From: <a href="http://www.aftenposten.no/spesial/wikileaksdokumenter/article3985655.ece">Aftenposten</a><br>
Date: 22.10.2009
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C O N F I D E N T I A L BERLIN 001324 
SIPDIS
STATE FOR EUR/CE PETER SCHROEDER
STATE FOR OES/SAT DAVID TURNER
STATE FOR EUR/ERA AND EB/IFD/OMA 
E.O. 12958: DECL: 10/22/2034
TAGS: ETTC, PGOV, PINR, MCAP, PREL, TSPA, FR, GM
SUBJECT: OHB-SYSTEM CEO CALLS GALILEO A WASTE OF GERMAN TAX PAYER MONEY 
REF: A. BERLIN 1319 B. BERLIN 1207 C. BRUSSELS 1153 D. BERLIN 655
E. BERLIN 430 F. BERLIN 429 G. 08 BERLIN 899 H. 08 BERLIN 897
I. 08 BERLIN 264 J. 08 BERLIN 243 
Classified By: Acting Global Affairs Unit Chief David L. Fisher
for reasons 1.4 (b) and (d). 

1. (C) SUMMARY: Berry Smutny, the CEO of Germanys top
satellite manufacturer, OHB-System, called the EUs Galileo
global navigation satellite system (GNSS) "a waste of EU tax
payers money championed by French interests." Nevertheless,
Smutny said his company would gladly accept contracts to build
the satellites. Smutny anticipates the EU Commission (EC) will
award his company a contract this December to build a
significant portion of the Galileo satellites. According to a
recent media report, the EC is scaling back the Galileo
project by about 25 percent off the previously planned 30
satellites ($1.24 billion) due to budget overruns.

2. (C) On October 2, EconOffs met with OHB-System CEO, Mr.
Berry Smutny for general consultations. Smutny became CEO of
OHB-System in June of this year and was previously the CEO of
Tesat Spacecom, a German subsidiary of the European
Aeronautical Defense and Space Company (EADS). When Smutny
arrived at the Berlin Embassy on October 2, he had just
finished a high-level meeting with the German Transportation
Ministry for Transportation, Building and Urban Development
(BMVBS) to discuss OHB-systems bid on the Galileo satellite
build contract. Smutny said the meeting went "very well" and
his expectation is that OHB will be awarded 40-60 percent of
the satellite build. END SUMMARY

GALILEO IS A STUPID IDEA BUT OHB WILL TAKE THE BUSINESS
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3. (C) Smutny stated frankly, "I think Galileo is a stupid
idea that primarily serves French interests" given that GPS
already supplies all of Europes position, navigation and
timing (PNT) needs. He claimed the EU desire to develop a
redundant but alternative to GPS was spearheaded by the French
after an incident during the Kosovo Conflict when the US
military "manipulated" GPS to support military operations
(NFI). Since this time, he said France has aggressively
corralled EU support to invest in Galileo development --
something Smutny said France wants to ensure their missile
guidance systems are free of any GPS reliance. Smutny added,
the irony for German investment in Galileo is that some of
Frances nuclear missiles are aimed at Berlin.

THE EC COMMISSION IS SCALING BACK GALILEO TO CUT COSTS
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4. (U) Space News reported that at an October 15-16 conference
on European space policy, the EC announced they will reduce
the number of Galileo satellites to be built from 28-30 to a
maximum of 22 satellites due to cost overruns elsewhere in the
program. In addition to soliciting a quote for the entire
satellite build, the EC asked both OHB-System and
Astrium-Satellites to quote blocks of eight and 16 satellites
in the event that the contract is divided. Best-and-final
offers are due in November and a final decision on the
contract is expected in late December.

5. (C) Smutny said the EC is steadfast that the entire Galileo
system stay within the allotted 3.4 billion euro budget. In
Smutnys opinion, the EU has grossly underestimated the
complexity of the complete Galileo system and additional cost
overruns and schedule slips are likely. He said industry
experts estimate the final Galileo cost to be about 6.5
billion euros (assuming the previously desired 32 satellite
constellation), but in his opinion the final cost will balloon
to around 10 billion euro.

GALILEO CAN NOT BE BUILD ITAR FREE
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6. (C) Smutny said no matter how much the French would like
Galileo to be built International Traffic in Arms Regulation
(ITAR)-free, this is highly unlikely given that there are not
sufficient replacements for some radiation-hardened US
ITAR-controlled components that Galileo will need. Smutny
pointed out that the EU already strayed from the concept of a
completely indigenous EU system when they procured the Galileo
clock - the heart and soul of the system - from the Swiss.
Smutny said he recommended early on that Galileo try an
procure an US-origin clock, but this idea was immediately
rejected by Galileo decision makers (NFI).

7. (C) Smutny feels that the Galileo program, as it currently
looks, is either doomed for failure or will have to undergo
drastic scalebacks for survival. He said OHB-System is serious
about their bid and will deliver contracted product "on time,
within budget, and per requirements" (something OHB-System has
a good track record of), but his company is preparing for the
possibility that the contracts will be canceled if the EC can
no longer stomach the ballooning costs.

Murphy 
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