"Who told you about those houses?" the Russian asked me.

Taken aback, I could only say, "People I trust."

"Well, trust me" he replied, speaking very carefully. "It -- is --
dangerous -- for you -- to write -- about -- this subject. You know about the
Russian mafia? It is dangerous for you to write about these houses."
He then walked off.

The man, a high official in his country's space program, had
approached me inside the employee cafeteria at the NASA Johnson
Space Center in Houston, Texas. It was early 1995, just before the
first visit of an American astronaut to the Mir space station. A few
months earlier, the Washington Times had published one of my
articles on the Russian-American space partnership. Along with my
descriptions of the poor treatment of Americans in Russia, and of
NASA's poor knowledge of the Russian space industry, I had reported
that vast amounts of Western money meant for the space program
appeared to be winding up in the pockets of top officials, while
ordinary workers were severely underpaid, often months late. In
particular, I had mentioned the half-million-dollar mansions for top
officials at Star City, the cosmonaut training center near Moscow.
Reportedly hooked directly into the heating and electrical power net
of the cosmonaut center, these houses were being built only half a
mile from the main entrance road to the base. They were far too
expensive for the salaries of the officials involved.

Now, unsure whether this official's message was a threat or a
friendly warning, I reported the encounter to NASA security. I never
saw any results. The joint space program continued, and in Moscow
the construction continued of the so-called "cottages" of the "big
cones" (Russian for "big wig").

Two years after my ambush, by which time I had published another
article on the subject illustrated with a photograph of some of the
mansions, the tables were turned on the Russians. TV newsman
Byron Harris of the ABC affiliate KFAA in Dallas, Texas, had seen my
articles and set off on his own investigations. He had been to Moscow
and had found a way to visit and videotape the still-growing complex
of space industry mansions.

When one of the mansion-owning officials, General Yuri Glazkov,
visited Texas in early 1997, Harris was ready. Using their proper
press credentials, the reporter and his camera crew entered the
Johnson Space Center and lingered outside of administrative
headquarters, where Harris had learned that Glazkov was headed for
a meeting. As the Russian and his interpreter approached, Harris
asked him about the funding for the costly dwellings.

"There are no such houses at Star City", Glazkov answered through
his interpreter. Shown stills from the video, he kept up his bluff: "I
don't know anything about it, I don't live there." Confronted with the
claim that he did, and that one particular house was in fact his, he
changed tack: "This has nothing to do with the space program, and I
don't want to talk about it." Harris asked where he had gotten the
money. "My wife is a pilot, and we have saved up all our lives for
this," Glazkov explained, walking off.

Of course, any money saved by Glazkov and his wife had been wiped
out by the hyper-inflation upon the collapse of the USSR. His official
salary was totally disproportionate to the value of the house in
question.

NASA's reaction was telling: It immediately clamped down on the
U.S. news media. Highly restrictive new badging procedures were
immediately implemented for journalists, to make sure no visiting
Russian space official ever had to go through such an ordeal again.
When Harris's report appeared on "Nightline" a few month's later, a
NASA spokeswoman gave the agency's official position on the
mansions: "What Russia does with their own money is none of our
business." Pressed as to how she knew this was really Russia's own
money, and not diverted assets from Western-funded programs (as
is commonly believed by workers at Star City, foreign and Russian
alike), the official admitted she had no idea.

The scandal of the Star City mansions and NASA's non-response to it
perfectly characterizes the U.S.-Russian space partnership. From the
beginning the program has stumbled over the issue of money -- how
much the Russians will get, where (and to whom) it will go, and how
little of it will actually wind up being spent on the promised services.
By 1998, the by now five year old partnership had seen the transfer
of more than $2 billion of American money (some from NASA but
most from commercial enterprises) into the Russian aerospace
industry, where most of it vanished utterly without a trace.

Only now is the American public catching on to the costs of Russian
delays, diversions of space resources to the military, and widespread
corruption--all of which the Clinton administration has covered up
for the sake of its foreign policy, with the complicity of the NASA
hierarchy. It is still not widely known how, just five years ago, the
Russians came to be given a controlling share of the multi-modular
space station, and in effect, a veto power over an entire project
dependent on their vehicles.As with so many other cases of
government mismanagement, to trace the storyline of this folly it is
necessary to follow the money.

Origins of the partnership

The idea of using the Russians to assist American space operations
sprang naturally from the collapse of the Soviet Union in 1991. As
NASA struggled with an out-of-control design for its grandiose
Freedom space station, many experts looked longingly at Russia's
decades-long experience with its own series of small space stations.

