2 Introduction

Many people in various countries are concerned with a question, what is a real status and prospects of the Russian space program? Is it going to collapse soon or will it survive? If it survives, which way the new Russian space policy may go and how that would influence a global scene of space activities?

One immediate practical aspect of such questions is whether it is worth relying on cooperation with Russia in on-going or future projects (if its space infrastructure is about to collapse)? On the other hand, is it wise to support it in any form (if there is a chance for return to confrontation)?

Difficulties in answering these and other similar questions are complicated by problems in obtaining sound information about what exactly is going on in Russia and, perhaps the most difficult, in correctly interpreting the available data, which are typically scattered and subjective.

This paper represents an effort to watch the Russian space program from a close distance, while remaining independent from its establishment and thus able to critically analyze official statements and reasonings behind them.

The paper considers status of the space activity in Russia, including:

• financing of the national space programs;
• operational status of national space systems;
• situation in the space industry.

To outline implications of the above to global space cooperation and competition, the paper discusses:

• perceived role of international activities for survival of the Russian national programs and;
• internal political environment for international space projects, particularly prospects for drastic changes of a state space policy after upcoming elections.

2 Status of space activity in Russia

General situation in the Russian space program is determined by two fundamental factors: the end of the Cold War and on-going economic transformations. The former factor results in several features, which are common to all participants of the Cold War. However, the latter causes substantial specifics of the current Russian situation.

Budgeting

In the former Soviet Union missile and space programs enjoyed very high priority and were appropriately supplied with money and materiel resources. A demilitarization of the economy with the end of the Cold War lowered priority of missile and space programs, while economic crisis, associated with break-up of the state planning system, decreased a total amount of resources, available to the government.

Figure 1, summarizing officially released data on the Soviet/Russian space budget between 1989 and 1995, clearly shows drastic decline of funding immediately before and after the break-up of the Soviet Union in 1991. According to Russian Space Agency (RSA), funding for space program in real terms fell more than 5-fold, from equivalent of 3.9 to 0.69 billions dollars and relatively to GNP it declined from 0.73 to 0.29 per cent.

Figure 1. Space budget of USSR/RF[1].

Precise interpretation of these figures is complicated by two factors. First, prior to 1991 an exchange rate of ruble/dollar was not fully representative because of the closed nature of the Soviet economy. Second, figures before 1991 relate to the whole USSR, while figures after 1992 relate to the Russian Federation, which has significantly smaller overall budget, but, on the other hand, possesses less number of space industrial and research organizations.*

Nevertheless, the available data leave no doubt, that the financial situation of the Russian space program is extremely tough.** The U.S. NASA with its expected budget cuts of some 12% in 5 years looks like an etalon of steadiness and wealth from a Russian perspective.

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* As will be discussed below, official statements, including budget calculations, should be taken with a grain of salt. The outcome of those heavily depend on when, by whom and with which purpose they are done.

** RSA and Space Forces claimed, that they need nearly triple as much money as they have been allocated in FY'95 budget (5860 millions rubles vs 2551 millions).

 

Status of space operations

One of the most obvious consequences of budget cuts is a decline of procurement, which is observed in decreased launch rate. Figure 2 shows, that in 1993-1994 Russian launch rate fell to one half of the level of mid-80s.

Figure 2. Space launches in 1983-1995.

The launch rate, however, is not an unambiguous indicator, since it may diminish because of increased operational longevity of spacecraft, as it was the case with the U.S. space systems in 60s. More representative is the status of operational space systems.

Table 1 lists all Russian space systems currently in use and shows their replenishment during 1994 and 1995.

The table demonstrates, that practically all space systems, inherited by Russia from the Soviet Union, are still maintained and the launch rate declined primarily because of less frequent replacements in operational constellations.

Rarer replacements cause aging of constellations, with a growing number of spacecraft operating beyond their warranty period. If earlier spacecraft tended to be replaced as soon as warranty expired, these days customers are forced to use them as long as they actually perform.

Impact on R&D

While decline in procurement is easier to observe, budget cuts have yet more profound impact on advanced research and developments. Table shows, that the R&D segment of the Russian space program suffers even more than routine operations. If such a trend will persist for few years, it will result in a loss of innovative capability and will block development of new, advanced systems in a future.

