13 May 2014

Russia Bans Export of RD-180 Engines to US

Author: Marco A. Cáceres, Drawn From: World Space Systems Briefing

There is great irony to all the fuss during the past few months about the possibility that the Obama administration might block the continued sales of Russian RD-180 liquid-fuel engines to United Launch Alliance (ULA) of Denver, Colorado, as a way of punishing Russia for its government's annexation of the Crimea and ongoing meddling in eastern Ukraine. As recently as a week ago, there was growing concern that a temporary injunction by US Court of Federal Claims Judge Susan Braden against sales of RD-180s to ULA could end up permanently prohibiting the sales, thereby forcing the US Department of Defense (DoD) to start looking for a replacement for the RD-180 and gradually start relying less on the Atlas V for launching its big military satellites.


The general consensus in the US defense and space industry has been that the US government would not dare implement or allow a ban of the RD-180 because the engine is simply too important to US national security interests. While DoD has other options (including ULA's Delta IV and SpaceX's Falcon 9) for launching its satellites to earth orbit, its preferred rocket has traditionally been the Atlas V. While there has clearly been some concern about the possibility of the US government using the RD-180 as a political football, the likelihood of a ban on the engine has been seen as extremely remote, because it would unnecessarily harm US interests. 

The temptation to stick it to Vladimir Putin for his aggressive moves toward the Ukraine has been tempered by the fact that the US would be at least seriously inconvenienced by having to replace the RD-180 -- possibly having to spend as much as $1 billion to develop a comparable engine. The problem is that, all along, we've been working under the assumption that the Russian government itself would not initiate a ban on RD-180 sales. After all, why would Mr. Putin intentionally wish to harm the business interests of NPO Energomash, the company that produces the RD-180? The value of each engine is estimated at $11-15 million.

The answer is simple: politics, national pride. Last summer, the Kremlin seriously considered imposing a ban on sales of the RD-180 to RD AMROSS (a joint venture between Energomash and Rocketdyne), which imports the engines into the US. One of the reasons for this was the Obama administration's threats to bomb Syria for its use of chemical weapons. Syria happens to be a longtime Russian ally, and so the Russian Security Council placed the proposal of a ban on the table as a disincentive to a possible US bombing campaign.

The seeming willingness of the Russian government last year to allow Energomash to take a financial hit on the RD-180s kept nagging at me in the midst of all the speculations about the possibility of a US ban. I thought wouldn't it be something if we got blindsided, and it was the Russians that said, "Hey, forget you!" Well, that now appears to be precisely what they've done. In response to recent economic sanctions by the US and the European Union (EU) against a number of high-level Russian government officials and some Russian companies (and the threat of more sanctions to come), the Russians today apparently banned the export of RD-180s to the US. Looks like Mr. Putin is willing to play ball after all.

Losers? The US, Russia, Energomash, RD AMROSS, and ULA. Winners? Hmm, probably Elon Musk and SpaceX.

About the Author

Marco A. Cáceres

Marco A. Cáceres

Marco joined Teal Group in March 1990. Previously, he was a market analyst for Jane's Information Group of the UK. As editor of both the Jane's DMS Defense & Aerospace Agencies and DMS Electronic Systems publications, Marco analyzed and wrote about the R&D and procurement activities within the defense- and aerospace-related agencies of the federal government, with a focus on the markets for major electronic warfare (EW) subsystems. Additionally, Marco edited Jane's DMS Budget Intelligence newsletter -- a weekly covering defense budget news.

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