[Summary]. The EU institutions, supported by a number of private sector and public actors, are promoting a EU capability in satellite navigation, referred to in Europe as the EU Galileo project. It represents one of the major public-private enterprises ever undertaken in Western Europe, in particular at the EU level. Europe had no collective presence in satellite navigation in the early 1990s. The perceived threat of import competition and of being outpaced by overseas competitors (US industry), and the associated political and economic costs of not supporting a European contribution to satellite navigation, led to infant-industry intervention. The European Commission identified an institutional void and acted upon it, stressing the importance of the project to EU member states. In particular, the EU transport ministers and the European defense and military establishments were involved in promoting the project. The EU member states granted the Commission a central management role. One of the politically controversial issues was the EU public financing of the project, which if too high would reduce the benefits that the EU member states expected to gain from political intervention. It turned into a burden-sharing issue where economic and political actors did battle over distributional issues, e.g. whether the EU Galileo project would be a public or a purely commercial enterprise. In late 2000 and early 2001, the controversies escalated when the EU member states were to commit substantial public funds to the project. In 2001, however, the EU Transport Council endorsed a road map for an industrial policy that supports satellite navigation and the EU Galileo project. This policy paper offers some background for this development, examines some of the central political issues involved, and suggests some areas that will play an important role in shaping the success of this ambitious project