In 1992, President Bush mentioned the possibility of space
cooperation in written testimony to Congress. House space
subcommittee staffers urged their White house contacts to offer
expanded cooperation to the Russians as a reward for political and
economic reforms. One agreement called for exchanging astronauts
and cosmonauts in orbit. That same year, Congress directed NASA to
evaluate using the Mir space station (launched in 1986 for a five
year mission) as a base for American experiments. The resulting
evaluation described an aging space structure prone to breakdowns,
noise, and vibration, starved for power, and totally inadequate to
host any visits by U.S. spacecraft. NASA's experts recommended
against any use of Mir for U.S. purposes. But there were other factors,
besides mere technology, to be considered in such a decision.

In the early days of the Clinton Administration, with political support
for the troubled Freedom project plummeting, NASA faced
devastating budget cuts. The Russians' space program, too, was facing
bankruptcy; and their plans for a Mir-2 space station were also
threatened. In March of 1993, Russian space officials proposed a
solution to this common crisis: merging their Mir-2 program with the
Freedom, which they claimed could save billions of dollars for both
nations. Lame-duck NASA Administrator Dan Goldin, reportedly
fearing replacement at any moment by some 'Friend of Bill',
responded with enthusiasm. Over the next two weeks, on Goldin's
initiative, officials at NASA, the White House, State, Defense, and
Commerce developed a plan for the U.S. to invite Russia into the
space station redesign effort, even though it had been Russia's idea.
Tony Lake, the president's national security advisor, endorsed this
suggestion on April 1, 1993, and officials presented it to the
president and vice president, who were about to meet Boris Yeltsin
for the first time. Three days later, at the Vancouver Summit,
Clinton and Yeltsin agreed to the proposal, and officials in both
countries were told to "make it happen." In Russia, the former
defense industry council that ran the space program had recently
been dissolved, and its function assigned to a new civilian group
called the Russian Space Agency (RSA), deliberately modeled on
NASA to facilitate cooperation with the United States.

America's top space official promoted the arrangement, pointing to
benefits that transcended science. "There is no event that can better
define the coming of the new age than we joining with Russia and
actually investing in technology instead of building weapons," Goldin
told the New York Times in January of 1994. He painted a grim
alternative: "If we don't do this together, then Russia goes its own
way and we go our own way." A few months later, at an aerospace
forum, Goldin argued that withdrawal of U.S. support for the Russian
role in ISS would play into the hands of "radical right-wing Russian
space industry" officials opposed to Yeltsin's reforms. "We could back
away -- and we could give the nationalists a self-fulfilling prophecy
that will be a disaster to this world -- or we can choose to try and
support the flicker of democracy in Russia. " Shortly thereafter
Goldin made the same point in more positive terms: "While there are
tangible benefits to Russian cooperation, auditors cannot put a price
tag on the intangible benefits of international cooperation. It's good
foreign policy, and it's good space policy. The Cold War is over, and
cooperation with the Russians demonstrates that former adversaries
can join forces in a peaceful pursuit which will generate tremendous
benefits for both nations."

The president himself had become enthusiastic about cooperation
with the Russians. On April 20, 1994, Skip Johns, associate director
for technology in the White House Office of Science and Technology
Policy, speaking at a meeting of the Commercial Space Transportation
Advisory Committee, touted the president's support for the ISS: "I'm
looking at a memo of just a couple days ago and he scratched a note
on it relative to the station and Russian participation and his
comment is, "Great. It [Russian participation] should help us sell it.'-- "

The formal 700-page U.S.-Russia space contract was signed in June of
1994, at a special White house ceremony, clearly symbolizing the
Clinton Administration's desire to take credit for it. Said Vice
President Gore: "After years of competition in space, which
symbolized the rivalry between our nations, we have now found a
common destiny in cooperation and partnership, a cooperation in
space which symbolizes the cooperation we are building here on
Earth."

"There are important real benefits for each country," he later added,
"in terms of bridges of understanding that develop when we work
toward common goals."

And NASA's Goldin went along with pretending the Russian
partnership had been Clinton's idea all along.On April 13, 1994, he
told Congress that: "Let me start by saying that this is a Presidential
decision and Presidential policy, and it is viewed to be in the interest
of the United States Government to do this in the broader sense."

