Russia Backs Away from International Space Launch Market

Russia Once Called SpaceX “A Nice Trick”


But now Russia is running up the white flag and surrendering to SpaceX — and you don’t surrender to “a nice trick.” You surrender to a force that has defeated you.

As recently as 2013, Russia controlled about half of the global commercial launch industry with its fleet of rockets, including the Proton boosters. But technical problems with the Proton, as well as competition from SpaceX and other players, has substantially eroded the Russian share. This year, it may only have about 10 percent of the commercial satellite launch market, compared to as much as 50 percent for SpaceX.

… On Tuesday… Russia’s chief spaceflight official, Deputy Prime Minister Dmitry Rogozin, made a remarkable comment about that country’s competition with SpaceX.

“The share of launch vehicles is as small as 4 percent of the overall market of space services,” Rogozin said in an interview with a Russian television station. “The 4 percent stake isn’t worth the effort to try to elbow Musk and China aside. Payloads manufacturing is where good money can be made.”

According to an independent analysis, the global launch market is worth about $5.5 billion annually. Losing its half-share of this market, therefore, has probably cost the Russians about $2 billion, which is a significant fraction of its non-military aerospace budget. __ https://arstechnica.com/science/2018/04/russia-appears-to-have-surrendered-to-spacex-in-the-global-launch-market/

But Russia isn’t doing so well in the “payloads manufacturing” business either. In fact, across the span of high tech manufacturing, Russia is being severely challenged by international competition. If not for the captive market of military and nuclear manufacturing, Russia’s high tech manufacturing sector would be in serious trouble.

Space Surrender Reminiscent of Great Fracking Bluff

Until very recently, the Russian view of the North American Oil & Gas Renaissance was to “deny!deny!deny!”. According to Putin and the Kremlin flunkies and trolls, North American shale oil & gas was a joke, destined to collapse “any day now.” And they played the same song for almost a decade with minimal, if any, revision. Years after oil & gas prices collapsed in 2014, Russia was still claiming that North American oil & gas production was not having any appreciable impact on the Russian economy.

Russia Oil Curse Economy
Wikipedia: Russia Export Treemap

The graphic above gives cause to question such claims. In fact, anything that affects international oil & gas prices will strongly influence the Russian economy.

Kremlin Mocks What She Fears

When the Kremlin is afraid of something, its first response is to mock it and deny its existence and/or its importance. This is a standard operating procedure seen during the Soviet years and during the Putin years. But there may come a day when the Kremlin needs some credibility, and finds that it has squandered it all.

SpaceX has been changing the equation of space launch for over 6 years now, which should have given Russia plenty of time to adapt to the challenge. But for many reasons, Russian industry is old and tired, cranky and stiff. Rich in grandiose vapourware announcements of “startling innovations”, mediocre in the prototype, but very very weak in actual mass production. It is becoming a Russian cliche.

Russian Defence Production Follies

Russian admirals have been aware of the fact that they won’t have much of a navy by the 2020s unless these older ships are replaced. The problem is that the older ships cannot be refurbished or upgraded because that would cost more than buying new ones, These older ships are not just falling apart, but because there was not any money available right after the Soviet Union dissolved in 1991, there were few repairs and no upgrades during the 1990s.

… Most of Russia’s warship building capability (experience and kills) disappeared during 1991… Since the late 1990s, most of the Russian construction effort went into finishing a few subs and building some surface ships for export. Even these subs had serious construction problems. Mainly it was quality control and the navy refused to accept ships, especially subs that could not pass sea trials. Apparently, the ship yards were ordered to put all their efforts into the subs and eventually some of these limped into service.

