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Market of Aerospace Services

Khrunichev Center - Leader of the Russian Space Sector


The economic decline and ensuing crisis of the late 1980s, the collapse of the USSR and the disintegration of established production co­operation chains resulted in a sharp drop in the Russian rocket and space industry in the early 1990s, including the Experimental Machine-Building Scientific Production Association and the M.V. Khrunichev Machine-Building Plant.

Both attempted to find a way out through en­tering the world market. By that time the Khrunichev Plant had been declassified and al­lowed to engage in foreign economic operations.

Formation of the Khrunichev State Research and Production Space Center

Back in 1990, the Salyut Design Bureau won the contest for developing the 12KRB cryogenic booster  for the Indian GSLV launch vehicle. In 1991 Glavkosmos, the then foreign economic di­vision of the USSR Ministry of General Ma­chine-Building, signed a $220 million contract with the Indian Space Research Organization (ISRO) for the 12KRB which implied the develop­ment and manufacture of two flying boosters and the transfer of their production technology to India. In the middle of 1992, however, the United States imposed sanctions against ISRO and Glavkosmos because it feared that India would use the Russian technology for military purposes. As a result in December 1993 a new contract was signed that did not provide for the transfer of technologies but increased the num­ber of flying boosters to be delivered. The price of the deal remained unchanged.

In 1992, Salyut together with Daimler Benz Aerospace won the contest of the German space agency DARA for the development of a space­craft with a recoverable capsule for technologi­cal space experiments in the framework of the German-Japanese Express project. The capsule was developed on the basis of the warhead of the UR-100 (SS-11) ICBM.

It was the Proton-K launch vehicle (LV), however, that proved the most profitable commod­ity. By the beginning of the 1990s, there started a worldwide telecommunication boom with nu­merous clients ordering launches of geostation­ary communication satellites. At the time there was an acute shortage of satellite delivery vehi­cles. The European Arianespace seized over half of the market. In the mid-1980s the United States flatly rejected disposable LVs in favor of the space shuttle for launching com­mercial satellites. After the accident with the Challenger, disposable LVs made a comeback but it proved impossible to rapidly organize the production of competitive launch vehicles.

In these circumstances the almost serially pro­duced Proton-K could have become a fairly profitable international market commodity. The designer Sa­lyut and the Khrunichev Plant as the manufacturer both started offering it to foreign clients, often to each other's disadvantage. Evidently their competition and the resistance of foreign LV manufacturers who did not want to let Rus­sia to this market segment resulted in a situa­tion in which Salyut managed to sign only one con­tact by the beginning of 1993. This was for the launch of the Inmarsat-3 F2 satellite with a Proton-K at a dumping price of $36 million, which that did not even cover the expenses on the production of the rocket, nor the purchase of the booster from S.P. Korolev Rocket and Space Corporation (RSC) Energia or the launch that took place in Sep­tember 1996.

On its own, the Khrunichev Plant in 1992 won a tender for launching an Iridium satellite of a low orbit global mobile communication network. The Russian government issued a reso­lution permitting the plant to sign a contract with Motorola for launching such satellites with the Proton-K and also for acting as an investor of the program, channeling $40 million of the earnings from the launches to it. The $156 million con­tract provided for three launches of the Proton-K with 21 Iridium satellites. The launches were conducted in 1997-1998. Later, the Khrunichev Center raised the share of its investments in the Iridium program to $82 million. Due to the bankruptcy of the Iridium program, however,  this direction of commercial operations did not bring the Khrunichev Center the profits it expected.

With the purpose of improving marketing con­ditions, both Salyut and Khrunichev started looking for foreign partners who would help ex­pand the presence of the Proton on international markets. Initially talks were held with Ari­anespace the then market leader in launch services. It conditioned its coopera­tion, however, with a fee constituting about half of the launch price. Talks with Arianespace were stopped due to these exorbitant demands. At the same time US Lockheed (the manufacturer of the Inmarsat-3 satellite), with which Salyut and Khrunichev had closely cooperated in the framework of the satellite launch contract, of­fered more acceptable terms - 15% of the launch cost. In October 1992 the Khrunichev Machine-Building Plant and Lockheed signed an agree­ment on the formation of a joint stock company for Proton-K launches and upgrading. In 1993 RSC Energia joined the agreement as the de­signer and manufacturer of the booster. On April 15, 1993 the Lockheed-Khrunichev-Ener­gia joint venture (LKhE) was registered.

