BRUSSELS: After hours of haggling, the European Union on Friday salvaged its highest profile investment project, agreeing to divert \2.4 billion of public money to bail out its struggling satellite navigation project, Galileo.

Designed to rival the American GPS system, Galileo has been beset by funding difficulties and hit by lengthy delays after a consortium which was supposed to get the satellite network off the ground failed to agree on financial terms.

The deal Friday was reached after that bickering among private companies was mirrored by a round of horse-trading among national governments fighting over the economic spoils of the funding that will now be ploughed by taxpayers.

Late Thursday Spain sought to block the deal because, unlike Italy and Germany, it was not granted a ground station be placed in the country as part of the network of 30 satellites that will beam navigation signals to earth by 2013.

Madrid finally agreed to the funding plan Friday after the formal conclusions of the meeting hinted that the status of the body in Spain may be upgraded, describing it as one of a network of “three centers.”

Last week EU ministers agreed to earmark the \2.4 billion needed to salvage the \3.4 billion project from money inside the EU budget which was allocated to farm subsidies but has not been spent. At least a \1 billion more of public money has already been spent.

“The door is open to this high-technology project,” German Transport Minister Wolfgang Tiefensee said, describing it as a “smart combination of national strengths and fair competition.”

One senior European diplomat welcomed the decision, citing the economic benefits of a project which its supporters say will produce thousands of jobs in the transport sector and benefit motorists, train and shipping companies, airlines and emergency rescue teams amongst others.

“But just as important is the fact that this is a symbolic project, because it shows that Europe can do something - which is why the Americans are annoyed by it,” he added.

Britain, which has been skeptical about the plan, welcomed the deal, its Transport Minister, Rosie Winterton, saying that was “no doubt that Galileo offers real benefits to the UK space industry and the wider British economy.”

The focus will now be on the tendering process though, judged by the experience of recent months, this may not prove a seamless one.

After the private sector abandoned Galileo this year, the European Commission drafted rules to ensure large and small companies in many EU nations can benefit from the construction of the Galileo program. Germany, which pays most into the EU budget, had feared it would fail to get enough out of the project.

The new tender rules divide Galileo contracts into six segments covering various stages of the project and no single company can be the prime contractor for more than two segments.

Meanwhile the project will have to recover a reputation which has been severely battered by recent setbacks on funding. With precision of up to 1 meter, compared with 5 meters with GPS technology, Galileo was seen as a technological pioneer.

Now there are fears that delays have put it behind updated versions of GPS and Russian and Chinese satelite navigation projects which are planned.

Already under attack for potential heart risks, the diabetes drug Avandia is taking fresh hits from two new studies published Sept. 11 in the Journal of the American Medical Association.

One of the new studies, co-authored by drug-safety crusader Dr. Steven Nissen of the Cleveland Clinic, found that a rival drug called Actos appears to actually protect patients from heart attacks, strokes, and death. Actos, made by Japan’s Takeda Pharmaceutical («www.businessweek.com»), lowered the combined risk of heart attacks, stroke, and death by 18%, according to the Nissen team’s latest findings. It was Nissen who published an influential study in May that first identified an (BusinessWeek, 6/1/07).

That initial analysis came under fierce attack by Glaxo («www.businessweek.com») and some physicians because it was a so-called meta-analysis, which combines the results of many disparate studies. But the second of the two new studies published in JAMA confirms Nissen’s earlier findings on Avandia. While also a meta-analysis, the study by a team from Wake Forest University is seen as more rigorous, as it draws from four studies that followed more than 14,000 patients for a year or more. The Wake Forest researchers found that Avandia increased the risk of heart attack by 42%, while Nissen’s earlier survey found a 43% increased risk. GSK on the Offensive

Both Actos and Avandia are glitazones, a type of drug that lowers resistance to insulin in diabetics. Avandia, introduced in 1999, had been one of Glaxo’s best-selling drugs, racking up more than $3 billion in revenue a year. But sales have slowed since the Nissen study was published in May, helping slice more than 5% off GlaxoSmithKline’s stock price, and Actos has steadily gained market share.

Glaxo said in a statement Sept. 11 that the conclusions of the most recent JAMA studies “do not confirm a difference in the safety profile of Avandia (rosiglitazone) and Actos (pioglitazone).” The statement said the two studies “do not yield data robust enough to guide doctors in selecting appropriate diabetes treatments for their patients.”

Nissen disagrees. “It does not make sense to give a patient Avandia when you have another drug that [lowers insulin resistance] and is safer,” Nissen tells BusinessWeek, noting that heart disease is the leading cause of death for diabetics. “Why give them a drug that raises the risk?” Nissen, who was one of the first doctors to sound the alarm about heart attack risks from the Merck («www.businessweek.com») painkiller Vioxx, says he thinks the Food & Drug Administration will now come under tremendous pressure to remove Avandia from the market.

