
origin, was supposed to bear at least half of the financial burden of
the European satellite navigation system, but it also gives up
advocating a combination of Community monies and direct contributions
from member states.

On the other hand, the transport commissioner did not rule out seeing
the future operator of this competitor to the American GPS, who would be
designated by a call for tenders, be bound to share its profits with the
EU budget according to as yet unspecified keys and methods.

In virtue of the principle of political caution\', Jacques Barrot does
not seek to hide the fact that there are questions regarding the
project\'s commercial viability, even in light of the current and
foreseeable expansion of the sale of equipment and services related to
satellite navigation. Ever cautious, the commissioner has already
earmarked a sum of €428 million within the total €3.4 billion purse to
cover any unforeseen expenses.