February 25, 2021: It was no surprise that 2020 was a bad year for the Russian space program. At the end of 2019 Roscosmos, the state-owned corporation that manages the Russian space program, announced it would conduct fifty launches in 2020. At the time this seemed ambitious. That was an understatement because Russia only had sixteen launches in 2020. That’s the worst launch performance since 2008. In one area Roscosmos did excel; the prosecution of officials for corruption.

Roscosmos was created in 1992 and immediately ran into problems with attracting competent workers and managers. Personnel quality kept declining and the average age keeps rising. The end of the Soviet Union in 1991 meant the end of a state-run economy. Russia as a whole prospered once people could work for whoever offered the best pay and professional opportunities. Roscosmos was seen as an employer of last resort for scientific and engineering personnel and those who manage that kind of work. The Russian space program turned into an extensive (about $3 billion a year) make-work program for those who could not get jobs in profitable firms. Roscosmos currently provides work for about 250,000 people, including many contractors. It has been noted that the American space program does more with 30 percent fewer people. More importantly Roscosmos is still unable to offer competitive pay to attract and retain qualified personnel. This is especially true when it comes to senior officials, who have excelled in only one area; corruption and mismanagement.

The most plundered Roscosmos effort was not launching rockets but building or improving Cosmodromes (launch facilities). The most prominent example was the decade long effort to build the new Vostochny Cosmodrome in the Russian Far East (Amur Province, just north of Manchuria). So far about 80 Roscosmos officials have been convicted for Vostochny-related corruption. President Putin, who ordered several rounds of corruption investigations, is frustrated by the fact that many of the replacements for jailed officials are subsequently found to be engaged in the same corrupt acts as their predecessors. Putin has also fired many senior Roscosmos officials for inability to handle one or more aspects of their jobs.

Construction of Vostochny has been underway since 2011 and is still not finished. Costs have risen as a result and are now over five billion dollars. New regulations have been enacted to make it more difficult for officials to set up offshore bank accounts or invest personal funds outside Russia. These Vostochny-related investigations and prosecutions began in 2014 and since then nearly 20,000 violations have been uncovered. Many of these were due to incompetence or sloppy management. Too many of these violations were criminal in nature, involving theft or misuse of government funds.

Most of the damage at major projects like Vostochny was the result of incompetence but a lot of the poor work was deliberate. That was often the case when the use of substandard materials was involved. This occurred with a new launch pad and the defective concrete had to be laboriously removed and replaced with concrete capable of handling large rocket launches. Another major source of corruption involved payroll, as in reporting more employees working more hours than was actually the case. Procurement was another profitable area for the corrupt as items that did not exist or were substandard were paid for rather than what was needed.

The government auditors admitted that a lot of the problem was the result of Russia keeping details of such projects secret. Many of the scams would have been obvious if, as in the West, financial details of construction were public, and available for anyone to examine, records. “Classified” (secret) projects are always more prone to corruption or incompetence that goes undetected longer because few people are monitoring how the money is spent.

Vostochny is for commercial, not military, launches and keeping construction details secret does not encourage potential foreign customers. Vostochny will only be profitable if there are a lot of foreign customers for the inexpensive and reliable satellite launch services. The government wanted to make Vostochny a project demonstrating how the Russian space program is making a comeback. Instead, Vostochny is turning out to be a reminder that not much has changed in Russia except that the traditional problems of corruption and poor management have gotten worse.

There have been some successes at Vostochny. In early 2016 the first satellite launch went off without a problem. A Soyuz rocket put three civilian satellites into orbit. The second launch took place in late 2017 and failed. The third launch, in early 2018 was a success. Another launch in late 2018 was a success as was one in early 2019. However, that is only five launches in five years. A second, larger, launchpad is under construction and by 2020 nearly half of Russian satellite launches were supposed to be carried out at Vostochny. That did not happen.