The newest studies have already won over some doctors who were skeptical of Nissen’s original Avandia meta-analysis. “Nissen’s first article was a surprise,” says Dr. Joel Zonszein, director of the clinical diabetes center at Montefiore Medical Center in New York. “I think these latest reviews now show not that the medicine is causing the heart attack, but that it is not protecting patients from it. On the other hand, Actos may actually have a beneficial effect.” Zonszein predicts that most doctors will start switching their patients from Avandia to Actos. “I think even if the drug is not removed from the market, the prescription rate will drop quite a lot.”

A converted warehouse in a Moscow industrial zone is home to the most popular Internet search engine in Russia. Hundreds of casually dressed employees enjoy intellectual sparring, shooting pool, table tennis, or a massage in the open plan office.

Sound like one of Google’s foreign subsidiaries? Think again. It’s the headquarters of «investing.businessweek.com», a homegrown search company. Google («www.businessweek.com»), named a World Economic Forum technology pioneer in 2002, may be the most popular search engine in many countries, but it still lags way behind in Russia. Despite several years of trying, the American search giant can’t seem to catch up to its local rival, which on Nov. 29 was named a 2008 tech pioneer. Local Advantage

Yandex handles 55% of local language search queries in Russia. Its closest rival is «investing.businessweek.com», another Russian company, with a 17% share, followed by Google with 15%, according to research site LiveInternet.ru. “Western portals cannot offer Russian users anything that they have not been getting from Yandex for years,” says Arkady Volozh, co-founder and chief executive, who has a degree in applied mathematics.

But Yandex isn’t just a search engine. It also offers photo-sharing and professional networking features analogous to Flickr («www.businessweek.com») and «investing.businessweek.com». It organized its own free Wi-Fi network with hotspots all over Russia long before Google got into that game in the U.S. And it has a laundry list of other features, including its own mail service (protected by unique anti-spam technology it developed), news clustering and aggregation, blog search, free Web hosting, shopping, mobile search, and a homegrown electronic payment system. Its social networking service for professionals is called MoiKrug (Russian for “My Circle”), and it’s rolling out another one for the masses called ya.ru (Me).

That may make Yandex sound like a bit of a mish-mash, but the company isn’t short on technical chops and accomplishments. It was the first to introduce contextual Internet advertising in Russia, running a context-specific banner on Yandex.ru 10 years ago. Now Yandex accounts for 55% to 60% of all ads tied to search topics on the Russian Internet, generating $72 million in revenue for Yandex last year. And the company, which offers both online and mobile search, looks well poised to further tap the fast-growing Russian market, thanks to its laser focus on catering to locals in the local language.

To be sure, no other search provider can challenge Google on a global scale. But the search king has been humbled in some countries, including China and Russia. In such markets, local players are sometimes more nimble. Yandex, for instance, indexes and searches documents in the major Cyrillic languages—Russian, Ukranian, and Belorussian. That’s a bigger job than it used to be: From 1997 to 2007, the size of the Russian language portion of the Internet grew from a mere 4 gigabytes to about 28,000 gigabytes. Yandex also indexes information in English, French, and German that might be of interest to a Russian-speaking audience.

The company traces its roots to 1990. Volozh co-founded a firm called Arcardia (now CompTek) that became one of the largest distributors of networking and telecom equipment in Russia. The company developed two information search systems with names that sound quaint to today’s Net-savvy users: “The International Classifier of Inventions” and the “Goods and Services Classifier.”

In 1993, Volozh and his CompTek partners decided to build on the technology by creating a subsidiary called Yandex (short for “yet another indexer”) to focus on Russian-language searching. They enlisted the help of the Russian Academy of Sciences to enhance the system’s linguistic abilities: Search in Russian is complex because the language uses numerous word variations to reflect grammatical purpose and meaning. Yandex says that one of its key technological advantages is that it automatically searches all possible forms of a given word in an attempt to make each search more accurate.

Yandex became a standalone company in 2000. «investing.businessweek.com», an affiliate of «investing.businessweek.com», invested $5.3 million, and some CompTek shareholders became shareholders. Now Yandex is attracting 6 million users a day. The company keeps on innovating, releasing new localized services such as real-time information about Moscow’s infamous traffic jams. And, to take into account the fact that most Russians don’t have credit cards or checkbooks, its payment system allows people to convert cash into digital rubles at local outlets.

Like Google, Yandex is cultivating young talent. In September it opened the Yandex School of Data Analysis, offering free tuition to its two-year program for its class of 80 masters’ degree students. The company, which already employs 1,000 people, is going to need the help. “The Internet user base is growing at more than 20% a year here; it has all the chances to be the largest market in Europe,” says Volozh.