Financial Times

China's hunger for Galileo pinpoints US security fears

Beijing's involvement in Europe's rival navigation service to GPS has Washington chiefs worried

By Raphael Minder
Published: February 24 2005

When the European Union unveiled plans to build its Galileo satellite navigation system, Washington's initial worry was whether it would eclipse the Pentagon- controlled Global Positioning System.

More recently, US concerns have shifted to China's role in the navigation system, which will involve a constellation of 30 satellites and ground-stations.

During his visit to Europe this week, President George W. Bush underlined US anxiety about European relations with Beijing. Topping his list of concerns has been the EU's plan to lift its arms embargo on China, which Mr. Bush warned could "change the balance of relations between China and Taiwan".

But Washington is also worried that China could derive a military advantage from the Galileo project by using it to improve the accuracy of its missiles.

Peter Brookes, a former Pentagon official and a senior fellow for national security affairs at the Heritage Foundation in Washington, says: "Galileo falls right in the same category as the EU arms embargo. The concern of the US is that the EU should not do anything that improves China's military capability."

Over the longer term the US defense industry is also concerned Beijing might base some of its military hardware on Galileo's technology, taking more lucrative defense contracts away from US defense companies.

So far, China has offered a contribution of 200m to the 3.2bn cost of Galileo, earmarking 65m for Galileo's development and 135 mln. For the deployment phase. This month, three Chinese officials will join the Galileo Joint Undertaking, the committee overseeing the project. China could end up playing an even bigger role if the iNavSat consortium led by EADS, the Franco-German group, wins the bidding for Galileo. CASC, a Chinese satellite company, is among the 40 partners in the consortium.

The GJU is set to decide in the coming days whether to select iNavSat or the rival Eurely consortium, spearheaded by Alcatel of France and Finmeccanica of Italy.

Senior EU officials have played down concerns about China's involvement in Galileo. Hans Peter Marchlewski, general counsellor of the GJU, says the agreement with Beijing ensures it is "explicitly excluded" from confidential signals affecting western security. EU officials say the aim is to provide Beijing with a more sophisticated satellite system limited to civilian use.

However, European officials admit Beijing has shown interest in investing at the top end of Galileo, including in its Public Regulated Service. The service, which will be encrypted to resist jamming and interference, is designed principally to help EU armed forces and police combat drug trafficking and illegal immigration.

To remove any "grey zones" about its use, EU ministers confirmed last December that the PRS would only be available for military uses such as pinpointing locations, not for missile technology.

Any change to Galileo's status as a civilian project would require the unanimous approval of the 25 EU member states.

Heinz Hilbrecht, a director at the European Commission, insists the PRS "will not be offered outside the EU". He adds: "It's very clear that certain confidential things, for example linked to intellectual property rights, will not be opened to the Chinese". The Chinese will use this (Galileo) for specific applications and we have no indications that they would use it for military operations."

In spite of the reassurances, US concerns over Galileo have resurfaces. Last June, the US and the EU settled a long-running dispute over how to make their navigation systems compatible. That agreement included the proviso that Galileo's PRS should not interfere with a military code being developed for the Pentagon's GPS, which is seen as an essential tool for the military operations of the US and its NATO allies.

While Washington focuses on China's role, the EU is pressing on with plans to involve a dozen more partners - including Israel, India, Ukraine and Russia - because Galileo's commercial success will depend on whether it can tap into a world market estimated at 3bn receivers, worth as much as 300bn, by 2020.

The EU is hoping to agree co-operation terms with India that might include a financial contribution of as much as 300m. That would put India ahead of China on the list of key partners.

As one European executive involved in the Galileo bidding remarked: "The US is now worrying about how China could use Galileo, but it is likely to feel almost as unhappy about some of the other partners that are due to come on board."

By the time Galileo starts operating - at the earliest in 2008 - Washington's geopolitical concerns may have shifted.