Russia’s space industry on the verge of reform

The unsuccessful launch of the Proton-M launch vehicle on July 2 has spurred a necessary restructuring of the Russian space sector. How deep is the systemic crisis in Russian astronautics, and what can be done to overcome it?

Click to enlarge the image. Drawing by Niyaz Karim

“It seems something is wrong,” said the Russian Federal News Channel presenter as he watched the Proton-M launch vehicle fall flat and head back to Earth on live television. Eye-catching footage of the catastrophe drew the attention of the leadership and the public to the Russian space sector, forcing them to find an answer to the question of what exactly is “going wrong.”

This is already well-known to specialists and analysts, however: “A systemic crisis” is the phrase that the majority of them are uttering when the conversation turns to the state of Russian astronautics. Here are a few of the key points that need to be highlighted.


The crisis in the space sector is first and foremost one of personnel. Formally, there is no personnel issue: There are officially 244,000 people currently employed in space industry enterprises, which is more than anywhere else in the world.

First of all, however there are very few among these employees who are middle-aged and at their most productive. Secondly, the consequence of such a large workforce is extraordinarily low labor efficiency. This, in turn, is the key reason for wages remaining low. Consequently, low wages naturally mean that the best personnel are leaving the sector.

..and structure

It is impossible to solve the personnel issue without consolidation of the space sector and serious cutbacks in both the number of enterprises and their employees. This is evident to the leadership of Roscosmos, which defends the idea of creating a state corporation on the basis of the agency—similar to Rosatom—and transferring state assets under its management. Such a step would allow improvements in the manageability of the sector and, as a result, increase both labor efficiency and the quality of the finished product.

However, standing in the way of reform is resistance on the part of the enterprises, which do not want to lose their independence. For them, the current situation is very comfortable: Surviving on state orders, they exist, in essence, in an environment free from competition; the issues of labor efficiency and production quality are secondary. The responsibility for failure lies first and foremost with Roscosmos.

Forthcoming reform

The current head of Roscosmos, Vladimir Popovkin, faces a whole series of bold and unavoidable decisions, which his predecessors would not have had the courage to face. Soon after his appointment, he began a campaign to identify misappropriation of funds, and a series of resignations at various enterprises followed unscheduled checks. 

In April 2013, President Putin supported an initiative started by the head of Roscosmos, proposing that the government examine the issue of setting up a space ministry. This was how the space sector was organized in the Soviet Union, with the enterprises being subordinate to the ministry of general manufacturing.

All in all, the Proton-M catastrophe in July, which was caused by manufacturing negligence exacerbated by a design flaw in the rocket, has galvanized the leadership of the country to restructure the sector. There are rumors deep within the space administration that the decision has already been made and will be announced soon.

The new Russian space sector

A restructuring of the sector will inevitably be accompanied by a review of the federal space program. Evidently, the trend set by Roscosmos to lend greater pragmatism to the program will continue.  A reduction in the share of the budget on manned astronautics—which has next to no economic effect—will be accompanied by an expansion in spending on launching satellites that are vital to the Russian economy.

Apart from this, expansion in participation in international space programs will become an important part of the strategy of Roscosmos. Military and research astronautics will not be forgotten, though. In the end, in the last few years, work to build the Russian Vostochniy Cosmodrome, as well as work to create the new Angara launch vehicles that are to replace the Proton-M, has gained pace considerably.

All of these measures give us hope that Russian astronautics can survive this current difficult period, and that Russia will retain her position among the leading nations in the space industry.

Sergey Denisentsev is an expert at the Center for Analysis of Strategies and Technologies. 

First published in Russian in VPK-news.

All rights reserved by Rossiyskaya Gazeta.

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