Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions GALILEO at a cross-road: the implementation of the European GNSS programmes COM(2007) 261 final
Date: 2007-07-11
Institutions: European Economic and Social Committee
Subjects: EU programme, satellite navigation

27.10.2007

EN

Official Journal of the European Union

C 256/73

Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the European Parliament,
the European Economic and Social
Committee and the Committee of the Regions GALILEO at a cross-road: the implementation of the
European GNSS programmes’

the Council,

COM(2007) 261 final

(2007/C 256/14)

On 16 May 2007, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned
proposal.

On 29 May 2007, the Committee Bureau instructed the Section for Transport, Energy, Infrastructure and the
Information Society to prepare the Committee's work on the subject.

Given the urgent nature of
the European Economic and Social Committee appointed
Mr Buffetaut as rapporteur-general at its 437th plenary session, held on 11 and 12 July 2007 (meeting of
11 July), and adopted the following opinion with 95 votes in favour and one abstention.

the work,

1. Conclusions and recommendations

the

realism and

The European Economic and Social Committee (EESC)
1.1
welcomes
the
European Commission in its Communication entitled GALILEO
the European GNSS
implementation of
the
at a cross-road:
programmes, COM(2007) 261 final,
in which it draws the
conclusions from the stalled negotiations over the concession
contract for the Galileo system.

displayed

courage

by

The EESC urges that

the terms and the manner of
1.8
awarding the concession for the EGNOS system, which comple-
ments, at European regional level, the services provided by the
American GPS system, be clarified without delay and calls for
the implementation of this programme to be properly coordi-
nated with that of the Galileo programme.

The EESC approves the selection of the European Space
and designing

‘procurement

agent

1.9
Agency (ESA)
the
authority’ for the project.

as

1.2
The EESC fully agrees that these deadlocked negotiations
should be brought to an end and that an alternative strategy
should be implemented.

The EESC wholly endorses the desire of the Council, the
1.3
European Parliament and the Commission to carry the Galileo
project through to a successful conclusion, whilst maintaining
the scope and initial definition of the project.

1.4
The EESC takes the view that the Galileo project repre-
sents a strategic project for the European Union and a project
which is able to demonstrate the capacity of the EU to harness
its resources in the pursuit of a remarkable human, scientific,
technical and economic venture.

The EESC believes that it would be disastrous for the EU

1.5
to abandon the project.

1.6
The EESC highlights the fact that the scenario proposed
by the Commission constitutes an interesting and realistic
proposal for enabling the Galileo project to be brought to a
successful conclusion and takes the view that entrusting the
public sector with the responsibility for the development and
deployment phase and with the financing of this phase shows
that the Commission is taking a realistic view of the situation.

any preconceived ideas,

As the proposed scenario would have important financial
1.7
consequences and would require an undoubted effort on the
part of public funding, the EESC stresses the need to consider,
without
the
EU Member States may make use of the Galileo system for mili-
in particular defensive purposes, and also to
tary purposes,
consider the possibility of introducing a small levy on the price
of terminals for this system in order to help to ensure the finan-
cial balance of the project.

the possibility that

1.10
The EESC warns against the temptation to make the
Galileo project subject to the constraints of the ‘fair return’ prin-
ciple, even though it understands the justified concerns of the
Member States in respect of scientific, technical and economic
development.

1.11
The EESC draws attention to the fact that when matters
relating to governance and the distribution of economic and
technical responsibilities are poorly controlled, a very dangerous
situation may arise, as was demonstrated by the recent Airbus
affair.

1.12
utmost
successful conclusion.

The EESC calls upon the EU Member States to do their
to a
the Galileo project
to ensure that

is brought

2. The background to the Commission's Communication

2.1
Five months after the publication of the Green Paper on
satellite navigation applications, the Commission has published
a new Communication with the alarmist title of Galileo at a
cross-road: the implementation of the European GNSS programmes.

2.2
This shock title was provoked by the fact that the nego-
tiations over the concession contract have ground to a halt. It
has not proved to be possible to reach any agreement with the
industrial consortium seeking to be awarded the contract. There
were fundamental differences of opinion with regard to the
economic model to be adopted by the project.

2.3
The European Commission therefore had no other
option but to take note of this set-back which, following in the
wake of a series of delays in the implementation of the Galileo
project, made it necessary to carry out a major re-orientation of
the project from both an economic and legal standpoint.

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Official Journal of the European Union

27.10.2007

2.4
Furthermore, the Council of Transport Ministers, meeting
on 22 March 2007, asked the Commission to assess the situa-
tion and put forward detailed alternative scenarios with regard
the earliest
to the concession contract and a scenario for
possible provision of the EGNOS satellite navigation system —
which complements, at regional level, the services provided by
the American GPS system — as a forerunner of the Galileo
project.