… Now the Russian navy is in desperate shape. The latest example of how this is working out can be seen in the continuing delays getting the new class of 4,500 ton frigates (the Gorshkov class or “Project 22350”) into service. Construction on these began in 2006 but by 2010 only one had been launched and it was still only half complete. The navy wanted twenty Gorshkovs to replace the Cold War era Sovremenny class destroyers and Burevestnik class frigates. The government has only promised money for twelve Gorshkov sand has since raised that to fifteen. But so far the first Gorshkov has not passed sea trials. This ship was commissioned in 2017 but could not enter service until it passed the sea trials. So far the Gorshkov has not done so. The latest delay is the failure of the anti-aircraft missile system to function properly. There are also problems with the engines. The builder says all will be ready by July. A second Gorshkov was launched in 2014 and is to be ready for sea trials in 2018. A third Gorshkov is under construction but the launch date is unknown because another side effect of the Ukraine invasion was Ukraine refusing to supply any more naval turbines. Russia said it was having a Russian firm begin construction but that is behind schedule and now it looks like no more Gorshkovs (aside from the first two) will be available for completion until the early 2020s. __ StrategyPage

Whether you are talking about ships, planes, helicopters, tanks, or missile forces, the story is the same. Loud claims about the capabilities of weapons systems are made, while the darker realities behind the propaganda screens tell a different story. And given the massive levels of corruption across Russian industry, even a doubling of current oil prices would not allow Russia to make up the skills and innovation deficit across the industrial spectrum. Russia no longer has the necessary talent to do what would have to be done to back up its propaganda releases.

And that is very bad, because the Kremlin is getting Russia involved in a large number of wars and quasi-wars:

… the Kremlin has gotten involved in “too many fronts,” has “too few resources,” and “absolutely no friends,” a situation that has prompted Putin to talk about the use of nuclear “wonder weapons” not as a last resort “but as the only one” ___ (rosbalt.ru/blogs/2018/04/10/1695422.html) via WOE2.

The civilian homefront is losing its strength and cohesiveness in a weakening economy, encouraging ever increasing brain drain and capital flight abroad. Tipping point mechanisms eventually take hold, making decline unstoppable.

Russians’ Incomes Fall for Fourth Year in a Row, as Prices and Bankruptcies Rise…. Industrial production set a record for decline (ru-mir.net/2018/01/24/rossiyskaya-promyishlennost-postavila-rekord-po-samounichtozheniyu/), Russia’s foreign debt rose to 529 billion US dollars (.interfax.ru/business/596215), the rate of capital flight doubled from last year to this (rusnation.org/sfk/1801/1801-27.shtml), corporate defaults set a record as well (ng.ru/economics/2018-01-23/4_7156_defolts.html), and domestic debt rose 18 percent in 2017 (graniru.org/Economy/m.267082.html). Some analysts suggested that these numbers show that the policy of the Russian Central Bank is hurting the country more than any Western sanctions could (dailystorm.ru/politika-centralnogo-banka-rossii-vrednee-chem-novye-sankcii-ssha). __ http://windowoneurasia2.blogspot.cl/2018/04/a-bakers-double-dozen-of-neglected.html

But that is not true, since almost any other approach taken by the RCB would likely have led to an even faster decline.

Russia is Losing its Talent and Its Heart

It is becoming almost impossible for intelligent Russians to believe in the idea of Russia any longer — unless they are paid very well to do so. Less intelligent Kremlin trolls are a dime a dozen on internet comment sites and forums across the net, but they are not creative or interesting, so why bother reading them?

Most Russians with talent and skills wants to leave. Who can blame them? Even the best Kremlin trolls tend to work from outside of Russia, putting the lie to many of their own claims.

Drugs and alcohol provide temporary respite from reality, but the world always wins. Putin, of course, can always invade another country — if he can find the willing young men to do so.

Hope for the Best. Prepare for the Worst

More:

Brain Drain on the Rise

Half of elite students want to move abroad

Russia cannot afford to buy its new weapons

More on Russia’s shipbuilding fiasco

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This entry was posted in Brain Drain, Russian Decline, Space Future and tagged . Bookmark the permalink.

5 Responses to Russia Backs Away from International Space Launch Market

  1. Rudolf Huber says:

    There are countless other examples where Russia prefers to put the head in the sand rather than facing reality. Let’s take their gas export contracts to Europe for example. Since the EU has reformed their gas markets, trading hubs have sprung up in time. The mere existence of a trading hub means that the subterfuge (which oil-linked prices really are) is no longer necessary as there is a market for gas now. The market dictates the prices – just as with strawberry ice cream. No need for complicated formulas anymore. Still, Russia holds out when all others have made the switch years ago.

