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Britain to demand money back after being frozen out of Galileo satellite project

The Russian Soyuz VS01 rocket, carrying the first two satellites of Europe's Galileo navigation system - REUTERS
The Russian Soyuz VS01 rocket, carrying the first two satellites of Europe's Galileo navigation system - REUTERS

Britain is poised to demand the EU repays up to a £1 billion if the bloc continues to force British companies out of the Galileo satellite navigation system, The Telegraph understands.

Whitehall sources said that the The Department for Exiting the Union will on Thursday publish an uncompromising paper on the Galileo project that will now raise the prospect of Britain recovering its investment in the project.

The row over Galileo has become a bitter flashpoint in the Brexit negotiations which reopened in Brussels this week after moves to shut British businesses out of the €10 billion (£8.8bn) project on legal grounds.

The UK paper is expected to contain strong language about the EU’s failure to honour promises it made during Brexit bill agreement.

It is expected to argue that the EU has reneged on the December Joint Report which said that the UK was eligible to participate in EU programmes during the current budget cycle and that UK participants and projects will be “unaffected by the UK’s withdrawal from the Union for the entire lifetime of such projects”.

Sir James Dyson: Brexit is a disaster for Europe, not Britain
Sir James Dyson: Brexit is a disaster for Europe, not Britain

During those negotiations Britain agreed not to request repayment for its share of EU space assets - including over £1 billion of investment in Galileo - on the basis that the UK would be part of the system under a post-Brexit security partnership.

It noted that the UK share of space assets had not been part of the calculations and that “past contribution to the financing of space assets could be discussed in the context of possible future access to the services offered”.

Now that UK participation appears to have been ruled out by European Commission lawyers, senior Whitehall sources said that the UK was now considering its options “including financial”

The Chancellor, Philip Hammond, was said to have been left “hopping mad” over the EU’s attempts to squeeze Britain out of a programme that is heavily reliant on British technology.

A move to recover UK investment and revisit that part of the €45 billion financial settlement threatens to further sour Brexit negotiations.

Seven kinds of Brexit
Seven kinds of Brexit

Ministers have already taken steps to respond to the EU position, which cites legal justifications for excluding Britain because the current rules of Galileo - which the UK signed up to - exclude the participation of non-EU members.

Britain will be granted access to the Galileo’s highly secure military applications, called the Public Regulated Service, on the same terms as the US - without access to the sources codes or technology.

“This is the same basis as EU states currently access America’s GPS system - they don’t have the source codes for that. As a non-member, the UK will access Galileo on the same terms,” said a senior EU source.

The British side does not accept EU arguments that, legally, it cannot get key elements of Galileo certified as ‘secure’ if it contains technology held by a non-member state, arguing that if the bloc wanted to be constructive, it could find a way.

In retaliation, Greg Clark, the business secretary, has written to the EU to warn that removing UK encryption technology could delay the project by three years at a cost of around €1 billion. Plans have also been floated to build a rival system with Australia.

Mr Hammond is also reported to have tried to encourage UK companies not to accept invitations to transfer sensitive technology to EU companies, in a move The Financial Times said was designed to “sabotage” Galileo.

The row over Galileo came as Dominic Cummings, the former Michael Gove adviser and chief strategist of the Vote Leave campaign wrote an expletive-laded blog post condemning the “shambles” of Brexit.

He accused Downing Street of ‘botching’ the process by triggering Article 50 without first devising a plan, and warned a “revolution” could be needed to fix the problem.

“Unless it changes fast, drastic action will be needed including the creation of new forces to reflect public contempt for both the main parties and desire for a political force that reflects public priorities. If revolution there is to be, better to undertake it than undergo it…”