LUXEMBOURG European Union governments pledged 100 million euros ($90.17 million) on Thursday to help launch a new satellite navigation system that it hopes will rival the U.S. Global Positioning System (GPS).

The money, plus the same amount from the European Space Agency (ESA), is the first tranche of an estimated 3.25 billion euros the ambitious "Galileo" project is expected to cost, half of which the EU hopes will come from private investors.

"We have made a good decision to press ahead with what is one of Europe's biggest-ever technological projects," EU Transport Commissioner Loyola de Palacio told a news conference.

The decision to release the money came only after hours of wrangling between transport ministers of the 15 EU countries.

Some countries fear the cost could spiral out of control and national treasuries will have to make up the shortfall if private funds are lacking.

Britain, Germany, and the Netherlands, fearing that the cost could spiral, insisted that ministers make a formal agreement to set a ceiling on total public spending when they meet next December.

The project's more whole-hearted supporters -- France, Italy, Spain and Belgium -- had argued that private investors would only help fund Galileo if government support were seen to be unequivocal, but they agreed to define its total public sector budget by the end of the year.

In the meantime, the EU will launch a public tendering process which it hopes will result in firm private sector commitment.

A group of European firms has already pledged 200 million euros as an initial commitment to the project in a letter to the European Commission last month.

EU sources said the companies included France's Alcatel and Thales, Italy's Enav and Telespazio and Spain's Aena.

Galileo, which has an operational target date of 2008, will be able to pinpoint the location of people and objects equipped with the appropriate receiver, via a network of some 30 satellites.

Potential uses include air, land and sea traffic management systems, in-car navigation and location-related services offered via third generation mobile telephone.

The technology is already available via GPS system but proponents of a European alternative says Europe should not be dependent on a system operated by the U.S. military.

"There are uses that would not be possible with GPS, for example systems for aircraft takeoff and landing -- these can not be subject to a system that could cut you off," De Palacio said.

(Reuter)