: Ukrainian Space. Going in Circles
Dr. Andrij Zhalko-Tytarenko Dr. Andrij Zhalko-Tytarenko Deputy- and Acting Director General of National Space Agency of Ukraine, 1993-95

18:53 Mar. 30, 2016

Ukrainian Space. Going in Circles

Dr. Andrij Zhalko-Tytarenko

Ukraine Today Opinion - Dr. Andrij Zhalko-Tytarenko

Almost 20 years ago to date, I received my first paycheque as a Vice-President of SpacePort Canada in the Hudson's Bay. A year prior, I had attended the Aerospace Congress in Vancouver as the Head of the Ukrainian Space Agency.

In the middle of the opening ceremony, I got a call from my Deputy, who told me that the new Director General had been appointed. This call marked the end of my two year stint as the Deputy- and Acting Director General of the National Space Agency of Ukraine.

As was common in those almost legendary times, I didn't receive any explanation, nor any job offers.

Nevertheless, we had done a good job at the Space Agency over those previous two years. We had managed to enter into the space market, which was already fragmented before we got there, and even garnered the support of the USA. Certainly it was not I, alone, who achieved this; decisive contributions came from an Academic Vladimir Gorbulin—who created the Agency—and from people within the industry.

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Despite our accomplishments, I expected a dismissal, as it was quite clear that I didn't fit in with the emerging system of corruption. Perhaps I wasn't politically correct enough for Dmytro Tabachnyk, who then was a Head of the President's Administration; alternatively, it could be because before the trip to Vancouver, I had forcefully transferred money into pay wages at the Kharkiv "Kommunar", bypassing all the intermediate hands. I'd just fulfilled my promises to the plant workers when the director called me, right from a protest rally at the company. In any case, I'm proud of the job done and have no regrets about my actions.

I had different kinds of regrets. The newly appointed Director General almost immediately canceled a strategic meeting with the Head of European Space Agency, Jean-Marie Lutton. Shocked French colleagues told me that he cited lack of time. Agreements with India, Poland, and Hungary that we signed were never fulfilled.

Only the Americans were relatively lucky:  the first commercial launch of "Zenith" had been secured and Sea Launch had already started. As the result of such a sudden change in management with transitory period, Ukraine's participation in the European programs was postponed by five or six years, whereas cooperation with Poland started only in 2016; Ukraine even had to sign a new agreement with Poland as the one from 1994 had expired due to inaction. There were many projects that were in the preparation stage, but simply never happened.

Why was the impact so significant? It definitely was not because I was irreplaceable; I wasn't. The problem lies in how the Space industry works. It's important to understand that after the collapse of the USSR, Ukraine was left with a missile industry that had no analog in the world. This industry was strongly tied to Russia, but Russia had announced a policy of non-cooperation with Ukraine in the defence field. For this reason, our only open alternative was to seek international partnerships so that we could be ready, and survive, the moment when Russia will be able to go on its own. 

"Survival" for the Ukrainian Space industry meant securing contracts for launching satellites. This isn't as easy as it may seem—it's not like selling cars. Conventional mass marketing does not work for the Space launch market. There are fewer than a hundred commercial launches per year in the world, each worth between 15 to 100 million U.S. dollars and requiring two to three years to prepare. All of the competitors are first-class, multinational corporations, backed by their respective governments.

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It takes years to find customers, build up their trust, and eventually sign contracts. If you work long and hard and have a little bit of luck, you might even establish a long-term partnership with the West, complete with standing orders. This is especially important for Ukraine, which cannot afford to support the Space industry for a long time if there's an interruption of commercial cash flow. Ukraine can do better than be the infamous Russian "Laughing Islanders".

Luckily for Ukraine, Dnipropetrovsk YUZHNOYE learned how to maneuver this very difficult market. The Ukrainian Space industry survived, and this victory has certain names attached: Academics Stanislav Konyukhov and Alexander Degtyarev. Degtyarev is considered the leading Space market and industry professional in the ex-USSR, and one of very few internationally recognized Ukrainian Space industry leaders. Thanks to his contributions, the Ukrainian Space industry successfully operates at practically at no cost to the budget. However, this success does bring with it solid cash flow.

Not only are tens of millions of dollars coming into the country, there are also orders for dozens of subcontractors, which ultimately manifests in salaries paid to the top designers, engineers and workers of Ukraine. This cash also keeps one of the most critical branches of the Ukrainian defence industry afloat. Unfortunately, new Ukrainian business custom is to get cash flow under control by the "right" people.

On February 26, 2016, the new Director General of the Space Agency, flanked by Parliamentarian Andriy Teteruk and a labour union representative, told the people of YUZHNOE and YUZHNY Machine Building Plant that he had decided to dismiss General Designer/General Director Alexander Degtyarev. The reason: an audit discovered overspending in travel funds for a total of UAH 800 (less than USD 30) by a company that has 6,000 employees.  After brokering the news, the Director General of the Space Agency had to be escorted from the premises to the back gates, and forced to leave YUZHNOYE via a decoy car, for his own safety.

And thus history repeats itself. The new Director General of YUZHNOYE will have to establish contacts, search for contracts, and once again go through all of the difficulties Ukraine has already overcome. He will also have to explain what happened, and this will neither be easy, nor beneficial commercially. Once again, neighbours from the northeast will interfere in every possible way.

The total scale of disaster is yet to transpire, but it's already clear that cash flows will shrink, and countless opportunities will be lost. Consequently, there will be inevitable wage debts, and unique specialists will have to leave the industry once again.

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Of course, they could migrate to some other field in Ukraine, since a talented professional will always find a decent job. But there is also North Korea, Iran, and most significantly, Russia, which desperately needs YUZHNOYE expertise for its new heavy ballistic missile "Sarmat". A stroke of luck may allow the Space industry to survive this shake-up, but drastic losses of both time and money loom on the horizon.  

About the author: Dr. Andrij Zhalko-Tytarenko, Deputy- and Acting Director General of National Space Agency of Ukraine, 1993-95.

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