Before the House Science Committee, Space & Aeronautics Subcommittee
Hearing on U.S.-Russian Cooperation in Space
Mr. Chairman, and Honorable Members of the sub-committee,
I would like to thank you for taking time from your
busy schedules to look into a matter that is of considerable
importance to and impact on the future of our US space
enterprise community.
My name is Robert M. Davis. I currently serve as the President and Chief Executive Officer of the California Space Authority, a member-supported California-based non-profit corporation, whose purpose is to Retain, Grow and Create California Space Enterprise. Our membership is comprised of individuals and entities from industry, academia, labor and workforce developers, and local government. Our membership includes a number of companies, large and small, from whom you hear frequently in behalf of their and our nations' aerospace interests. The name of my corporation implies that we are interested only in the well being of California Space Enterprise. However, Space Enterprise is an intensely competitive, internationally coveted industry, and many of our constituents compete in tough global markets. The California Space Authority is therefore keenly attentive to policy positions taken by the US Government that bear on the future competitiveness of our industry and nation and therefore do not limit our interests and voice solely to the confines of the borders of the State of California.
While I appear before you today as an employee of the California Space Authority, the comments and viewpoints today are my own. They are drawn from and reflect extensive earlier experience that I gained throughout the 1990s with a number of US-Russian company to company and company to Russian government dealings and to which I continue to pay ongoing attention. I am flattered to have been invited to appear before you today, and thank you for the opportunity to offer and share my views as a US space enterprise industrialist.
With several provisos that I will define in my subsequent remarks, I support US-Russian Space Cooperation and initiatives, and strongly encourage that our policy makers and policies support company to company cooperative pursuits, in particular where they contribute to a strong US industrial space enterprise base, and compliment our National Security interests.
In support of the aforementioned statement, I offer the following points for the committee's consideration:
- Overall, US industry dealings with Russian space
entities have been a positive experience for US companies.
Many US entities have found their Russian partners
to be good partners. It is fair to say that strong
and positive relationships have developed over the
years in a variety of areas. A number of these business
ventures have grown to be very successful and they
have gained use of technologies that are beneficial
to US space enterprise companies' interests. Later
in my remarks, I will underscore what my own experiences
have taught me as to how Russians become good partners,
which is quite different than how such relationships
occur and grow in a US to US business framework.
- Those with whom I speak from across industry
for the most part endorse company-to-company engagements
with Russian aerospace industries. There are tangible
and specific benefits that accrue to the companies
who enter into these engagements, from which the USG
also benefits significantly. It appears that these
dealings have reduced the likelihood of missile technology
proliferation. Whether they have wholly stopped proliferation
is not known. Company to company aerospace projects
do keep Russians (companies and individuals) gainfully
employed, thereby creating incentives to behave in
ways that comply with US ITAR and export/import requirements,
which is beneficial to the interests of the US and
USG's objectives.
- Dealing with Russian entities on development
and production of aerospace products achieves other
outcomes that are beneficial to the interests of the
US Government. These dealings expose and demonstrate
market-oriented/western economic operations and philosophies
to Russian entities and citizens. Presuming the USG
finds it desirable for the Russian Republic to continue
in the direction of becoming a true market versus
command economy, these relationships and ongoing business
dealings do help in achieving the transition of Russia
toward that end.
- Aerospace endeavors appear to have been helpful
in bringing about Russia's transition in the direction
of a true market economy. A number of early US-Russian
company to company dealings broke new ground in Russian
adoption of western business approaches, financial
thinking and juridical practices that did not broadly
exist during the Cold War. Last year the USG recognized
Russia as a Market Economy, which can only be helpful
to US global economic interests in the future.
- Another real plus is the access US companies
have gained to Russian technology and know how through
conduct of company to company projects. The opportunity
we thereby have to leverage technology, particularly
in propulsion, which is selectively more highly performing
and a high quality product, has been of specific benefit
to US propulsion interests, and thereby the USG and
other US companies that buy products that incorporate
these technologies.
- I do not have a specific answer to the question
"How do US companies ensure that Russian partner
companies not proliferate?" In my experience,
which admittedly is somewhat dated, I think it very
difficult to detect what a Russian partner may or
not also be doing that is not in the interests of
the US. As professional relationships grow, particularly
when US people are operating in situ, it is reasonable
to expect that if one has his or her eyes open and
ears attuned, one might coincidentally witness circumstances
that would give rise to suspicions about undesirable
dealings the Russian partner may be conducting. In
my own case and those of my past and current colleagues
who have ongoing dealings with Russians, none with
whom I have worked would allow business interests
to cloud their view of US interests and let some concern,
if it were to arise, go ignored.
- Cultural behaviors and motives can create an
air of uncertainty about whether a Russian entity
is conducting ancillary activities that are not in
the interests of the US national security and diplomatic
interests elsewhere in the world. The Russians
are very proud, by their nature very suspicious even
of one another, and secretive. They are deservedly
proud of their aerospace accomplishments, highly protective
of their technology, and behave diligently to ensure
that their intellectual property remains theirs, and
is not exploited, at least without specific offsetting
gain. These behaviors can create concern over their
underlying motives, which may not be warranted.
