PARIS — The Luxembourg government is in advanced negotiations with satellite fleet operator SES to place a military telecommunications payload on an SES satellite for use by Luxembourg and the NATO alliance, Luxembourg Deputy Prime Minister Etienne Schneider said July 23.

Appearing on Luxembourg’s Radio 100.7, Schneider said the two sides had tentatively agreed to create a joint-venture company capitalized at 150 million euros ($200 million), with equal 50 million-euro investments by the government and SES, plus a 50 million-euro bank loan.

Schneider said the Luxembourg Cabinet was expected to decide on the joint venture at a meeting that was scheduled for July 25. The Cabinet ended its meeting by committing to an increase in the country’s defense spending but without spelling out any specific measures.

SES spokesman Yves Feltes said the company, which is headquartered in Luxembourg, would have no comment on Schneider’s remarks until after the Cabinet decision.

Schneider said the 28-nation NATO alliance is pressuring individual members to raise their defense spending to around 2 percent of gross domestic product, a level that many are far from achieving.

Schneider said Luxembourg’s military spending is around 0.4 percent of its GDP. He said that in the past, Luxembourg has been forced to make defense procurements that have no return to Luxembourg industry — for example, its purchase, for NATO, of an A400M European military transport aircraft.

A Luxembourg-based joint venture providing NATO with badly needed military satellite communications capacity would help solve the problem, he said.

Schneider said SES, which operates a 55-satellite fleet, has reserved an orbital slot and would need confirmation of the Luxembourg government’s intentions by this summer or risk losing regulatory rights to the slot.

NATO currently gets its satellite telecommunications capacity from British, French and Italian military satellites under a long-term lease that ends at the end of the decade. NATO officials have said the organization is unlikely to be able to afford its own satellite fleet and would like to find a similar arrangement with one or more NATO members to succeed the current contract.

SES is currently providing NATO with satellite capacity under an agreement with Northrop Grumman Corp. of Falls Church, Virginia. Specifically, SES is providing Ku-band satellite capacity over the United States and Europe as part of Northrop Grumman’s $1.7 billion Alliance Ground Surveillance system contract with NATO.

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Peter B. de Selding was the Paris Bureau Chief for SpaceNews.