Frolov Igor, Ganichev Nikolay Institute of Economic Forecasting, Russian Academy of Sciences Economy & Business 14th International Conference 1–5 September 2015 Elenite Holiday Village, Bulgaria www.sciencebg.net

1. CONTRADICTIONS IN THE
RUSSIAN SPACE PROGRAM:
CHANGING PRIORITIES
DURING THE ECONOMIC CRISIS
Frolov Igor, Ganichev Nikolay
Institute of economic forecasting of the Russian
academy of sciences
Elenite, 2015 1
ECONOMY & BUSINESS 14th International Conference 1–5 September 2015
Elenite Holiday Village, Bulgaria

2. Outline
1. The development trends of the Russian space
industry.
2. The Russian space industry position on the global
market of space services.
3. The importance of government financial support
for Russian space industry
4. The gap in funding of the Russian Space program
in 2015.
5. The consequence of reduction of the Russian Space
Program funding
2

3. 3
1 1.01
1.22
1.44
1.66 1.76
2.02
2.16
2.58
2.78 3.01
3.33
3.74
4.31
4.68
10.10
1.00
21.00
18.00
15.20
6.10
14.40
6.90
19.90
7.40
8.50
10.70
12.10
15.30
8.60
0
5
10
15
20
25
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Growth of Russian space industri output (compared to 2000)
Growth rate of the russian space industry output (y-o-y)
The development trends of the Russian space industry
Russian space industry growing rapidly and it is one of the few high-tech industries
where Russia has retained a position of the world leader. As you can see on the figure
growth rate of Russian space industry products in 2000–2014 amounted to
approximately 12%, while the total production of space industry increased by 4.7 times.

4. 4
The Russian space industry position on the global market of space launches
27 29 25 27 32 31 30 28 33 36
13
18 19 15
24
15 18
13
19
23
5
5 10 11
6
15
19
19
15
16
7
7
11 14
12 9
10
14
11
17
52
59
65 67
74
70
77 74
78
92
0
10
20
30
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Russian SLV launch USA SLV launch Chinese SLV launch Other countries
One of the main reasons for this rapid growth is cheap and reliable space launch
vehicles, thanks to which Russia took first place in the world by number of space
launches.
Have a look at the chart representing space launches in the world in 2005-2015.
Throughout this period Russia retained the leading position in the number of launches
(over 40% of the total number of launches).

5. 5
69
103
110
100
120
112
124
134
106
212
39
30
49 48 50
40
61
40
88
100
20
26
17 21
30
23 24 22
28
40
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total number of spacecraft placed into orbit
Spacecraft placed into orbit by a Russian SLV
Russian spacecraft placed into orbit
The Russian space industry position on the global market of spacecraft
placed into orbit
Russian launch vehicles placed into orbit more than half of the spacecrafts
produced in the world.

6. 6
The importance of state financial support for Russian space industry
However, the main factor of Russian space industry growth is increasing
financial support from the state. Even under the budget cuts during crisis
years Russian Space Agency has always maintained their projects and kept
the Russian space program fully funded.
34.4
41.4
47.6 52.1
92.6
109.1 107.3
163.6
178.7 179.9
187.8
0
20
40
60
80
100
120
140
160
180
200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
bnrub(currentprices)
Government financial support for Russian space industry

7. 7
At the beginning of 2015 Russian Space Agency demands the financing
for The Russian Space Program on the period of 2016-2025
implementation the amount of 3.8 trillion rubles in current prices.
However, due to the severe shortening of budget income today the
Russian Government is pursuing the considerable cuts. Thus, the
Russian Space Program saw the limits of its budget funding reduced
to 2.7 trillion rubles. That is almost 30% less than the amount
requested by Russian space agency.
-30%
The gap in funding of the Russian Space program in 2015
Despite of this fact Russian Space Agency has no plans to give up the
majority of long term R&D projects which are planned by the Russian
Space Program. This will be achieved by rescheduling the implementation
of some high-cost projects for the period after 2020 with the intention of
resuming its funding later in full volume. Nevertheless, these plans are not
realistic for several reasons.

8. 8
Firstly, Russian Space Agency incorrectly assessed the costs of Russian
space program, because of Russian Ministry of Finance underestimate rate of
inflation.
As you can see on the figure, deflators for mechanical engineering production
forecasted by Russian Ministry of Finance throughout from 2005 to 2014
appeared to be lower by an average of 2-3% than the actual values.
-10
-5
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Real value Forecast
The gap in funding of the Russian Space program in 2015

9. 9
154
191
264
324
394
437
481 495
517
547
119
152
174
237
272
293
316
342
369
396
157
198
280
350
431
485
542
566
598
643
0
100
200
300
400
500
600
700
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
bnrub(currentprices)
Demand Limits of budget funding Real value of the Russian space program (estimation)
4250
3805
2671
60%
Real cost of the Russian Space program
Assuming that the trend of underestimating the actual rate of inflation will continue in the
forecasted period, than we can make more realistic assessments of the final cost of the
Russian Space program.
Thus, according to our estimates, the Russian Space program will cost more than 4.5 trn.
rubles at current prices. Therefore, the implementation of laid down in the Russian Space
program will require about 60% more than the defined limits of budget financing.

10. 10
Consequently, that might lead to abandon a larger
number of promising long-term R&D projects, such as
development of:
• super-heavy space launch vehicle;
• Nuclear electric rocket;
• Lunar landing module (Russian manned mission to the
Moon would be delayed to sometime after 2030);
• prpogram to conduct biological experiments in space;
• and others.
The consequence of reduction of the Russian Space
Program funding
Furthermore, the cost of implementing the projects on hold will
increase considerably after 2020 due to the necessity of
recovering the scientific and technological infrastructure of the
projects that will be regressing as a result of underfunding.

11. In the new economic environment in the program will
remain only relatively short-term and simple projects, such
as creation of:
• the Russian orbital station, based on the Russian
segment of the ISS.
• new generation universal manned transport spacecrafts,
that will be putted into the orbit by the new middle class of
space launch vehicles "Angara".
Meanwhile, the new generation space launch vehicles and
the spacecrafts have unsuitable performance
characteristics for commercial launches. This will adversely
affect the long-term prospects of the Russian space
industry and the retention of its leading position in the
global market.
11
The consequence of reduction of the Russian Space Program
funding - 2

12. Thank you for your
attention!
12