Germany rejects EU satellite funding proposals

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LUXEMBOURG, Oct 2 (Reuters) Germany today rejected proposals to fund a multi-billion euro European Union satellite navigation system solely with EU funds, while ministers agreed to take a decision on the project's future by the end of 2007.

The executive European Commission proposed last month that public money be used to build Galileo, a rival to the US Global Positioning System, after private firms refused to foot part of the bill.

The Commission said unused agricultural funds budgeted for 2007 and 2008 could plug most of the 2.4 billion euro hole left in the project.

But that would require adjusting the 27-nation bloc's 2007-2013 budget, which has already been approved. Germany opposed that and called for more options to be put on the table.

''The German government does not agree with the Commission's proposal in this form,'' Transport Minister Wolfgang Tiefensee told reporters at the meeting in Luxembourg.

A Commission spokesman said Germany was isolated in its concerns.

''There is a large majority in favour of the proposal of the Commission,'' he said.

One EU official said, however, Germany was not alone. Britain was worried about the precedent of budget adjustments for one project while Ireland had concerns about diverting farm funds, the official said.

French Secretary of State for Transport Dominique Bussereau told reporters he supported the Commission's proposal ''100 per cent'', though he said the issue of using agricultural funds budgeted for 2008 should be revisited.

The Commission's proposal foresees taking 1.7 billion euros in unused agricultural funds from 2007 and 500 million euros in farm funds from 2008 to finance Galileo. Administrative funds would also be applied.

The ministers, who reiterated their support for the project in general, agreed to make a final decision on funding by the end of the year. The issue will have to be discussed by EU finance ministers and may require final consensus from a summit of the bloc's top leaders in December.

The original consortium of companies charged with building Galileo included aerospace giant EADS, France's Thales and Alcatel-Lucent, Britain's Inmarsat, Italy's Finmeccanica, Spain's AENA and Hispasat, and an eighth member that included Deutsche Telekom and the German Aerospace Centre.

A new tender offer will have to be extended for companies to build the system now that the consortium has pulled out.

A French official played down German concerns that German industry would not get enough of the contracts in a competitive tender. ''The Germans have a strong industry. They shouldn't be worried.'' REUTERS RS RAI2154

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