European governments appear to be moving toward acceptance of a proposal to

finance the Galileo satellite navigation project using funds originally earmarked for agricultural subsidies, and to make the European Commission the project’s sole master.

Government and industry officials said that despite continued protests from some quarters – most recently a Nov. 12 British Parliamentary report – a majority of European Union governments have agreed to finance an additional 2.4 billion euros ($3.5 billion) to complete the construction and deployment of the Galileo constellation.

The European Commission has proposed that European Union governments spend a total of 6.9 billion euros on Galileo over the next 14 years. The spending breaks down this way: 1 billion euros in Galileo funding that

already has been set aside, 2.4 billion euros in fresh backing to complete construction and launch of the constellation, plus 250 million euros in annual maintenance and operating costs.

Not included in this sum is the 1.5 billion euros already spent on a limited deployment of the Galileo ground network, and the construction of four initial Galileo satellites and two test spacecraft, one of which has been launched.

Also not included is the capital cost of building and launching a second-generation constellation of Galileo satellites.

A series of high-level government approvals will be needed before the struggling Galileo project can be considered fully approved. European transport ministers are expected to express their opinion in a meeting scheduled for Nov. 29-30. Half of the Galileo budget so far has been provided by Europe’s transport budget, with the other half coming from the European Space Agency (ESA).

Under the current proposals, ESA would lose its role as Galileo’s co-owner and instead become a project manager hired by the European Commission.

Europe’s economic and finance ministers are scheduled to meet Nov. 23 to discuss the 2008 budget for the European Commission, including whether the transfer of unspent agricultural funds to Galileo should be accepted.

The European Parliament

also is expected to deliver its view around this time.

European heads of state are expected to

ratify Dec. 13 the decision made by the other ministries.

European government and industry officials said the proposal on the table remains a full constellation of 30 satellites, including four in-orbit spares, which would be in service in 2013-2014.

These officials said a reduced-price constellation of around 12 satellites with a stripped-down capability, as proposed by small-satellite builder Surrey Satellite Technology Ltd.

Nov. 14, is not being considered.

The Surrey proposal came after a British Parliamentary Committee urged that European governments make no decision on Galileo until further cost-benefit analysis has been conducted.

The Transport Committee’s report offers a stinging assessment of the management of Galileo so far by ESA and the European Commission.

But the committee’s report also concedes that, under European Union rules, the additional funding needed for Galileo needs only a qualified majority vote of European Union governments to be approved – regardless of what Britain or any individual nation thinks.

“The [British] government on its own does not have the power to stop, or to impose changes on, the Galileo project,” the committee says in its report. “We fear that Galileo’s status as a ‘grand project’ is clouding the judgment of some in relation to its true, realistic and proven merits.”

A European government official said the commission is seeking to avoid a showdown that would result in any government suffering a loss of face.

“We would like all governments to be on board at the end of the discussion,” this official said. “While a qualified majority is sufficient for legal purposes, we’re not going to play that game.” This official conceded that, in addition to British concerns, Germany continues to lobby for provisions that will protect its industry in the event a Galileo competitive procurement cuts German industry’s work share. Germany is the largest contributor to the European Union budget.

On a separate track, ESA officials continue to negotiate with the industrial consortium that up to now has been Galileo’s prime contractor on a firm price to complete the project. ESA and the European Commission have agreed to divide the cost overruns for Galileo’s validation phase, which includes the construction and launch of four satellites in addition to the two already ordered. Once this phase is paid for, ESA’s financial obligations to Galileo would end, and the European Commission would be the project’s sole paymaster.