  2. Daniel Gonzalez says:

    “Most Russians with talent and skills wants to leave.” Really, then Why are actual numbers of
    people immigrating from Russia into Canada much lower now than 20 years ago?
    1998-4304 http://publications.gc.ca/collections/collection_2010/cic/Ci1-8-2003-eng.pdf
    2017-2295 http://www.cic.gc.ca/opendata-donneesouvertes/data/IRCC_M_PRadmiss_0002_E.xls

    • alfin2101 says:

      Your links are not adequate to support your claims, and your claims are insignificant (documented emigration to Canada?).

      https://themoscowtimes.com/articles/russia-must-deal-with-catastophic-brain-drain-55647

      No one can count how many people left Russia for studies or on a work contract and simply never returned. For example, the SSS states that in 2014 4,780 Russians moved to Germany, although Germany records almost five times that number of Russian immigrants. For the U.S., the corresponding numbers are 1,937 and 9,079. But the greatest discrepancy concerns Spain, where the SSS says just 437 Russians emigrated in 2014, but Madrid reports the arrival of 8,286. Researchers say that, even by the most conservative estimates, State Statistics Service numbers bear tripling or quadrupling to reflect reality.

      Most of the people who leave the country lived in border areas or the more prosperous regions. “Those people have potential to develop that they cannot realize here,” said Grebenyuk. Most of those who emigrate to the West are scholars, college students, and business people. The number of independently wealthy Russian émigrés is gradually increasing. They are typically former government officials, families of politicians, and members of the financial and bureaucratic elite.

      https://themoscowtimes.com/news/half-russian-phd-students-want-move-abroad-61050

      https://themoscowtimes.com/articles/russia-suitcase-migration-putin-597

      • Daniel Gonzalez says:

        “Your links are not adequate to support your claims” Why not? They are official numbers by the government of Canada showing much lower immigration from Russia.
        “and your claims are insignificant” I was using Canada as an example of lower immigration from Russia compared to the late 90s, but it´s the same thing for any other country. Using US immigration statistics for approved green cards-permanent residency applications it´s the same pattern:
        Green cards approved for Russian citizens in 1996: 19,668
        https://www.dhs.gov/sites/default/files/publications/INS_AnnualReport_LegalImmigration_1998_1.pdf
        Green cards approved for Russian citizens in 2016: 9,297
        https://www.dhs.gov/sites/default/files/publications/YRBK%202016%20LPR%20Excel%20Final_0.zip
        The flow of new immigrants from Russia to the US is about half what it was in the 90s,just as in Canada. I’m using official government immigration sources, the Moscow Times is essentially an Anti-Putin propaganda outlet so I wouldn´t take anything they write seriously.

        • alfin2101 says:

          Interesting. I had forgotten about the massive flood of Russians into the US between 1900 and 1920 (about 2.6 million) and the lesser flood in the 1990s (almost 450,000). Those were recognised as catastrophic times in Russia, as opposed to the merely “hard times” being experienced in the latter days of Putin. But Russia has tended to the catastrophe, as has China. The tragic aspect of emigration in Russia at this time pertains more to the quality of its losses than quantity — at least in comparison to the outpourings from previous periods of collapse. This time around, an underpopulated Russia can ill afford any losses, particularly the highly skilled.

          All the young girls trafficked around the globe for purposes of exploitation tend not to be counted at all.

          Russia does not document its losses very well, for example to nations such as Germany, Spain, and the US. https://themoscowtimes.com/articles/russia-must-deal-with-catastophic-brain-drain-55647 The Moscow Times is as good a source of Russian propaganda as any pro-Putin site. 😉

          No one can count how many people left Russia for studies or on a work contract and simply never returned. For example, the SSS states that in 2014 4,780 Russians moved to Germany, although Germany records almost five times that number of Russian immigrants. For the U.S., the corresponding numbers are 1,937 and 9,079. But the greatest discrepancy concerns Spain, where the SSS says just 437 Russians emigrated in 2014, but Madrid reports the arrival of 8,286. Researchers say that, even by the most conservative estimates, State Statistics Service numbers bear tripling or quadrupling to reflect reality.

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