Ukraine Aerospace Sector Briefing

July 17, 2001
Representatives from Yuzhnoye Design Bureau and Yuzhmash Production Association, two Ukrainian entities made famous for their design and production of the Soviet SS-18 ICBM, visited The Eisenhower Institute on July 17, 2001 to discuss the efforts being made to transform the former Soviet state's nuclear weapons industry into a commercially viable sector of the economy. In attendance were Stanislav Konyukhov, General Designer and General Director of Yuzhnoye Design Bureau, Alexander Degtyarev, Yuzhnoye Deputy General Designer and General Director and Yuri Alexeyev, President of Yuzhmash Production Association.

The Yuzhmash factory, which is located in Dnepropetrovsk, Ukraine, was originally built to manufacture automobiles, but was converted to produce missiles in 1951. After serving as the design bureau within Yuzhmash, Yuzhnoye was established as a separate entity, also in Dnepropetrovsk, in 1954 and given the name of Experimental Design Bureau #586. In 1965 both organizations were placed under the direction of the Soviet government's Ministry of General Machine Building.

Yuzhnoye and Yuzhmash have designed and produced a wide variety of missiles, including the SS-4, which was stationed in Cuba, the infamous SS-18, which can carry up to ten warheads each, and the solid propellant-based mobile SS-24. The companies are also responsible for designing and producing the Kosmos, Cyclone and Zenit space launch vehicles, as well as several models of satellites.

Five decades since Yuzhmash first ceased production of automobiles and began producing rockets, Yuzhnoye and Yuzhmash are once again experiencing a change in their mandate. This time, however, the change is de-emphasizing their role as linchpins of national security strategy. In order to stay in business, the leadership must now operate for profit. The Dnepr space launch vehicle (SLV) is an example of the approach the Ukrainian companies have taken to this dilemma.

The Dnepr program

Dnepr SLVs are RS-20/SS-18 "Satan" rockets that have been converted for civilian space launch, differing from the SS-18 by a modified control system, a custom-made third stage and, of course, a payload destined for orbit rather than for use in a nuclear war. The Dnepr, Mr. Konyukhov said, is the best civilian application of the SS-18. He noted that it has already been used to launch satellites from several nations and said that the next launch, which will include one US and two Italian satellites, is scheduled for November of 2001.

The Dnepr program has the Strategic Arms Reductions Treaties between the Soviet Union/Russia and the United States as its foundation. By ratifying the first Strategic Arms Reduction Treaty (START I), the Soviet Union agreed to reduce the number of warheads in its arsenal to 6,000. The treaty made specific reference to its 300 SS-18 ICBMs, and required that 150 be dismantled. START II, in addition to reducing the total number of warheads on each side to 3,000-3,500, requires that the remaining 150 SS-18s be deactivated by December of 2003 and dismantled by December of 2007.

For Russia, which possesses all the remaining SS-18s, converting them into Dnepr launch vehicles became the only alternative to destroying their arsenal. And Russia needs Ukrainian participation in this task because Ukraine is the holder of the relevant intellectual property. The conversion program allows these states to develop an economic sector that offers high financial and technological returns while helping them meet their arms control obligations. Symbolic of the dual-use nature of the space launch industry, the program also provides the further benefit of employment for scientists who might otherwise be tempted to accept high-paying offers from rogue states to develop their own missile programs. According to Mr. Konyukhov, no former Yuzhnoye employees are currently working in "states of concern," such as Iraq, nor has such an accusation ever been leveled against Ukraine. He admitted that five such individuals are working in Israel, but reassured the Institute that the rest of those who have left their jobs at Yuzhnoye are currently working in either Russia or Ukraine.

The space sector and Ukraine's international relations

Yuzhnoye and Yuzhmash are enmeshed in an international industrial network that is responsible for much of the world's activity in space. They are thus focal points for high-level economic and political interaction between Ukraine and other nations.

The Dnepr program itself is a good example of this interaction between Russia and Ukraine. When Ukraine agreed to accede to the Treaty on the Non-Proliferation of Nuclear Weapons as a Non-Nuclear-Weapon States Party, all of its nuclear weapons were subsequently shipped to Russia to be dismantled. At this point, responsibility for the 150 remaining SS-18s was transferred to Kosmotras International Space Company, which was established in 1997 as the primary entity for implementing the Dnepr Program. Kosmotras consists of partners from Russia, Ukraine, Kazakhstan and the United States. Yuzhnoye is the primary design and development organization and Yuzhmash is the primary production company. The promotion of the efforts of Kosmotras and other Russian-Ukrainian joint projects has been declared a high priority by the presidents of both nations.

Through its bilateral treaties with the Soviet Union, the United States has also played a role in the conversion of certain parts of the ballistic missile industry. It has provided various forms of security assistance in exchange for Ukraine's pledge to give up its nuclear weapons, and has helped in the dismantling of Ukraine's nuclear weapons infrastructure through the Cooperative Threat Reduction program.

In addition to these security arrangements, regular interaction with the US also comes in the form of commercial contacts. An American company, Thiokol Propulsion, is a partner in the Dnepr program. Thiokol helps to market the program to Western clients and provides organizational and legal support. Yuzhnoye and Yuzhmash also share ownership of Sea Launch, the world's only ocean-based launch company, with Boeing, Russia's RSC Energia and the Anglo-Norwegian Kvaerner Group. The Ukrainian companies provide the program with Zenit rockets. Boeing, a 40% partner, manufactures the payload capsules; RSC Energia is responsible for the third stage; and the Kvaerner Group is in charge of the floating launch platform and command ship.

The discussion that took place emphasized that decisions which were formerly made based on Soviet nuclear strategic policy are now increasingly based on calculations of economic interest. Although not completely insulated from geopolitics, these interests are closely tied to the fortunes of other multinational corporations (and these corporations' domestic lobbying efforts) and therefore international economic trends and market forces. Nevertheless, these economic freedoms are still subject to a complex web of political arrangements between Russia and Ukraine, as well as the many international agreements governing everything from the transfer of missile technology to commercial quota restrictions.

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In conclusion, Mr. Konyukhov listed several qualities that make the Ukrainians viable partners for space launch missions. He argued that they have technology that allows them to conduct pre-launch preparations on the booster from a horizontal position, and automated preparation systems for certain tasks (such as fueling), and that the precision of the Zenit's satellite deployment is much better than what can be achieved by US launchers.

Obstacles to cooperation with Western partners remain. For example, the Russian insurance infrastructure remains undeveloped and premiums, therefore, must be added to the price that the satellite manufacturer charges its client. In addition, Russian and international politics and US industry quotas have also hampered the efforts of the Ukrainian firms. Konyukhov said that they would carry on in their search for foreign partners as they seek to continue the conversion process and further develop Ukraine's space industry.

This meeting was held in conjunction with The Eisenhower Institute's two projects on space: "The Future Use of Space," which examines the peaceful and military uses of space, and "Ten Years Later: An Assessment of US-Russian Engagement in Space." This report was written by Institute Program Coordinator Ryan McFarland.