2.5
The European Parliament, whilst reiterating its support
for the Galileo project, expressed its alarm over the repeated
delays in developing the project and called upon the Commis-
sion to put forward proposals for redressing the situation.

2.6
The Commission has put forward the Communication
under review in response to this double request from the deci-
sion-making institutions of the European Union.

3. Gist of the Communication

The first important point is that the Commission invites
3.1
the Council and the European Parliament to take note of the
failure of the current concession negotiations and, consequently,
to end the negotiations. As the negotiations have become dead-
locked, the Commission did, in reality, have scarcely any other
option.

3.2
The Commission does, however, request the Council and
the European Parliament forthwith to reaffirm their commit-
ment to put in place an autonomous satellite navigation system
and to support the continuation of the Galileo programme. The
present failure of the negotiations over the concession contract
must not therefore imply that the Galileo project is to be aban-
doned. On the contrary, the Commission wants the strategic
nature of the project for the European Union, together with its
economic importance, to be reaffirmed.

3.3
In the Commission's view, the Galileo programme should
be continued, along identical lines to those of the present blue-
print. The technical characteristics of the programme should
remain the same, namely a constellation of 30 satellites offering
five different services with an excellent signal quality.

There should, therefore, be no question of making do

3.4
with a cut-price Galileo project.

3.5

The Commission proposes two alternative scenarios:

an

procure

system with

a) Under Scenario A, the public sector would initially finance
and
limited
operational
performances. This core infrastructure would be composed
of 18 satellites with the associated ground segment. Under
this scenario it would be possible to achieve a level of posi-
tioning accuracy and coverage sufficient to introduce services
on the market but without capitalising on Galileo's technical
value-added.

design robustness to the future concession holder. The
public-private partnership (PPP), under the form of a service
concession contract, would cover operations, exploitation
the constellation of
activities and the maintenance of
30 satellites. Full deployment would be achieved by the end
of 2012 and the PPP concession contract would cover the
period 2010-2030.

The Commission recommends

3.6
second scenario, in two stages:

the adoption of

the

— start with the immediate implementation of EGNOS by
means of a specific concession, as a precursor to Galileo, by
2008. Following the deployment of the full Galileo constel-
lation, the system should be operational by the end of 2012;

— in parallel, negotiate and put in place a PPP, in the form of a
concession, for the EGNOS and Galileo exploitation phase
from 2010-2030.

3.7
The Commission urges the Council and the European
Parliament to support these two programmes by affirming a
number of principles:

— making the EGNOS system operational from 2008;

— deciding that the European GNSS programmes are to be
defined, agreed, managed and overseen at the level of the
European Union, in the interests of all its Member States;

— recognising the strategic nature of the Galileo programme;

— designating the European space Agency (ESA) as

the
‘procurement agent and designing authority’ on behalf of
the European Union and acting under the latter's
authority and rules;

— introducing fair competition into the programme wherever

possible;

— strengthening and restructuring the public governance of
the programme by entrusting the European Commission
with political responsibility and leadership;

— creating confidence amongst investors.

3.8
Such a programme would make it necessary to mobilise
considerable financial resources. There is a need not only to
commit the sums provided for under the financial perspectives
in respect of the programme as currently proposed but also to
provide additional funding.

For the financial period 2007-2013, it would be neces-
3.9
sary to make available the sum of EUR 2,4 billion in order to
carry out the present scheme, with additional measures being
required to reduce risks. In order to finance the procurement of
the first complete constellation (30 satellites) and the ensuing
PPP for the exploitation phase from 2010 to 2030, there would
be a need to mobilise EUR 3,4 billion.

The remaining 12 satellites would be deployed by the private
sector under a concession contract.

4. General comments

b) Under Scenario B,

the public sector would finance and
procure the complete operational system with full perfor-
of
mances. The
30 satellites with the associated ground segment. This
scenario would allow the provision of all Galileo's services
for all targeted users and provide confidence in respect of

infrastructure would

composed

be

4.1
It is right and proper for the Commission to take note of
the stalled negotiations over the concession contract under the
current arrangements and to recommend that the negotiations
be ended. The adoption of sham solutions would have served
only to prolong a disturbing situation and would have further
delayed the implementation of the programme.

