Editorial: Galileo and Globalization

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  Space News Business

Editorial: Galileo and Globalization

posted: 19 June 2008
01:58 pm ET






As European governments begin debating the appropriate level of non-European industrial participation in the Galileo satellite navigation system,
Germany
and the European Space Agency (ESA) are staking out protectionist positions that do not serve the program’s best interests.

ESA Director-General Jean Jacques Dordain went so far as to suggest that European firms will be marginalized if Galileo is opened up to global competition, raising the specter of a constellation built by the United States and Russia and launched aboard Chinese rockets. Meanwhile, Johann-Dietrich Woerner, chairman of the
German
Aerospace
Center
, or DLR, said Galileo contracts should be doled out in rough proportion to each nation’s contribution to the program. This would be in keeping with ESA’s longstanding procurement policy known as geographic return.

But Galileo is no longer an ESA-led endeavor; the European Union, via the European Commission, has taken over funding responsibility, effectively resuscitating a program that was all but dead following the collapse of its original commercial business model. The commission is insisting that Galileo be managed according to its own procurement rules, which call for making contract awards based on best value for the money.

Surely Mr. Dordain does not really think this would result in the contracting scenario he has painted: The notion that the European Commission would dictate that ESA, the Galileo prime contractor, award the choicest pieces of work to non-European firms is as implausible as the
U.S.
government permitting
China
to launch American-made satellite navigation hardware.

The reason
Europe
is doing Galileo in the first place is to have a satellite-based navigation, positioning and timing capability that is fully independent, something that will not happen if European industry is relegated to a secondary role in the program. The benefit of using any
U.S.
hardware or technology in the program, for example, will have to be weighed against the restrictions – as applied by the State Department through its export control regime – that would come with it.

Mr. Woerner argues that the unique nature of space programs dictates that ESA procurement rules should prevail on Galileo. This is understandable given that
Germany
is the second biggest contributor to ESA, not to mention the biggest contributor to the European Union. But one of the reasons for being part of an economic collective is to benefit from large infrastructure projects that the individual members could not undertake on their own, and this occasionally requires subordinating narrow national concerns for the greater good. Unfortunately, Germany, Italy and Spain have been particularly aggressive in asserting what they see as their prerogatives on Galileo – insisting that certain work or facilities be located on their territory – and this has caused disruptions to the program.

That said, Mssrs. Dordain and Woerner have touched upon a very difficult question that European government officials will have to grapple with as they move forward on Galileo: Which technologies and components should be reserved for European manufacturers for legitimate strategic and industrial-base reasons – no matter what the cost – and which should be open to outside suppliers? The issue is extremely complex, with the answer depending on such factors as the value of the dollar versus the euro, trade accords, the march of technology in places like
China
and
India
and, yes, jobs.

But globalization is a fact of life in aerospace and defense, as it is for all industries; when properly embraced, it offers clear economic advantages over protectionism. Moreover, in the policy document that sealed its commitment to finance Galileo, the European Commission left itself plenty of wiggle room to take strategic and industrial-base considerations into account in deciding the level of outside participation in the program.

The best way for
to achieve the strategic and economic goals associated with Galileo is to carry out a successful program. The European Commission, by insisting on the flexibility to take advantage of non- European components and technologies where it makes sense, is maximizing the chances of that happening.