By this time, and considering such rhetoric, outside observers had
developed a good idea about the actual purposes of the Russian space
partnership. The Wall Street Journal noted that "Washington's
decision to conclude an agreement with the Russians to implement a
project to create an orbital station is the basis of an ambitious and
risky strategy aimed at consolidating Russia's orientation toward
reforms after the U.S. and Western pattern by establishing ties with
its military, scientific, and industrial elite." In Space News, Andrew
Lawler reported that aNASA source told him, "We are just a pawn
of the State Department," and that American diplomats were more
concerned with political benefits than technical merits.

Justifying the costs

Not everyone within NASA was as enthusiastic as Goldin about the
practical value of the Russian partnership. On August 27, 1993, the
chief of Mission Operations in Houston, Gene Kranz (the charismatic
hero of the Apollo-13 crisis), sent a memo to Washington describing
significant safety issues "of particular concern" that his team had
identified. "Agreements established without addressing these issues
would be premature," he warned, "and could present problems
during future negotiations, or result in a configuration that is
complex to assemble and costly to operate." The warning was
brushed aside, and within months Kranz was out of a job -- a lesson
not lost on other officials at NASA.

The Russians wanted to be treated as full partners, but they also
insisted on being paid as contractors. It was agreed that the Russians
would host a series of practice space shuttle dockings to their Mir
space station, where a few American astronauts would stay for
months-long expeditions, and that NASA would pay for this service.
These payments were based not on any serious cost-benefit analysis,
but on considerations of foreign policy. Contemporary events suggest
what the rationale was.

In July 1993, Russia became one of five states (including China) in
the Missile Technology Control Regime (MTCR), intended to prevent
the spread of missile technology to Third World nations, and agreed
to stop exporting cryogenic manufacturing technology to India.
Defense, State, even Commerce Department officials, worried that
India might be using hydrogen-fueled rocket engines in building
surface-to-surface military missiles, had lobbied for two years
against Russia's sale of the enabling technology. But the United States
had had no leverage with Russia until the space partnership
emerged.

It was the Russians who told the White House that the Indian deal
would have resulted in them making several hundred million dollars
profit (other observers considered that number highly inflated). And
by mid-1993 the directive was clear: the US must find an alternative
space agreement with Russia that will be worth the same amount to
them.

U.S. diplomats insisted that there was no link between Russia's
cancellation of the deal with India and its acceptance of a U.S. space
deal with an equal dollar value, but they did admit that "things came
together conveniently." But many outside observers assumed that
the linkage was direct. The price tag of $400 million for the Mir visits
alone was otherwise inexplicable. Russian officials valued the Indian
deal at about the same amount.

On top of this $400 million was another $200 million to pay for the
first Russian-built space station module, the "FGB", in return for the
right to call it an "American launch." (Nonetheless, NASA recently
acceded to Russian insistence that this "American launch" be
renamed 'Zarya', after a classic Soviet space vehicle.) Miscellaneous
hardware purchases and extension of the Mir visits added another
$100 million in U.S. payments, bringing the total NASA cash transfer
to Russia to $700 million.

"We knew the administration wanted to send money to Russia,"
retired NASA official (and former astronaut)Bryan O'Connor told me
not long ago "but not just as sending dollars. We wanted to get
something out of it. But at that time, they were going to send the
money anyway." Once the actual figure was set, the next step was to
get enough services from Russia to make the price seem justified.

Ironically, other efforts to justify the cost of the program only made
it more expensive. A prime instance was the excessive number of
Shuttle-Mir dockings prior to beginning the assembly of the space
station. Says O'Connor, who played a leading role in those
negotiations, "Our conclusion was that we could do everything we
needed in four flights." But while traveling from Washington to
Moscow in late 1993, NASA administrator Goldin told his staff to
make it ten flights. "We were completely baffled," recalls O'Connor.
"We had to cross out all the numbers on our charts and replace them
with the new ones. I didn't know where that idea came from."

The Russians, too, were amazed by the change. "They had worked out
the logistics for four flights, and suddenly we told them we wanted
to have people on board for two years," O'Connor recalls. "They asked
us what was happening to all the science missions that these flights
would replace. They asked us why we were trashing our science
program to dock again and again and again with Mir." If six more
shuttle launches were diverted to docking with Mir, their original
science payloads would have to be canceled. "The Russians thought
very highly of the science we were getting from the Spacelab flights,
they had the highest praise for it . They were just drooling to get on
board."