- Russians can become very Trustworthy. My
personal experiences speak volumes about dealing with
Russians. My and my earlier company's first "deal"
with a Russian design bureau came apart in August
1991, after some months of joint activity, probably
the result of a collision of expectations, and more
importantly due to fundamental failures in communications
borne out of vast initially indiscernible cultural
differences. My second undertaking, which became a
true, enduring partnership, even when the leaders
of the Russian partner were subjected to extreme Russian
government pressures to abandon it, have stayed the
course. The fundamental difference between the two
was the presence or absence of one-to-one trust on
the part of the two leaders of the two entities. In
the first case, we went at it as a standard business
to business transaction, wrapped in typical Letters
of Agreement, Contracts, payments, etc., which in
the outcome didn't endure at the first moment of any
pressure. The second was a partnership that was built
first on gaining each other's trust, then jointly
resolving how to meet our mutual business interests
and objectives, and finally entering into a relatively
simple "contract". That partnership endures
yet today, and in the case of the Russian partner,
has upheld every tenet of the agreements, even when
it has been very financially painful for both partners
to do so. I can also report that this has been the
experience with many of my industrial colleagues who
have entered into and continue to conduct business
to business dealings with Russians and Russian entities
today. That said, neither I, nor my many colleagues
who have worked closely with Russian counterparts
hold a Pollyanna view of the Russians - they are tough,
able competitors, who have their own national and
international needs to satisfy, and they will invariably
seek to do so.
- There are significant US industrial base downsides
that result from US-Russian Space Cooperative Endeavors.
US-Russian company to company (and government to government)
dealings has and does displace US company workers.
Propulsion and other aerospace work that could be
done by employees and US companies is being done by
Russian companies and workers. Given the recent and
dramatic decline in demand worldwide for commercial
launches, US propulsion companies, in particular,
are suffering, probably all working at something less
than 50% of capacity, and worse. From first hand experience,
our nation has not had an enduring space launch propulsion
investment program, which is what compelled me, one
of my former employers and other propulsion companies
to look toward Russia as a means of expediently gaining
a better domestic competitive position. Essentially,
our nation's only enduring space propulsion investment
has been in the Shuttle's main engine, which generally
powers but a fraction of our national launch program
needs and capabilities. The expense of large engine
development, as a general rule, exceeds the financial
capacity of essentially any of the US propulsion companies
or corporations. While not necessarily the choice
or preference of US propulsion companies, the comparatively
meager USG investment in space propulsion is what
has helped create the gradient or incentives that
stimulated strategic alliances with Russian propulsion
developers and producers. In order to achieve the
access and workable alliances, a number of those U.S.
companies have heavily invested private capital in
order to achieve productive agreements; in some cases
those agreements have not been particularly lucrative,
especially in light of the downturn in the worldwide
commercial launch market. To somewhat offset their
losses (and domestic technology investments) in propulsion
base, those same alliances have gained access to and
use of technology and know how developed by the Russians
in the course of their space program. The Russians
took different technology and production routes than
those of the US, and produced, selectively, more highly
performing, very durable rocket engines; several of
those different approaches are being incorporated
into future US engine technology development. In fact,
in the era of a future Orbital Space Plane, potentially
launched on a US EELV, powered by an engine of Russian
technology origin, US ISS access interests are likely
to be served. Other such projects such as Sea Launch,
arrangements and possibilities exist that could enable
routine ISS access in yet different beneficial ways,
again selectively using Russian aerospace technologies
and capabilities.
- On the subject of US-Russian cooperative interests, nature abhors a vacuum, which absent US-Russian cooperative aerospace endeavors, Russia will seek to fill. If the US were to take the route that future dealing with Russian aerospace developers and producers is undesirable, and cause their discontinuation, several things will or could occur. First, a part of our current expendable launch stable will be disrupted for a period of time. That will result in a loss of competition and in the long run, quite possibly a loss of technological innovation and progress. Absent competition, the flow of innovative juices is eventually stunted. Absent government to government, company to company dealings, Russia will be forced to seek new markets for its capabilities and products. China appears headed in a direction that some US aerospace leaders feel could seriously threaten US space enterprise leadership. Russia may well be induced to turn to dealing with China in order to keep its aerospace community productively employed and earning, something that the US may not find in its longer term best interests. The same outcome may occur between European and Russian interests. The US would also lose access to and insight into the ongoing evolution of Russian aerospace interests and capabilities, which we might later come to regret.
In closing, it is therefore my viewpoint that the US should clearly articulate and steadfastly support policy that enables US-Russian company to company (and government to government) undertakings. I urge that these and our Administration's deliberations produce policies and accompanying laws and regulations that are implemented in a fashion that minimizes the potential for business disruption. Many US companies have invested considerable sums of private capital in joint US-Russian aerospace endeavors. From time to time they find their partnership and financial expectations disrupted, or relations with their investors imperiled because of a temporary diplomatic position taken by the USG in order to produce a behavioral modification on the part of Russia. Most companies enter into these business partnerships with a prudent appreciation of the potential for instability and possibility of disruption. However, whatever actions the USG can take to insulate these US companies, particularly those that are entrepreneurial, and often thinly capitalized, from contemporary diplomatic issues, should be further explored and implemented.
Mr. Chairman, Honorable Members of the Committee, thank you again for the opportunity to appear before you today. I will be delighted to answer any questions that you may in regards to my remarks.
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