Its main business was the marketing of the Pro­ton LV family and its use for launching foreign satellites.

The situation, however, where two different parties (the design bureau and plant) were offering one and the same LV to foreign clients obstructed the advancement of Proton-K on the market. Their merger was the logical solution. On June 7, 1993 the Russian president issued a decree on the formation of the Khrunichev State Research and Production Space Center (the Khrunichev Center). Head of the Khrunichev plant A. I. Kiselyov was appointed the general director of the center.

The company was given a unique status for those days. It was not subordinate to any ministries or agencies, as was the Russian Space Agency set up in February 1992. Its general director was appointed only by presidential decree. Evi­dently the company received such a high status largely because President Boris Yeltsin's youngest daughter Tatiana Dyachenko worked at Salyut in those days (she quit the Khrunichev Center only in 1994).

The presence of such a staff member must have been instrumental in giving a number of privi­leges to the Khrunichev Center. For instance, the Center was added to the list of companies exempted from privatization and incorporation and it kept its state-owned status. Simultane­ously, it was given the right to foreign economic operations and the use the receipts at its own discretion.

The Khrunichev Center managed to survive and maintain regular production cooperation links with some 150 companies in Russia and CIS countries thanks to its successful foreign eco­nomic operations in the worst times for the Rus­sian space sector. It used the receipts from commercial programs for developing several advanced launch vehicles, boosters and spacecraft without funding from the government.

Khrunichev Center structure

After the formation of the Khrunichev Center and the reshuffle at the facilities constituting it, its structure gradually evolved. In almost nine years of existence it has changed somewhat and currently comprises the following divisions.

The Center proper was placed at the head of the entity. It consisted of commercial units signing contracts with foreign clients and various aux­iliary services. Some services that used to exist both at the plant and the design bureau were streamlined to eliminate overlapping. Later the Center started brining the greatest revenues to the entire entity. Such separation of a foreign economic unit was somewhat unusual. All other units had the status of subsidiaries of the Cen­ter. After the issue of the federal ordi­nance prohibiting the existence of a company and its subsidiaries in the same territory, however, in 1999 the Moscow subsidiaries became ordinary divisions within the Khrunichev Center.

In 1993 the Khrunichev Engineering Plant was renamed the Rocket and Space Plant. It is re­sponsible for the production of rocketry, pri­marily Proton launch vehicles. Its share in the overall Khrunichev business is 55-60%.

The Salyut Design Bureau has preserved its old functions and name. Only its test plant merged with the Rocket and Space Plant at the end of 1999 to stop overlapping. The share of the de­sign bureau in overall operations is 20-25%.

Khrunichev's facilities at the Baikonur space center preparing and testing LVs and payloads for launches, was named the Plant for Operating Rocket-Space Equipment. What makes it unique is that at Baikonur all assembly and test buildings, technical positions and launchers are owned either by the Russian Space Forces or en­terprises of the Russian Aviation and Space Agency responsible for the ground infrastruc­ture. Understanding the need for the repair of old buildings and facilities and construction of new ones the Khrunichev Center has invested several hundred million dollars in the Baikonur infrastructure without formally owning the fa­cilities. The money has been used to alter launcher No. 24 at pad 81 to make it fit for the launches of both Proton-K and the upgraded Proton-M launch vehicles. Extra clean work­shops with work places for foreign spacecraft were furnished at assembly and test facility 92A-50, as well as a structure added to it for fuelling foreign satellites. In the same building a work­ing station was equipped for the Proton-M LV. A filling station was made for the Breeze-M booster. Presently the plant is the biggest investor in Baikonur, securing a large

number of jobs. It per­forms 10-15% of Khrunichev operations.

When the Khrunichev Center was formed in 1993, the non-core production that existed at the Plant was separated and became the Medical Equipment and Commodity Plant. The facility develops and manufactures medical equipment, with an emphasis on apparatuses and equipment for hyperbaric oxygenation, resuscitation and hypobaric hypoxia wards. Its entire business, however, constitutes only a fraction of the overall Khrunichev operations (no more than 0.8%).

