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Can Russia Afford To Keep Funding Its Space Program?

  • Russia’s space program is facing mounting economic hurdles.
  • Sanctions against Russia are weighing on its space program and economy as a whole. 
  • Putin’s invasion of Ukraine has also highlighted the failures of the Kremlin’s military space assets.
Russia Space Program

By 2023, Russia’s budgetary planning for civilian and military space programs was presumed to have changed compared with previous years due to the breakdown in space cooperation with the United States and Europe (with the exception of the International Space Station); the failures of Russia’s military space assets during Moscow’s invasion of Ukraine; and the economic troubles of the space corporation Roscosmos, suffering from sanctions and low economic efficiency. For instance, the corporation received 31 billion rubles ($421 million) with more than 50 billion rubles ($730 million) in net losses for 2021–2022, compared to a 1.8 billion rubles ($28 million) in net losses and 500 million rubles ($7 million) in net profits for 2019 and 2020, respectively. Moreover, the cumulative net losses of the state-owned corporation since its establishment in 2015 as a successor to the Federal Space Agency surpassed 90 billion rubles ($1.3 billion), comparable to Russia’s annual expenditure on civil space exploration (Roscosmos.ru, 2021; Vedomosti, December 21, 2022).

It has become evident that the past few years have been a complete disaster for Roscosmos and that the war has made the situation even worse. Despite this, however, little changes are evident in the Russian space budget. The total annual expenditures on space programs during the previous five years were the following: 212.4 billion rubles ($3.4 billion) in 2018; 251.7 billion rubles ($3.9 billion) in 2019; 258.2 billion rubles ($3.6 billion) in 2020; 250.6 billion rubles ($3.4 billion) in 2021; and 264.2 billion rubles ($3.9 billion) in 2022. For 2023, 2024 and 2025, the current plan presumes 257.5 billion rubles ($3.8 billion, according to the average exchange rate of 2022), 254.5 billion rubles ($3.7 billion) and 253.8 billion rubles ($3.7 billion), respectively (Sozd.duma.gov.ru, September 30, 2020; Sozd.duma.gov.ru, September 30, 2021; Sozd.duma.gov.ru, September 28, 2022). However, the plan for space spending may be revised several times during 2023, and its final annual amount will be clear by the end of this year.

Russia’s military space program consists of the Global Navigation Satellite System (GLONASS), other military satellite networks and various projects including communications, optical and radar observation and electronic intelligence. The maintenance and development of the Plesetsk military launch site and other military ground space infrastructure are included as well. The Russian military’s current share of total space spending has become much harder to determine than in the previous decade. But the approximate and rather conservative number for 2023 is no less than 110– 120 billion rubles ($1.6–$1.8 billion)—this assessment being based on official documents and on the differences between openly declared space spending and the total space budget in the previous decade (Vedomosti, May 13, 2014; Sozd.duma.gov.ru, September 28, 2022; Fcp.economy.gov.ru, 2023). Annually, only minor fluctuations were observed in spending, as compared to the previous and current levels of expenditures.

At the same time, this estimation does not include operational spending on military units and military personnel involved in the space program, which are financed by the Russian Ministry of Defense. This prospective figure also does not count dual-use programs and projects in the development of satellites and launch vehicles, which are financed within the civil space program. Moreover, as Russia continues to cut itself off from the global space market and its domestic space market is quite small, the Ministry of Defense may become the main driver even for the civilian space program. This may go so far as to even include manned flights if Russia is able to deploy its own orbital station sometime after 2030 (Roscosmos.ru, July 26, 2022).

Despite Russia’s push toward autonomy in space travel, some level-headed top managers are still present within Roscosmos who realize that Russia must maintain its space partnership with the United States and Europe, instead of buying into illusory thinking about a national orbital station or potential partnership with the People’s Republic of China (Interfax-AVN, December 26, 2022; RIA Novosti, February 10).

Another key point to consider here is the status of GLONASS. The current budget plan still does not presume a significant increase in spending for the program. For 2023, 2024 and 2025, the program is set to receive 24.7 billion rubles ($361 million), 24.5 billion rubles ($358 million) and 28.2 billion rubles ($412 million), respectively, compared with 24.9 billion rubles ($338 million) and 27 billion rubles ($394 million), respectively, in 2021 and 2022 (Sozd.duma.gov.ru, September 28, 2022). These numbers are much lower than in 2009–2010 and 2015–2018, when Russia actively modernized and maintained its satellite navigation system (Fcp.economy.gov.ru, 2023). However, the planned investment in the GLONASS program for the period running from 2021 to 2030 is set at 484 billion rubles ($6.6 billion), as compared with 270 billion rubles ($5 billion) in 2012–2020 (RBC, December 21, 2020).

If this data is true, that means Russia will spend only a quarter of what it once spent during the first five years of the ten-year program. Moreover, as of today, 14 of 25 GLONASS satellites have exceeded their expected lifespans, and it is becoming more difficult for Russia to replace the old GLONASS-M generation of satellites with the next-generation GLONASS-K (Glonass-iac.ru, February 9, 2023). Russia produces 15 to 17 satellites of all types annually, and increasing satellite production rate is considered possible either through additional budget spending or through corporate bonds worth 50 billion rubles ($675 million) that could only be purchased by state-owned entities. As a result, it is hard to say if Russia will be capable of producing any more than one or two navigation satellites per year (RIA Novosti, February 10). Consequently, the absence of growth in spending in this sector most likely means that Moscow still does not have a clear plan for GLONASS. The example of the inertia plaguing GLONASS may be considered an indicator of the actual situation within the Russia’s entire military space program.

By the Jamestown Foundation

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Leave a comment
  • Mamdouh Salameh on February 13 2023 said:
    It can and it will because it is of vital strategic importance to its existence, defence, future commercial benefits and above all maintaining its superiority in a field it has been leading the world.

    One way Russia will be able to keep funding its space programme is to pay its companies that are involved in space exploration in ruble while it receives hard currency payments for its energy products, uranium, wheat and food exports, precious metals, weapons and many other items and commodities it exports.

    This financial wizardry has enabled Russia’s oil giant Rosneft to achieve the lowest lifting cost per a barrel of oil in the world at $2.8 compared with $3.8-$4.0 for Saudi Aramco. The trick is that Rosneft and other Russian oil and gas companies pay for exploration, production and maintenance in ruble while paid in hard currency for their exports.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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