Yet the extra science missions were cancelled in favor of repetitive
dockings (at least seven and "up to ten," in the official
announcement). IfNASA was going to pay the Russians $400 million,
they wanted it to look like they were getting $400 million worth of
dockings, even if they had to cut the shuttle science flight program in
half to do it.

NASA's claim that the Russian partnership would make the
International Space Station cheaper and faster to build was based on
the assumption that the Russians would provide certain modules that
NASA would otherwise have to build and pay for. These included
equipment for propulsion and attitude control, for life support inside
the station,and for a spacecraft capable of evacuating the crew
when the space shuttle wasn't docked. In NASA's estimate, the net
savings in construction and assembly costs came to $2 billion. Almost
all non-NASA specialists rejected these claims. "I have yet to see a
joint international program that saves any money," noted aerospace
industry leader Norman Augustine. By June 1994, the Government
Accounting Office had written: "Most of the savings from Russian
participation comes from an optimistic schedule that may not hold
up. If the schedule slips, any savings will quickly evaporate." As time
would tell, this outside advice was right on target, but at the time
NASA and the White house refused to consider it.

NASA's Goldin responded to the GAO report in a statement issued
June 24: "The fact is every nickle is accounted for in the NASA
budget, and Russian cooperation will not cost the U.S. taxpayer one
penny more -- in fact I believe it will save us billions." Barry Toiv,
then a spokesman for the White House's Office of Management and
Budget, agreed: "We are confident in our estimate" of savings due to
Russian participation," Toiv said in the Houston Chronicle

The books were obviously cooked. One crucial gimmick was not
counting space shuttle missions in the cost of the space station. NASA
officials say this is legitimate since the shuttle flights, which come
from another part of their budget, would have occurred anyway. But
in that case, operational costs would have been charged to another
program, whose cancellation to fly Mir missions was one more
hidden cost of the Russian partnership. Omitting the shuttle costs also
made possible the biggest budget deception of the ISS program:
hiding the expense of changing the station's orbit.

Going Out of Our Way

Original plans called for the Freedom station to be carried up in
pieces by shuttles launching due east from Cape Canaveral, taking
full advantage of the eastward rotation of the Earth. The station's
orbit would consequently range between 28 degrees North and 28
degrees South latitude (i.e., an "orbital inclination" to the equator of
28 degrees).

The Russians, with their far northerly rocket bases, simply could not
reach this orbital path due to esoteric but immutable laws of celestial
mechanics; their missions circled the Earth with a much steeper
north-south range of 52 degrees. So in order to allow the Russians
access to the new space station, NASA shifted its planned orbit
northward.

This caused a number of operational difficulties, since NASA
engineers had based their designs for the station on the low-
inclination orbit. Many parts of the station could easily overheat or
freeze in the new orbit. Even worse, shuttles heading for the station
no longer could fly due east from Florida, but instead had to head off
towards the northeast, losing much of the boost from Earth's
eastward spin. Because of this, the shuttle's payload carrying
capability fell by one third. NASA implemented a number of design
changes to increase the shuttle's payload, but since these would have
been possible no matter which orbit was aimed for, there remained a
one-third penalty for the Russian-compatible flight plan.

It's easy to tally up the cost of doing it the Russians' way. Over the
planned 20-year life of the International Space Station, NASA
expects to fly about 120 shuttle missions to it. About 40 of these will
be needed merely to match the amount of cargo that the first 80
would have been able to carry into the old west-to-east orbit. At an
estimated half a billion dollars per flight, taking the Russians into the
partnership will cost $20 billion. Yet not a penny of this appears in
NASA's official space station budget.

The change in orbital inclination had been a feature of the original
Russian merger proposal letter back in March 1993, but NASA
officials had not drawn attention to it, and Congress was caught by
surprise months later. "The controversial thing was not the docking
program," recalled Nick Fuhrman, then an aide to the House
Subcommittee on Space. "The controversial thing was changing the
orbital inclination of the space station." NASA assured Congress that
the penalties for the change would be entirely offset by developing
more efficient shuttle launch hardware.

NASA justified the new orbit by pointing out that it allowed
observation of more of Earth's surface (even though the agency had
earlier rejected all proposals to do Earth observation research from
its space station). The argument was clearly designed with one target
in mind: Vice President Gore. "That was a cheap and unfair trick by
NASA," recalls Nick Fuhrman, "taking advantage of Gore's well-
known environmental inclinations." Gore uncritically accepted this
rationale for the awkward northern orbit, but as it turns out, NASA
has not funded any significant scientific research for the space
station [to take advantage of the high-inclination orbit], except a
small instrument for watching sunrises and sunsets -- which could
just as easily have been hooked to an unmanned satellite.