At Vostochny the Cosmodrone is only one part of a larger construction effort to build communities for the 25,000 people who will operate the facility. This will cost about twice as much as the Cosmodrone and revive the economy in the sparsely populated Far East region of Russia. Vostochny is unlike the original Soviet era facility in what is now the independent state of Kazakhstan. Construction of Vostochny was necessary because Russia realized Kazakhstan was becoming a very difficult landlord. Construction of Vostochny initially made great progress in part because the site used to be Svobodny 18, an ICBM base that was shut down in 1993 as part of the START disarmament treaty. Svobodny 18 was not completely abandoned in the 1990s or allowed to fall apart. Amur Province was ultimately selected because of weather; the area averaged only 50-60 overcast days a year, had a dry climate and calm winds. There was also an absence of earthquakes.

Construction went according to schedule initially and it appeared that the first launches would take place, as planned, in 2016. This was made possible by the government acting quickly when the first signs of corruption surfaced. Three construction executives were arrested for corruption and many others threatened. Construction continued, mainly to build equipment and facilities for handling heavier cargoes, including supplies and components for space stations. In 2018 there were signs that the prosecutions of dozens of officials had not eliminated corruption and that a lot of it was still going on undetected. Until the completion of an intensive and extensive 2019 investigation, it was unclear how extensive the corruption was and how much damage it was doing to the construction effort. That investigation produced a report revealing the extent and persistence of corruption and mismanagement at Vostochny and explained the continued delays.

Vostochny will get Russian commercial launches but military launches will largely remain at Plesetsk, near the Arctic Circle. While Plesetsk's location is good for some types of launches, like high inclination, polar, and highly elliptical orbits, the place is frozen most of the year and more expensive to operate because of the climate.

One positive result Vostochny project was that the Kazakh government became more cooperative. In 2013 Russia agreed to remain in Baikonur if demands for higher rent were reduced. Russia had threatened to cut launches at Balkinor from 75 percent of the Russian total to ten percent by 2020. Kazakhstan originally demanded a lot more money and threatened to shut down Balkinor if the Russians did not pay. At the time Russia paid Kazakhstan $115 million a year for the use of Balkinor, in addition to the $50 million a year spent to maintain the facility. Many Kazakhs saw Balkinor as an ATM and, anytime there was a cash shortage, they could make a withdrawal and the Russians would be forced to pay. Early progress in building Vostochny convinced the Kazakhs that plans to leave Balkinor were real. It was pointed out that Balkinor was where the commercial satellites were launched and Russia sold these “launch services” to a growing list of foreign customers. If Russia paid the higher fees the Kazakhs were demanding the foreign customers would have to pay more than what other competitors charged and Russia would have to abandon Balkinor as uneconomical. The Kazakhs agreed to more reasonable rent and, for the moment, Russia's largest satellite launch site is still in Kazakhstan. When Vostochny is fully operational the Kazakhs have to pay more attention to being an accommodating landlord.

Founded in 1955 by the Soviet Union, Baikonur was long the main satellite launch facility for the Russians. But after the breakup of the Soviet Union in 1991, Baikonur found itself in the newly minted Central Asian nation of Kazakhstan. There it became more expensive and difficult for the Russians to use. Russia has leased the Baikonur complex from Kazakhstan since 1991 but this led to periodic disputes over lease terms and danger to locals from launch accidents. These disputes were settled but costs kept rising. The Russians valued the Baikonur launch site as it is very efficient for some types of launches; geostationary, lunar, planetary, and ocean surveillance missions, as well as all manned missions. But having your main launch site in a foreign country was seen as untenable. Russia began building a replacement site to the east, in Russian territory. But Russian manned space programs did not get moved Vostochny by 2020. That means Russia cannot yet abandon Baikonur. This is not a disaster because the current lease lasts until 2050. If the Russians leave, they will take or destroy all their gear with them. No point in leaving anything to help a competitor launch satellites.

The growing problems with Roscosmos and Vostochny put a spotlight on the role of corruption in crippling Russian economic growth and efforts to become a modern, competitive industrialized economy.