Does anyone benefits from the monopolization of Ukraine’s space industry?
Ukraine’s rocket industry is widely recognized as one with significant scientific potential. But unsuccessful Ukrainian partnerships in some large-scale international projects have considerably affected the credibility of its designers, who were at the forefront of global innovation in the space launch market not long ago.
Yet blame for the failure of the launch of Ukraine’s rocket industry cannot be placed with its rocket designers; given the realities in Ukraine, the two most obvious reasons are continued corruption, along with inflexible regulatory management policy in this formerly “flagship” economic sector.
On the one hand, the continuing scandals at Yuzhmash and YSDO (Yuzhnoye State Design Office), the two largest enterprises in the field in Ukraine, do not enhance investor appetites to fund space industry development. On the other hand, potential investments in Ukraine’s rocket science are unrealistic even for a dreamer such as SpaceX founder Elon Musk, due to the total state monopolization of the field.
There is still not enough debate over whether or not to open up the “Iron Curtain” for investors and allow fair competition in Ukraine’s space industry. Those who are against “breathing” new financial life into the field are motivated by protecting their own interests, while those who try to support innovations feel as if they are crashing into a wall of bureaucracy.
In the meantime, the Ukraine’s budget suffered $800 million in lost revenues caused by dishonest management at YSDO with regard to the non-completed Cyclone-4M project. In addition to huge financial losses; Ukraine was subject to financial penalties of millions of dollars for breaking the contract, while the cost of the damage to its reputation in the global market is incalculable.
Aleksander Degtyarev, YSDO’s head and general director, is fully to blame for the failure of the project. Yet despite being under investigation, Degtyarev continues to lead the enterprise; moreover, by under a government decision his salary has was recently raised to a quarter of a million hryvnias.
It is hardly realistic that such a situation, with broken deadlines and unmet commitments to international partners, would have arisen within a private company, as this would threaten the reputation of a private enterprise’ status and bring into question its very existence. Yet the state, the key YSDO investor of the “Cyclone-4” project (nearly Hr 4 billion in investment in the uncompleted pilot project has been swallowed in a corrupt “black hole”), has not taken any measures to fix the situation.
Understandably, Musk, the U.S. investor, and other space innovators pay attention to Ukraine’s rocket science. To Musk, the Ukrainian-built “Zenith” is the best launch vehicle after his SpaceX Falcon launchers. However, despite Ukraine’s high ranking in rocket science research, its credibility in the eyes of the international community has been severely dented, mostly because of the numerous corruption scandals in the field. One other striking example of state bungling is the disrupted project related to the launch of the Lybid, the first Ukrainian telecommunication satellite. In 2017 Canada, Yuzhmash’s key financial partner, chose to withdraw from the project due to the non-transparent spending of a credit.
For Pavel Degtiarenko, the head of the State Space Agency of Ukraine, the first step in breaking this run of catastrophic failures and the slow-motion crash of one of Ukraine’s key economic sectors should be to take a fundamentally new approach to rocket science management and industry regulation. The current laws not only prohibit the participation of private companies in rocket research, testing and launching; they effectively make it completely impossible for rocket-making plants to be involved in foreign joint ventures. Thus, at the legislative level, there is no way either to foster fair competition, develop quality and bring in further orders, or to encourage investment in rocket science development. Ultimately, the problem of restoring Ukraine’s image as a country capable of conquering space depends on lawmakers and bureaucrats, and not on the talents of Ukrainian rocket scientists.
Kate Korchinskaya
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