Congress also objected to a station design that allocated critical
modules to the Russians, with no backup systems on the U.S. side.
Although it was the main basis for the promised cost savings, this
dependency worried many congressmen -- on both sides of the aisle.

Democratic Senator Barbara Mikulski told Goldin that Russia's role
should be "enhancing" but not "enabling." Rep. James Sensenbrenner,
the Republican chairman of the House Science Committee, developed
"critical path" terminology to argue that successful completion of the
design should not depend on Russian hardware.

In repeated testimony before Congress, NASA agreed not to put
Russia on the critical path, then proceeded to do exactly that. In June
1994, President Clinton assured Congress in writing that the agency
would "maintain in-line autonomous U.S. life support capability
during all stages of Station assembly." NASA did studies of alternate
billion-dollar replacement modules, but when it actually tried them
in 1997, all the highly touted contingency plans turned out to be
useless.For years, NASA had promised it had workable alternative
plans for Space Station assembly and operations, in case the Russians
reneged on their promises. This was a charade. Seeing that the White
House was committed to keeping the Russians aboard at any price,
NASA officials never seriously considered any other possibility.

The bill comes due

As envisioned in early 1994, before the signing of the partnership
agreement, the Russians' contribution would be extensive. They
would build the ISS's first module, the FGB (a Russian abbreviation
for "Functional Cargo Block") under contract to NASA's station
contractor, Boeing. They would finance and build the second module,
called the "Service Module," based on their own embryonic "Mir-2"
module, and that would carry the station's life-support and space-
maneuvering systems. They would deliver a string of Soyuz manned
space capsules to provide emergency-landing capabilities for the
station crew; and they would develop a heavy robot supply ship
called the Progress-M2, twice the size of existing models, for
frequent logistics missions. Follow-on modules would provide more
laboratory, power, and operational capabilities. On paper, it was an
impressive collection of hardware, and it looked like a bargain -- if
the Russian promises were to be believed.

But in late 1995 the Russians confessed to NASA that many of their
initial promises simply could not be fulfilled. They had no money for
the Service Module or any of the follow-on modules, and the
proposed heavy supply ship Progress-M2 turned out to be only a
designer's fantasy. Although NASA publicly continued to express
confidence in their Russian partners, in private NASA knew better,
conducting contingency studies to anticipate Service Module delays
of up to 24 months.

In private briefings for employees at NASA, managers passed on the
news: "The plan is to let the Russians out of most of their promises,"
one manager began, according to notes from a listener. The White
House had directed NASA not to consider an "all U.S." version with
new modules; such a design was "politically unacceptable to the
administration." Further, despite the growing evidence for their
unreliability, the Russians must be kept in the critical path "to
support U.S. diplomatic goals," the NASA official continued.

To preserve the partnership, NASA agreed to shoulder significant
new burdens, including two extra shuttle flights to carry up sections
of a Russian-built module called the Science Power Platform, which
Russia couldn't afford to launch on its own (a billion dollar expense
for the U.S.). NASA would pay the Russians to redesign their Soyuz
space capsule so that taller astronauts could fit in it (only half of the
American astronauts were short enough to use the capsule). Plans for
a joint space suit were cancelled and the old U.S. shuttle suit had to
undergo major (and expensive) modifications.

NASA also agreed to pay Russia for two additional Mir visits, during
which the shuttle would deliver enough supplies to relieve "a
significant logistics shortfall" (in Goldin's words). In exchange for this
expansion of the original contract (and the infusion of much-needed
American cash), the Russians made a series of new promises: They
would keep on schedule for their own modules, especially the FGB
and the Service Module (April 1998 was the goal). They would
develop a new heavy-class robot supply vehicle to support the new
station.

NASA also had to sacrifice some other high-utility plans. It was going
to mount an experimental high-efficiency solar power module on Mir
at the end of its manned operations, so that the unit could be flight
tested in anticipation of using it on the ISS. With the extension of Mir
manned operations, this opportunity for a useful joint experiment
evaporated. But it was no loss, since despite all the costs allegedly
"saved" through the partnership, NASA found that it was running
short of money and could no longer afford to develop the new "solar
dynamic" system. Then the promised new heavy supply ship fell into
a black hole and vanished, while Russia told NASA that it could not
on its own afford to build enough smaller old-style supply ships.
Recently, after more delays in funding their promised contributions
to the International Space Station, Russian officials even claimed they
didn't have enough money to safely dispose of the 120-ton Mir space
complex.