Khrunichev Telecom was formed in 1994 to guarantee reliable communications in all divi­sions of the Khrunichev Center, mainly at cos­modrome. In 1995-1999 it was also responsible for participation in the Iridium system. Khrunichev Telecom is currently working on a project of the Dialog communication system re­lying on small geostationary satellites of the same name designed at Salyut. Thus, the Khrunichev Center has followed the same road as leading foreign manufacturers of communica­tion satellites that have their own units offering telecommunication services. The share of Khrunichev Telecom is about 2-3% but it has been growing steadily during the past few years.

In 1997 the Khrunichev Center set up a new subsidiary, the Space Systems Research and Development Institute, on the basis of the De­fense Ministry 50th Research Institute of the Russian Military Space Forces. The chief of the old institute, Maj. Gen.V.A. Menshikov, was ap­pointed its director. At present the institute conducts R&D in the sphere of developing and upgrading space equipment, the application of high technologies and it conducts comprehensive feasibility studies on space projects.

In May 1999 the Russian State Property Minis­try issued an ordinance under which Armatura Design Bureau in Kovrov, Vladimir region, be­came a subsidiary of the Khrunichev Center. Its general director and chief designer Yu. L. Ar­zumanov kept his posts and became deputy gen­eral director of the Khrunichev Center as well. Armatura Design Bureau develops and serially manufactures electropneumatic locking, distrib­uting, regulating and safeguarding equipment for gas supply systems for launch pads and checkout facilities of rocket and space com­plexes. In the past few years, most of the orders and financing have come from the Khrunichev Center in the framework of developing Proton-M LV complexes, the Angara LV family and the 12KRB booster for the Indian GSLV launch ve­hicle. Its share in overall Khrunichev operations is 5-7%.

In addition, the Khrunichev Center tried to assume control over Molniya Scientific Produc­tion Association that is developing the Baikal recoverable first stage for Angara LV in 1998. The State Property Ministry did not give its consent to such a merger, however, because of the differ­ence in ownership forms: the Khrunichev Center is a state-owned enterprise while Molniya is a joint stock company. The Anti-Trust Committee also opposed the take over. Thus, the Khrunichev Center in a fairly good financial position in those years, pursued the same policy of expand­ing rocket and space facilities that was typical of major US and EU corporations in the 1990s.

In addition to the facilities named above, the Khrunichev Center set up the Aircraft Test Design Bureau for the construction of general-purpose light aircraft in 1996. It has designed several aircraft types, but so far only one of them has been built - the T-411 Aist light multipurpose aircraft, and there have been no sales contracts for them as yet.

In 1998, the status of the Khrunichev Center changed significantly. It was made subordinate to the Russian Space Agency (currently Rosavia­kosmos). In 1996-1997, in the framework of re­structuring the Russian rocket and space sector, the agency was placed in charge of 105 compa­nies and facilities. The Khrunichev Center, with its special status, resisted the move for a long time. When it finally accepted the more it managed to broker a number of privileged conditions. For instance, the agency can in no way influence the foreign economic operations of Khrunichev. All returns from commercial projects were directly transferred to it, bypassing the accounts of the space agency. Neither could the agency join the joint ventures Khrunichev had set up for the commercial use of Proton and Rockot launch vehicles.

Evidently to forestall encroachments on its funds, the Khrunichev Center set up the Khrunichev S.ar.L subsidiary in Luxembourg in October 1999. Officially it was formed for the European environmental space monitoring pro­gram GES in which Khrunichev had intended to take an active part. Nonresidents of the EU can not, however, take equal part in EU scientific programs. The subsidiary with bank accounts in Luxembourg, was allowed to circumvent this formal­ity. At the same time, the subsidiary, was placed in charge of the settlements of the Center with its foreign partners. Nevertheless, some of the operations of Khrunichev S.Ar.L still remain unknown.

The special status of the Center allowed it to change its general director in 2001 to its own advantage. Back in 1995, A.Kiselyov chose his suc­cessor by appointing A.Medvedev his first dep­uty. At the time it was a gesture of reconcilia­tion between the Khrunichev Plant and Salyut. In 2000 due to deteriorating health and having reached retirement age, Kiselyov planned to re­sign leaving his post to the chosen successor. Rosaviakosmos, however, tried to place its own man at the head of the Center. Several candi­dates were proposed by different parties. Kiselyov openly opposed Rosaviakosmos and published an open letter to the president in the media on the situation in and around the Khrunichev Center. As a result on February 6, 2001 President Putin approved A.Medvedev the general director of the Khrunichev Center.


