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  • FT

Theresa May fights to keep UK in EU satellite project

Theresa May is leading efforts to stop an “outrageous” EU move to freeze Britain out of Europe’s €10bn Galileo satellite project, as space becomes a new frontier in Brexit negotiations.

The UK prime minister has been warned that hundreds of millions of pounds of contracts are at stake in the coming months, as Brussels prepares to lock Britain’s space industry out to protect security elements of the satellite programme from being “irretrievably compromised” after Brexit.

Gavin Williamson, the defence secretary, was said by allies to have “hit the roof” when told about the EU’s strict approach to sharing confidential information, even though the UK has offered “unconditional” security co-operation after Brexit.

“What is being proposed [by Brussels] is outrageous,” said one senior UK official.

The exclusion of Britain from Galileo’s sensitive “public regulated service”, an encrypted navigation system for government users, would also cut the British armed forces out of the sophisticated new programme, a rival to the US’s GPS.

The UK defence department is having “early discussions” on whether Britain could launch its own satellite system to end its dependence on the US system and avert exclusion from the Galileo military application. “It would be hugely expensive — our priority is to sort this out with Brussels,” the official added.

The European Commission wrote to the UK in January to explain that it would be inappropriate to divulge highly sensitive information about post-2019 PRS plans to a departing member state.

“If the commission shared this information with the UK (which will become the third country) it would irretrievably compromise the integrity of certain elements of these systems for many years after the withdrawal of the UK,” the commission said, according to an official who had seen the letter.

Only EU members have access to the encrypted PRS system but the US and Norway are in protracted negotiations with Brussels over joining.

Mrs May is working to try to rescue the Galileo situation with Mr Williamson and other senior ministers including Greg Clark, the business secretary, David Davis, Brexit secretary, and Philip Hammond, chancellor.

The issue is highly charged politically since French companies are expected to be the main beneficiaries if the UK were excluded from the next round of tendering for sensitive contracts.

Mr Clark, who met Jean-Pierre Jouyet, the French ambassador, last week to discuss the issue, said Britain wanted “complete involvement in all aspects of Galileo, including the key secure elements which the UK has unique specialisms in and have helped to design and implement”.

Another senior British official said: “Any suggestion that the UK poses a security risk to the EU or that our collaboration might be against EU interests is not only absurd but also prejudges negotiations.”

Although Mrs May said she wanted a full defence and security treaty with the EU, the commission has told the European Space Agency it must prepare for the worst-case scenario of a “no deal” Brexit.

With the next round of long-term contracts expected to be awarded in June, that could mean the UK being excluded, since contracts awarded now could risk becoming illegal on Brexit day in March 2019.

Among the UK businesses that could be affected are CGI, a software company involved in encryption, and Qinetiq, which makes the PRS receiver. Many other British companies want to build applications on the back of the encrypted service. Airbus, with big operations in the UK, is an important player.

One EU official said the ESA, which runs Europe’s space programme, has been told to make plans as if “the UK is not in the programme any longer”. The official added: “These are the instructions that have to be followed.”

Any clarity on a security treaty could come too late for Britain to retain access or work on PRS, even though UK companies have been at the forefront of developing the technology. Britain funds 12 percent of Galileo.

In addition to existing tenders amounting to €3bn to complete the constellation of satellites, the industry estimates the potential market for Galileo-related applications and services could amount to €6bn by 2025.

The latter market is a significant driver behind the UK’s ambition of taking 10 percent of the global space market by 2030, which would mean more than trebling the £11.8bn annual turnover achieved in 2013 to £40bn.


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