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Finance and Budget

The Soviet aerospace industry was, by far, the largest of its kind in all of Europe and Asia. In the three years (1992-1994) following the demise of the USSR, the size and production capability of this enormous sector of the economy suffered significant reductions as government orders were sharply curtailed. From the largest manufacturers of satellites and launch vehicles to the smallest subsystem component vendor, the continuing breakdown in the entire military-industrial complex led to disruptions and even cancellations of planned activities. The severity of the situation caused the Russian Supreme Soviet to issue a decree on 27 April 1993 with the intent of stabilizing the increasing economic anarchy and the flight of professionals to other industries.

Conversion from government to commercial projects has been highly encouraged for almost all the major Russian space industries. A 1993 goal was to consolidate and streamline the Russian space industry, creating four major space centers and 30-40 supporting enterprises from the existing 150 industries. A first step in this process came in June, 1993, when the Salyut Design Bureau and the Khrunichev Machine Building Plant were merged into the Khrunichev State Space Scientific Production Center. In February, 1994, Presidential Decree 237 enabled the government-owned Energiya NPO to begin privatization, although 51% of the ordinary shares were to be held by the government for at least three years. Another government decree two months later reinforced the Presidential decree and changed the name of the organization to the S.P. Korolev Energiya Rocket Space Corporation or RKK Energiya, for short. Also in 1994, several major space industries agreed to establish the Russian Aerospace Corporation and an Aerospace Bank (References 91-99).

The new Russian space law of 1993 specifically addressed the financing of space programs and foreign investments (Article 12) as well as establishing a space fund aimed primarily at supporting research and development activities (Article 13). However, both the 1993 and 1994 space budgets were approved only after torturous and protracted processes, during which skyrocketing inflation was diminishing the true value. Figure 1.16 indicates the relative expenditures of the 1993 and the proposed 1994 space budgets, while Figure 1.17 denotes the programmatic breakdown for the 1993 budget of 1,550 billion Rubles (1994 level) finally requested for the 1994 budget, 890 billion Rubles were appropriated and only 450 billion Rubles were actually funded. Scant information is available on the annual VKS budget, but requests for 1995 revealed planned expenditures essentially equal to that of the RKA. Both the RKA and the VKS provide funding for the Baikonur Cosmodrome in Kazakhstan. In June, 1994, the CIS Interstate Space Council adopted a program for 1994 calling for 1,200 billion Rubles, of which Moscow was expected to pay the lion's share (References 70, 100-105).

70. Space Policy & Industry in CIS Countries, Vol. 1, Space Industries and Markets in Russia and Other Countries of the Former Soviet Union, Euroconsult, October 1993.

91. Interfax News Agency, 8 June 1993.

92. S. Golotyuk, Moscow News, 2 July 1993, p. 9.

93. I. Matreyeva, Kommersant Deyli, 31 May 1994, p. 9.

94. C. Covault, "95,000 Russian Layoffs, Launch Breakdown Feared", Aviation Week and Space Technology, 15 November 1993, p. 27.

95. J.M. Lenorovitz, "Energiya Wins Approval For Privatization", Aviation Week and Space Technology, 27 June 1994, pp. 22-23.

96. "RKK Energia Issues Stock Due to Privatization Orders", Space News, 17-23 October 1994, p. 11.

97. U.S.-Russian Cooperation in Space, Office of Technology Assessment, US Congress, April 1995.

98. The Russian Space Directory 1994. European Space Report, 1993.

99. Directory of Russian Space Industry, 1994-1995, Sevig Press, 1994.

100. B. Ostroumov, Trud, 10 December 1994, p. 2.

101. P. Yevseyev, Finansovyye Izvestlya, 18-24 August 1994, p. 4.

102. ITAR-TASS News Agency, 12 May 1994.

103. V. Khalin, Delovoy Mir, 30 April 1994, p. 5.

104. D. Payson, Nezavisimaya Gazeta, 14 January 1994, pp.1-2.

105. A. Lawler, "Financial Woes May Cripple Russian Spaces", Space News, 1 -7 August 1994, pp. 1, 20.

Sources and Resources

• Adapted from: Europe and Asia in Space 1993-1994, Nicholas Johnson and David Rodvold [Kaman Sciences / Air Force Phillips Laboratory]

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