Budget cuts shoot down Franco-German satellite

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The soaring emblem of the new Franco-German military alliance is about to fall victim to German budget cuts, shot down in the effort to launch European monetary union on schedule.

Defence ministry officials in Bonn yesterday confirmed that Germany could not afford the Helios II spy satellite, a French device aimed at creating an independent European eye in space. A government spokesman indicated for the first time that the decision about the project would be taken later this year by the cash-strapped ministries concerned, all of whom virulently oppose Helios.

Bonn has never been interested in patrolling the final frontier, and Germans have always suspected that Helios had more to do with Gaullist virility than intelligence. Nevertheless, in the spirit of co-operation, Chancellor Helmut Kohl last year gave his word to President Jacques Chirac that Germany would come on board.

Until now, the European states belonging to Nato had been buying satellite information from the US. France is trying to loosen Europe's dependence on US technology, while Germany's main security concern is to tie the Americans into the continent's defence as firmly as possible.

Where geopolitics failed, economics will prevail. Germany's share of the bill for technology it does not want is estimated to be in excess of Dm3bn (pounds 1.3bn). What it gets in return is a satellite whose scanners cannot penetrate the clouds - a distinct disadvantage at Europe's temperate latitudes. The French also have grand designs for a radar satellite called Horus which could see through the clouds, but at a cost that is reputed to be stratospheric.

The German defence ministry was among the hardest hit in the latest round of cost-cutting, aimed at bringing the budget deficit below the 3 per cent demanded by the Maastricht treaty. Volker Ruhe, the defence minister when asked to nominate projects for the chop, put Helios top of the list.

He was then overruled by Mr Kohl, but ever since he has been fighting a rearguard battle. According to his ministry, either Helios is grounded or the Luftwaffe must cancel its order for the new Eurofighter aircraft.

The abandonment of Helios would deal a severe blow to the fragile relationship between France and Germany. Asked whether France would be prepared to postpone Helios, Charles Millon, the defence minister, replied: "No, no, no."

Herve de Charette, the foreign minister, told his German counterpart in Berlin yesterday: "We French need you more than ever." The Germans are inclined to say: "Tough."