The Commission warned that it would pull the plug on Galileo, the rival to GPS, unless the 15 member states committed to it by February 2002.
European heads of state failed to show that commitment to Galileo at their two-day summit in Brussels last week. Some questioned the 3.6bn euro (£2.2bn) cost, while others questioned the need for such a satellite system. The heads of state urged the Commission to continue its research and said they would decide whether to fund the project by March 2002.
Like GPS, Galileo will serve primarily as a navigational aid for commercial transport networks.
Six countries, including Germany and the UK, object to Galileo's price tag. They want the Commission to find more private funding. Others questioned the economic benefits of the network, which is set to become operational by 2008 only as a rival to the US-run GPS.
European Commission president Romano Prodi insisted that the project was "indispensable both for scientific programs, and for economic and social conditions". The Commission has warned that further delays would render Galileo technology out of date.
The European Union's head office believes Galileo will create a market for equipment and services of some 80bn euros over 15 years, along with 140,000 jobs.