Eventually the Russians also began to acknowledge the out-of-control
corruption within their space industry. In April of 1997, at a briefing
by the economic crimes unit of Moscow's Internal Affairs Main
Administration, specialist Timur Valiulin described a wide-scale
pattern of top-level corruption in the aerospace industry. He singled
out the Lavochkin Bureau, where the Mars-96 probe had been built
(it crashed in November 1996 after tens of millions of dollars of
European investment), and described how the bureau's general
director and one senior associate had been arrested for
embezzlement prior to the probe's crash. He called the case "merely
an individual fact in a series of such outrages." Shortly afterwards,
the Russian government fired Oleg Soskovets, since 1993 the point
man for negotiating the U.S.-Russian space partnership, based on
accusations of massive personal corruption.

Fuhrman, the former House Space Subcommittee aide, recalls
congressmen's frustration upon suddenly discovering that the
Russian Space Agency was bankrupt, despite $100 million in NASA
funds flowing into the RSA's New York bank account every year.

[deleted for space: "We had expected that the Russians would use the
Phase 1 payments to meet Phase 2 performance," he told me
recently. "We believed that this money would go into the aerospace
industry that was building their contribution to Phase 2." That should
have been more than enough to keep the Russian contributions on
schedule. But the Russians had told NASA that they were not to link
Phase 1 (Shuttle-Mir) payments with Phase 2 (Space Station)
performance. "We asked Gore staffers what connection there was,"
Fuhrman says, "and they insisted there was no connection." ]

Science Committee chairman Sensenbrenner himself had tried to find
out where the money was going, but the Clinton Administration sided
with the Russians: "The White House told us not to interfere in the
internal workings of foreign governments," Fuhrman said. The
administration thus echoed the comments made by the NASA
spokeswoman when confronted with the evidence of massive space
industry corruption: "What Russia does with their own money is none
of our business."

The Commercial Angle

The Russians obtained money not only from the U.S. government, but
from U.S. businesses as well. Under protective cover of the
government-to-government agreements in early 1993, a number of
commercial space cooperative programs were also launched. Several
different American aerospace corporations signed agreements with
Russian space factories to market Russian rockets to launch Western
satellites.Other deals saw the Russians selling their rocket engine
designs to be incorporated in upgraded American launch vehicles.

The same "Gore-Chernomyrdin Commission" that had been
inaugurated at the April 1993 Vancouver summit to oversee
government space cooperation was also in charge of commercial
ventures. Although at first the US insisted on a fairly restrictive
quota for sales of Russian rockets, American space companies soon
lost their fear of Russian competition and jumped on the bandwagon.
This was partly due to the US demand that the Russians not undercut
"world market prices" for launch services by more than 15 percent.
Given the far lower operational costs within Russia (the result of low
salaries and mass production), this meant a torrent of extra Western
overpayments would begin pouring into the Russian space industry
and their Western industrial partners.

By the time of the first Russian commercial satellite launching was
made in April of 1996, the cash flow from abroad already accounted
for about 40 percent of the actual funds received by the Russian
Space Agency, up from 20 percent the year before. And by 1997, the
Russians were annually raking in more than $600 million (some
sources say $800 million) in Western commercial contracts,
accounting for two thirds of the entire cash flow into the space
industry. Russian officials realistically expect that flow to reach a
billion dollars per year within two years.

This influx has largely restored many key components of the Russian
space infrastructure, which had been deteriorating in the immediate
post-Soviet years. Visitors to Russia's "Baykonur Cosmodrome" in
newly-independent Kazakstan report on how tens of millions of
dollars of commercial launch funds have totally rebuilt the payload
processing and fueling facilities, as well as the equipment at launch
pads and control bunkers. Totally new state-of-the-art
communications links have been installed, and an entire airport has
been upgraded to all-weather 24-hour capability, to support transfer
of personnel and payloads.

