Markos Kounalakis: Sanctions may backfire in Russian rocket sales to U.S. space program

08/03/2014 12:00 AM

08/02/2014 8:50 PM

Sophisticated Russian rocket technology took down Malaysia Airlines Flight 17 over Ukraine. It now has the potential to take down America’s Air Force and NASA rocket programs.

Not by attacking America, but by withholding rocket sales. Russia has a near monopoly on the advanced rocket engine technologies the United States relies on for its most important and sensitive missions. Lacking an immediate domestic alternative, this could severely damage American commercial and national security interests.

Whether launching GPS, weather, telecommunications or spy satellites, the Russian RD-180 is the largest, most efficient – in fact, the only – rocket engine used in the mission-critical Atlas V, a space vehicle run by United Launch Alliance, or ULA, a highly profitable Lockheed-Martin and Boeing joint venture. ULA is America’s single source of the rocket that Russians now say they will stop selling the United States.

Following Russia’s spring Crimean annexation, President Barack Obama exercised executive sanctions against certain individuals, including Dmitry Rogozin, the deputy prime minister in charge of Russia’s defense and rocket industry. Under the terms of the sanctions, the RD-180 was welcome to come to the United States, but not the man in charge of it.

Rogozin, a sometimes crass and canny hypernationalist, is so secure in his industry’s dominance of the post-Cold War rocket market that he proposed ending RD-180 sales to the U.S. and threatened to stop cooperating on the International Space Station. Adding insult to this threat, he tweeted, “I suggest the US delivers its astronauts to the ISS with a trampoline.”

New Western sanctions on Russian sectors and individuals are intended to convince Russian President Vladimir Putin that his aggression in Ukraine will have severe economic and political costs. But costs cut both ways, if unevenly. My Hoover Institution colleague, former U.S. Ambassador to Russia Mike McFaul, emphasizes that costs are not symmetric – Putin’s Russia will ultimately pay a bigger price. However, sanctions will mean the French lose defense contracts, Brits will drop financial deals and Germans may be forced to cut exports. The United States will also pay a price.

In fact, the U.S. Defense Department has already estimated that if the Russians make good on their threat to withhold the RD-180, it could scuttle as many as 31 missions and have up to a $5 billion negative impact.

While Germany depends on Russian gas and America depends on Russian rockets, Putin and his cabal rely on the open international system of trade and finance to stay in power. To counter these varied vulnerabilities, countries try to diversify their financial sources, supply chains and manufacturing bases. In fact, in the current crisis, Russia is creating a domestic plan to make up for the materiel it once procured from Ukraine.

The Interfax news agency quoted Putin as saying Russia will focus “on speeding up import-substitution efforts in the national defense industry.” Rogozin reinforced his country’s desire for self-reliance by suggesting that if France withholds already ordered Mistral-class warships, Russia can and will build its own.

America, too, needs to focus on domestic import substitution – for rocket engines, at least. There are already significant players potentially able to step into any breach. One industry leader is Rancho Cordova-headquartered Aerojet Rocketdyne, the company that developed engines that helped get men to the moon and today thrust satellites on Delta II rockets. Aerojet’s engines also power the national security payloads that, in orbit, do things like track from space the launch and detonation of the Russian BUK anti-aircraft missile that shot down Flight 17.

While there are a number of American rocket manufacturers that could step up and speed up their production and innovate, one relatively new entrant is aiming to disrupt the field entirely: the startup SpaceX, founded by Elon Musk, the same man who helped bring us PayPal and Tesla Motors. SpaceX is forcing the disruption with a lawsuit to open the bidding for some of United Launch Alliance’s recent $11 billion sole-source, non-competitive Air Force rocket contract. If successful, Musk believes he can drop space transportation costs significantly and deploy reusable launch vehicles. He would also dump America’s reliance on Russian rocket engines.

Regardless of how the SpaceX lawsuit fares, this should be a time to review the whole convoluted, often bloated and inefficient insiders’ game of U.S. defense procurement. In fact, the White House, in a recent Statement of Administration Policy, said it wants to effect Russian rocket replacement via “multiple awards that will drive innovation, stimulate the industrial base and reduce costs through competition.”

If SpaceX gets its way and gets a bit of the multibillion-dollar Pentagon satellite launch market, then Musk may just also achieve his bigger 21st-century dream of starting to colonize Mars by 2026. It would happen, in part, because Putin frittered away the 20th-century “peace dividend” with his 19th-century dream of recolonizing Crimea.

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