Putin at the rocket launch.

Photographer: Mikhail Svetlov/Getty Images

Putin's Space Debacle Blasts Off

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Russia finally launched the first rocket from its new spaceport, Cosmodrome Vostochny, on Thursday. One of President Vladimir Putin's signature megaprojects, the cosmodrome has been plagued by problems from the start. The launch was no exception.

As Putin watched, the first attempt Wednesday was aborted, prompting the irritated president to stay an extra day to witness the rocket blast off, then issue reprimands to the officials responsible for the stumble. The project is a case study in how Russia has failed to shake off old habits from its Soviet Union past.

Putin ordered construction of the spaceport in Russia's Far East Blagoveshchensk region in 2007. The project was politically motivated. The old Soviet spaceport, Baikonur, is located in Kazakhstan. After the Soviet Union fell apart, Russia inherited the former superpower's space program and leased the facility from the Central Asian state for $115 million a year.

The lease runs out in 2050, but the Kazakh authorities haven't always been comfortable with the arrangement, and officials there have talked about renegotiating the deal. Putin, meanwhile, was seeking self-sufficiency for Russia. A large part of the Russian space program is defense-oriented and he didn't want it dependent on a foreign state, no matter how friendly.

The cosmodrome was supposed to open in 2015, but delays and cost overruns made that impossible. Corruption was the single biggest reason. Stated-owned organizations that were responsible for construction outsourced most of the work to private firms. A 2015 investigation by the Russian news service RBC revealed that no competitive bids were tendered for an overwhelming majority of the contracts. Dozens of politically connected businessmen, including an old friend of Putin, Gennady Timchenko, were paid to complete the 300 billion ruble ($4.6 billion at the current exchange rate) project. Some of them received the money but failed to do the work; others ended up in court for not paying salaries to workers. 

Early last year, Russia's budget auditor, the Accounting Chamber, estimated that 13 billion rubles was misappropriated during the construction.

The actual work began in 2012, but by the following year it was already clear that the deadline wouldn't be met. Putin knew that corruption was sucking the project dry. He insisted on criminal prosecutions and various law enforcement agencies started two dozen investigations. Yet that still didn't do much to move construction along, and Deputy Prime Minister Dmitry Rogozin, who oversees the defense and aerospace industry, was given personal responsibility for the project. He visited the site more than 50 times to supervise the work. Putin, too, stopped by in 2014 to stress the importance of the cosmodrome.

Finally, the spaceport was ready for its first light rocket launch, which would send three satellites into orbit. The launch was scheduled for 11 a.m. Wednesday. Putin took his vantage point at 10:15. At first everything seemed to be going well, but a minute before the rocket was to take off, the launch was canceled because of a malfunction.

At a hastily called meeting of the government commission supervising the launch, Putin reminded the ashen-faced officials of the four arrests made following the corruption investigations, and of the Russian space industry's spotty recent history of sending cargoes into space. Malfunctions were possible, he said, but some of them had to do with "slovenliness and insufficient control over all the elementary processes that are so important in this industry."

"Russia remains the leader in terms of launch numbers," Putin said. "That's a fact and that's good. But we're dealing with a large number of malfunctions, and that's bad."

After making that speech, which must have sent the officials into a deep funk, Putin announced he would remain at the spaceport to watch the second launch attempt. He looked on sternly as the rocket went up at 5 a.m. the next day.

As happy as if his life had just been saved, Rogozin tweeted, "We've done it," adding the faintest possible smile emoticon. Putin, however, wasn't smiling. He slapped Rogozin, the heads of the Russian space program and the government launch commission with reprimands, and he demanded that the manager of the factory that made the malfunctioning equipment be put on notice. It turned out that on Wednesday, the automatic control system had flagged a possible flaw in a fuel valve -- but in fact there had been no defect. Faulty wiring in the control system was to blame.

Putin's space show made headlines, and commentary on the social networks was by turns celebratory and sarcastic. Yet that's all it was: a show. The new spaceport is far from being able to replace Baikonur yet. The next launch from the cosmodrome isn't scheduled to take place until 2018, and even then it won't be ready for heavier rockets.

Like other Putin megaprojects -- the 2014 Sochi Olympics and  the bridge to Crimea over the Kerch Strait, to name two -- the cosmodrome put on display the familiar scheme of how things get done in Putin's Russia. The president micromanages, connected businessmen enrich themselves while doing a shoddy job, bureaucrats are more concerned with putting on a show for Putin than with actual results.

The projects don't exactly fail, and sometimes, as in the case of the Sochi games, they look to the world like spectacular successes. Yet the waste and inefficiency are always massive, perhaps more so than in Soviet times, where Putin's megalomaniac undertakings have their roots.

That can't be fixed with reprimands and presidential visits to construction sites. Russia still hasn't shed the all-pervading state control and the associated thievery that rendered the Soviet Union unable to compete with capitalist economies. Now that Russia is under more economic pressure from low oil prices -- just as the Soviet Union was in the late 1980s -- it desperately needs deliverance from those shackles.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Susan Warren at susanwarren@bloomberg.net