While certainly convenient for Western customers, these upgrades
have proven crucial to Russian military space programs which use
the very same facilities. Military units paid as subcontractors for
commercial launch support are thus also available to perform
parallel military duties without having to appear on Russia's military
budget. Advanced Russian reconnaissance, early-warning, and
military communications satellites can be launched reliably from the
same launching pads refurbished by U.S. money. And when rocket
problems occur -- such as the failure of a 'Zenit' booster with a spy
satellite in May of 1997, which threatened some commercial flights
planned for later this year -- American rocket engineers have taken
part in the accident investigations. According to a recent 'Aviation
Week' article, they have provided crucial insights into solving and
fixing some of these technical problems to clear the way for resumed
commercial AND military Russian space launchings.

Keeping the Russians Out of Trouble?

By saving the Russian space industry from collapse, Western money
-- both from NASA and from the private sector --was supposed to
keep otherwise-unemployed Russian rocket experts from assisting
weapons development programs in rogue states around the world.

An example of what's really happening is the "Energiya' Rocket and
Space Corporation, which builds and operates Russia's manned space
vehicles and thus will play a crucial role in the International Space
Station.The corporation privatized in 1994, with the government
owning 51 percent of the stock (now down to 38 percent). Their
1997 commercial earnings were placed at $350 million, about half of
the total foreign sales. That broke down to:

* $160 million for foreign guests aboard Mir, mainly NASA with
some French payments;
* $100 million for sales of Space Station hardware, some paid by
NASA and some still owed by the Russian Space Agency;
* $50 million from investment in 'Sea Launch', a plan with Boeing to
launch a Ukrainian-Russian rocket from a ship in the Pacific Ocean;
* $20 million in sales of a commercial third stage used on "Proton"
rockets for Western satellites;
* $20 million in sales of the Yamal communications satellite to a
Russian bank.

Yet during the last ten years, Energiya has laid off more than 40,000
space workers, and it pays the remaining 22,000 engineers and
technicians less than generously.

One senior manager at the company recently told me how he has to
pay the 200 workers in his section. "They give me a pile of cash for
the payroll", he began. "I count it and sign for it, and it's never
enough." The money is intended for back pay, often months in
arrears, and the pay rate -- perhaps $200 per month -- is half of
what taxi drivers earn. "I then must call in each of my employees
one at a time," the official continues, "and we negotiate over how
much money they really need to get by in the next two weeks."
Sometimes he has money left over at the end, sometimes he runs out
before everyone is paid. Little wonder, then, that despite the
Western money there still are thousands of Russian former rocket
scientists looking for more reliable sources of income.On May 25,
'Newsweek' reported on the findings of Yevgeniya Albats, a highly
respected Russian journalist and an expert on where Soviet-era KGB
and military officials have wound up [cut: (she is also married to
Russia's top space journalist, Yaroslav Golovanov)]. She had talked to
several former rocket workers who had secretly been to Iran to
work on their missile program, and one told her of receiving
envelopes of badly-needed cash prior to making the trip.

Who Ultimately Loses

So what has "following the money" revealed so far?
First, the Russian proposal to combine the U.S. and Russian space
station projects was accepted enthusiastically by American space
officials anxious to keep their jobs in the new Clinton Administration
and shrewd enough to know that it would appeal to the ideological
biases of Clinton and (especially) Gore.

Second, the alleged practical justifications for the partnership -- that
it would save money and time -- were ludicrous from the start. Now
the GAO estimates that space station delays are costing US taxpayers
at least $100 million per month.

Third, the strategic justification that the partnership would keep the
Russian space industry intact and prevent an army of unemployed
Russian scientists from going to work building missiles for rogue
states has proved illusory as well. Even by official Russian figures,
hundreds of thousands of Russian space workers have been laid off.

Fourth, the partnership has preserved the Russian space industry
from total collapse and has enhanced both Russian civil and military
space capabilities. What has recently been discovered about the
implications of US space cooperation with China may only be a
sideshow to Russia.

Finally, the tidal wave of American dollars into the Russian space
industry -- more than $2 billion to date -- has had the same
corrupting effect that Western money has had elsewhere in the post-
Soviet Russian economy. (Another case involves $100's of millions
paid by Germany to house former occupying troops withdrawn to
Russia. The money's misappropriation has led to several trials.) As
most of it disappears (presumably diverted into private bank
accounts) some current Russian apparatchiks and officials become
"bought friends" of the United States, but many thousands more
come to feel insulted and resentful.

The Russians have a pungent proverb that describes this
arrangement. It's like pissing in your boot to warm your toes on a
cold day. After the first brief flush of warmth and comfort, you
realize you're worse off than before. And it stinks.

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