Comparison of national space program performances in 1989 and 1995.

Source: Hearings at the Committee on Geopolitics of the State Duma of Russian Federation, 23 Feb 1995.

Note, that the year of 1994 featured as many as 5 maiden launches of new spacecraft (see Table 1). Those spacecraft, however, were under development for a long time and were delayed for several years by budget shortfall. For space systems, which originally expected to be completed by now, timing of completion shifts to the year 2000 and beyond.

Industrial Base

Unequaled decline of the state financing, associated with the end of the Cold War and with transformation from planned to market economy, put Russian space industry in an unprecedentedly difficult situation. The volume of production in rocket and space industry in 1994 fell to 30% of the 1989 level.

The problem is not only an abrupt decline in state orders, but also late and/or incomplete payments of even these short money by the Government.

Because of peculiarities of the Russian transitional economy the Government is unable to raise a full amount of planned revenues. As a result, it can not pay enterprises in time/in full for their work under state orders. Naturally, the heavier an industrial sector depends on state orders, the more it suffers from Government's inability to pay for its obligations, with the space industry standing high in this list.

The impact of not-payments to companies is the more severe, the deeper they are down in a production cooperation chain.

A prime contractor, say, Progress Plant has to cope with short or delayed payments from RSA or Space Forces for its Soyuz launchers. When it eventually gets some money, it is not in a hurry to pay its subcontractor, say, Voronezh Mechanical Plant for the 3d stage engines. Similarly, VMZ does not pay NII of Physical Measurements, for supplied engine sensors, i.e. sub-subcontractors appear in a yet worse position.

Three dozens enterprises, subordinated to RSA, had a cumulative debt of about 500 billions rubles (as of this February), while the Governments owed them 470 billions [2]. Figures for individual enterprises varied from 5 billion rubles to the highest of 170 billions at Lavochkin NPO [3].

Level of salaries is extremely low. The most unpleasant feature is that these salaries, which traditionally were higher than in non-defense industries are now some 25% lower, than the average in Russia (see Figure 3).

Figure 3. Average monthly salaries

Average salary in space industry in1994 was 192 thousands rubles [4], what was equivalent to about 80 dollars. In February of 1995 average salary was 296 thousand rubles, but its dollar equivalent decreased to 70. Even these salaries are often delayed for several months because of not-payments from customers

Note, that an acting Russian legislation subjects an enterprise to a progressive additional taxation, if it pays its workers, employed on state orders, more than 6 "minimal salaries". Since the official "minimal salary" is currently equivalent to about $14 (a cost of monthly ticket in Moscow subway), this limitation prompts enterprises to find other ways to pay people and escape from formal accounting.

Consistent with the above is a profound loss of personnel in space industry (as well as in all state-dependent defense-related industries). By the end of 1994 employment in space sector decreased to 64-66% of the 1989 level (to about 600 thousand people).

There is also a significant hidden unemployment, with lots of people using their formal job affiliation just as an anchor and spending most of their time pursuing more profitable businesses.

An R&D sector suffers more severe reductions, i.e. design, testing and research divisions lose more personnel, than manufacturing units. Figure 4 displays, that the cumulative loss of "qualified employee" has reached 50%.

Figure4. Decrease ofemployment in the Russian space industry.

Young people are also more active in quitting job in space sector and more reluctant to join it. Hence, there is a problem of aging of personnel* and growing threat to succession of technological culture and know-how.

Note, however, that everything said above about differences in situations of individual companies, depending on their place in production chain and their individual role, remains true with respect to personnel losses. Prime contractors experience lower losses, typically about 25%. Energia Corp. reported a loss of about 7500 of its peak employment of some 35000 people, i.e. about 20%. Khrunichev State Space Center did not claim any significant losses and even known to re-hire experienced personnel from other companies to augment perspective developments.

There is also a difference depending on location of companies. For companies, located in large cities (Moscow, Saint-Petersburg), observable loss is higher. For those, located in dedicated "closed towns" (like NPO PM in Krasnoyarsk-26), hidden unemployment is more significant. In these confined enclaves employees of defense-related companies simply do not have other place to go for a job.

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* For example, at Design Bureau of General Machine-building (KBOM), average age of personnel reached 49 years.