Europe agrees to fund rival to US navigation system

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Europe agreed yesterday to fund a satellite navigation system that will rival America's mighty Global Positioning System (GPS), which is widely used by every self-respecting traveller from the weekend yachtsman to fighting soldiers.

The European Union's transport ministers have signed off the first €450m (£280m) which, along with the €100m already authorised and the €550m promised by the European Space Agency, will pay for the four-year development of the Galileo system.

Loyola de Palacio, the EU's transport commissioner, said that Galileo would be compatible with the American GPS, although it will be seen as a competitor in the satellite navigation market.

"We now have a 'yes' for Galileo, which signifies Europe's wish to be present in the international scene in the areas of research, technology and industrial development," Ms de Palacio said.

Galileo – a network of satellites positioned in a stable, geostationary orbit around Earth – is scheduled to be launched over a two-year period beginning in 2006. It is expected to be operational from 2008 onwards.

The system will be civilian controlled, unlike the military-operated GPS, and it will provide some 100,000 new jobs for European companies, such as Airbus, Thales and Eutelsat.

John Spellar, Britain's Transport minister, welcomed the decision to go ahead with Galileo, despite the fact that the UK, along with Germany and the Netherlands, had voiced doubts over the financial viability of the plan at the end of last year.

"Because of the importance of Galileo to Europe, we and other member states such as Germany and the Netherlands have been keen to ensure the viability of the project," Mr Spellar said.

"Our concerns have focussed on the management of the project, funding, costs and the benefits to users. I am glad that today the council has accepted our concerns and we have successfully negotiated sound financial and other safeguards," he said.

The safeguards will require the council to review Galileo's progress at the end of 2003 and to take a decision on the continuation of its development phase and on the capping of future funding so there is no need for further financing from member states, Mr Spellar said.

The US is concerned about the security of the civilian-run Galileo system. GPS, like the Russian equivalent, can be downgraded or taken off-line if an enemy state or terrorist group tries to use it, for instance to launch guided missiles.

Alvarez Cascos, the Spanish Development Minister, said: "The Galileo project has a civilian impetus and it will be managed by civilian authorities. It is up to the authorities to decide which users can use it."

Jean-Claude Gayssot, the French transport minister, said that Galileo would give Europeans much-needed independence from the American GPS. "Only the realisation of this civil system will allow the beginning of the development of the use of satellite navigation in conditions which are suitable for Europeans," Mr Gayssot said.

"It will allow the European Union to liberate itself from dependence on the American GPS system."

Some commentators have questioned the usefulness of a second, Western-built satellite navigation system, but supporters of Galileo argue that the "sat-nav" market should grow with the emergence of more powerful pocket computers and mobile phones.

Because Galileo is designed to be compatible with both GPS and the Russian Glonass satellite navigation system, it should mean that users will have a more accurate and reliable service for areas that are poorly covered at present, such as northern Europe.