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C 256/75

4.2
On this point, the Council has reached the same conclu-
sions as the Commission and has decided to end the negotia-
tions and to make a fresh start on a new basis. The Council also
wished to reaffirm the priority status of the Galileo project, an
observation which is welcomed by the EESC.

a

out

recent

survey

carried

Furthermore,

4.3
by
Eurobarometer (May/June 2007) on the Galileo programme — a
survey which was commissioned by DG TREN — indicates that
80 % of the population of the EU supports the idea of having
an autonomous satellite navigation system and 63 % of the
population would endorse the provision of complementary
funding in order to ensure that this project is carried to a
successful conclusion. The assessment as to the impact which
abandoning the Galileo project would have on the image of the
EU demonstrates somewhat contrasting opinions. 44 % of the
people questioned took the view that it would have a damaging
impact, whereas 41 % of those questioned were of the opinion
that it would have no impact at all.

4.4
The EESC welcomes the support for the Galileo project
provided by the Council and public opinion but believes that
abandoning this project would have a disastrous impact on the
image of the European Union and on the confidence that can
be placed in European projects. It would be indicative of the
fact that the European Union is not capable of carrying to a
successful conclusion a promising scientific and technical
project which could mobilise the best of our abilities in the
fields of
innovation and technical expertise and
provide opportunities for securing major contracts.

research,

4.5
The Communication does, nonetheless, leave a number
of questions unanswered. Strong emphasis is placed on the
EGNOS system and the need to exploit it as soon as possible
but the Commission fails to address the question as to who is to
operate this system. The Commission confines itself to pointing
out that a procedure for awarding a concession will be launched
but provides no indication as to the form of such a procedure
and the possible partners (enterprises or a consortium of bodies
or companies responsible for air traffic management?). Are we
talking here about a public or a private operator? What proce-
dures will be followed in awarding the concession and what
deadlines will be set?

4.6
The augmentation systems which make it possible to
enhance the quality of the GPS service are regionally-based. (In
addition to ENGOS,
there is a North American system —
WAAS — and a system based in India). What connections exist
between these regional systems and what international agree-
ments do they require?

4.7
Turning to the difficulties encountered with the consor-
tium which is seeking to be awarded the Galileo concession
contract, care must be taken to avoid being confronted with
similar difficulties in respect of the proposed new scenarios.
National directives were, in fact, frequently in evidence behind

Brussels, 11 July 2007.

the consortium members. Many of the companies concerned
depend on public-sector orders or are public corporations;
it
would be naive to believe that the consortium in question is the
standard type of ‘private’ consortium. This type of case could
occur under the new scenarios. In view of such a prospect, the
organisation of genuine competitive bidding must be strictly
adhered to.

The EESC welcomes the fact that the general blueprint
4.8
for the project has not been modified, in particular in the case
of the range of proposed services. The proposal put forward by
the Commission is the most reasonable proposal. Changing the
structure of the project would have entailed additional delays,
increased financial costs and unnecessary risks.

4.9
The EESC also considers that the Commission is right to
point out that: ‘Whilst maintaining the system as a civil system,
significant revenues could also come from military uses’. Recog-
nising the sensitive nature of this issue, the EESC takes the view
that discussions on this matter should be carried out between
the Member States. The EESC believes that the EU Member
States should have the freedom to decide whether to use the
Public Regulated Service (PRS) for defensive military purposes if
they so wish, and in return for appropriate funding.

Since the financing of the project is a matter of funda-
4.10
mental
importance, the EESC wonders whether consideration
should be given to the introduction of a very small levy on the
sale of terminals to help finance the Galileo project.

4.11 Whilst the EESC supports the idea of appointing the
European Space Agency (ESA) as the ‘procurement agent and
the designing authority’ for the Galileo project, it would stress
that this must not imply that the project has to comply with the
‘fair return’ rule, even though it is fully aware of the fact that
the agreements between the Member States under the previous
scenario came about because fine economic balances were
struck between the States. The EESC draws attention to the need
to avoid jeopardising, because of fears over the economic conse-
quences for the main participatory Member States, a project
which is essential and symbolic in equal measure to the EU. The
EESC points out that the difficulties currently being experienced
by EADS derive from such apprehensions. The desire to strike
an economic balance between partners is indeed a legitimate
goal but if it leads to de facto paralysis or delays in the imple-
mentation of projects, the whole of this emblematic European
project, with its industrial and scientific dimensions, would be
called into question, as would the knock-on economic effects.

4.12
In conclusion, the EESC assumes that it is the Commis-
sion's desire to preserve the principles of Community govern-
ance which have led it to be insistent — and perhaps a little
undiplomatic — in its claim to political control over
the
project, underestimating, as it does, the important role played
by the European Space Agency.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS