"Financial Times" on Meaning of End-of-Mir

Financial Times; Mar 22, 2001
By JAMES OBERG

The demise of the Mir space station has led to the rebirth of a pseudo- nostalgic fantasy about the old Soviet Union space programme. Like nuclear weapons, ballet companies and chess teams, space activities were seen by people in Soviet countries as symbols of "big power" status.

Russia's role as a partner on the 18-nation International Space Station (ISS), by contrast, has failed to provide the same kind of emotional satisfaction. But as Mir prepares to crash to earth, Russians are waking up to a new strategy for making their space programme useful to Russia.

Mir spanned a historical era between useless Soviet space showmanship and commercially profitable space commercialisation. If Russia learns the real lessons of its tough old space station, it can profit from it long after it is gone.

Mir once produced little more than national pride. The hundreds of scientific experiments performed by rotating teams of cosmonauts kept Soviet laboratories busy. But they were never translated into the strengthening of the country's economic and technological infrastructure.

But on the verge of bankruptcy in the late 1980s, the Russian space programme learnt to survive by opening up to western customers. Foreign visits to Mir, payload launches on surplus Russian rockets and auctions of memorabilia created a cash flow in the 1990s that prevented the collapse of the Russian space industry.

Many believe that Russia's space industry is still penniless, and point to long delays in providing promised components to the ISS as an indication of continuing crisis. In fact, there is plenty of money flowing into the industry. It amounted to more than Dollars 800m last year from foreign sales alone and several hundred million more from the Moscow government. At least half, and perhaps up to two-thirds, of those sales were profit.

This is partly because, at US insistence, commercial launch costs are set artificially high. A decade ago, when Russian rocket companies first began discussing selling launch services, they were able to undercut Western rocket prices by 50 per cent or more while still making a handsome profit.

The US Commerce Department, prompted by calls from US rocket-makers, deemed these low prices unacceptable. In the end, they allowed Russia to sell a set amount of capacity but only at prices that were not too far below prevailing western rates. The Russians happily doubled their original asking prices and began raking in cash.

So the money problem facing the Russian space industry is not that it lacks the cash to pay for the promised ISS modules and services - it has plenty. The problem is that most of it belongs to the Russian companies that make commercial sales. The federal space agency only receives a small cut of the profits, typically between 10 and 20 per cent.

The role of Russia in the ISS can best be seen in the context of those commercial sales. Yuriy Koptev, the head of Russia's aerospace agency, has made it clear to his Russian associates that participation in the ISS programme is a "cost of doing space business" with the west; any excessive shortfall, or abrupt Russian refusal to provide support to the ISS, would probably result in the cessation of these profitable contracts with Western companies.

In the short term, Russia cannot expect to receive any profits from its participation in the new space station. To make up a budget deficit a few years ago, the Russian space agency pre-sold about 4,000 hours of cosmonaut work time to Nasa, the US space agency. But the experience of Mir has shown that Russia can earn considerable revenue through its space programme. The Russian federal space agency has operational control of ISS, which means that it has the direct rights to sell space to foreign companies.

These include the rights to sell seats on the Soyuz visiting capsules to ISS, at about Dollars 20m apiece. They also include the sale of some expedition slots for up to Dollars 80m. The promise of such sales could easily finance all Russian support for ISS and will clear the way for continued commercial activities and the profits that flow from them.

Participation in ISS can even contribute to Russia's national pride by keeping the country's space programme going. During the last year, Russia has experimented with solar sails for interplanetary propulsion and space mirrors for ground illumination. It has also demonstrated the world's first inflatable heat shields to bring rocket stages back to Earth.

The Russian people will grudgingly learn to take pride in the crucial role their country has been assigned in the ISS, a project that was designed to be impossible to continue without Russian support. If the real lessons of Mir are appreciated, space can yet pay off for Russia.