Launch services involving the Proton-K LV have been the main source of the Khrunichev Center's revenues in the nine years of its existence. Set up in 1993, the LKhE joint venture was transformed into International Launch Services company (ILS) two years later due to the merger of Lockheed and Martin Marietta in the single Lockheed Martin Corporation. Together with Martin Marietta the corporation acquired the manufacture of the Atlas LV family, which was also offered on the international market. There­fore ILS started marketing two types of launch vehicles: Russian Protons and American Atlases.

The United States gave permission to the ap­pearance of Proton on the international market in September 1993 in exchange for the revision of Russia's contract with India on the 12KRB booster. In addition to the Inmarsat-3 satellite launch a quota of eight launches was assigned to Khrunichev. The quotas applied to satellites or spacecraft of American make or containing American components. The satellites or their components required a license for exportation from US territory. Over half of the operating communication satellites are of American make and some 40% or more contain American compo­nents, so the Untied States could exercise full control over the market of their launch services and impose its own conditions. In addition, the restrictions were imposed only on spacecraft launched to geostationary or transitional orbits but did not apply to the low orbit Iridium satel­lites. Thus, the United States tried to secure the biggest and most profitable sector of the launch service market against possible Russian dump­ing. In April 1996 the number of launches was raised to 20 to be completed by the end of 2000.

Despite the quotas, the Proton was quite success­fully marketed in 1996-1998. Already by the end of 1997, contracts for Proton launches to­taled $1 billion and by the end of 2000 ex­ceeded $1.5 billion. The launch services were no longer offered at dumping prices: the price of a launch was, on a world market level, ranging from $70 million to $90 million for launch. By the end of May 2002, 23 commercial Proton launches were conducted through ILS (one un­successful).

Though the end of 2000 was ap­proaching, the future of commercial launches remained unresolved. Due to complete uncer­tainty there have been no new contracts for Pro­ton launches since August 1999. Only on De­cember 6, 2000 did the US administration can­celled the quotas altogether.

The delay with the quota cancellation caused a decline in receipts from commercial launches. As a result the Khrunichev Center had to slash its personnel by 20% and suspend the implementa­tion of several programs. After the cancellation of quotas, contracts have again been signed but on a much smaller scale. In the past few years Lockheed Martin has developed more powerful launch vehicles – the Atlas III and Atlas V - ap­proaching the Proton-K and Proton-M in their ca­pabilities. In this connection, ILS has been in­creasingly giving orders to American LVs. Thus, due to the transfer of four foreign satellite launches from Proton to Atlas in 2002, Russia lost about $340 million. Besides ILS gets 15% of the contract sum from each Proton commer­cial launch.

Another disadvantage for the Khrunichev Center related to Proton-K commercial launches is the use of the DM booster for which it pays about 40% of the contract sum to RSC Energia. It is for this very reason that in 1996-1998 the Khrunichev Center stepped up the development of its own Breeze-M booster for the Proton. Due to the shortage of funding, however, its production has been extremely slow. To date only three Breeze-M boosters have been made and not a single commercial one. The Khrunichev Center has to make large advance payments for the DM boosters to RSC Energia. In April 2002, ahead of the DirecTV-5 satellite launch, it evidently failed to make such a pay­ment and Energia refused to supply the booster altogether, despite their partnership in one joint venture. The booster was delivered only after the settlement of the financial dispute.

Given the tendency towards the growing weight of geostationary communication satellites, the Khrunichev Center has been up­grading Proton-K to increase its carrying capac­ity since 1992. The modification is known as the Proton-M. Due to the same lack of resources, only one LV of this kind has been launched under the government space program. The commercial use of the Proton-M will begin no sooner than 2003.

Lately there have been difficulties with the pro­duction of the Proton-K. Launches under the Rus­sian Federal Space Program bring no profits to the Khrunichev Center. After the entire stock of these LVs from the arsenals of the Russian Armed Forces was used up in 2000, the Proton-K for each concrete launch is delivered to the cos­modrome directly from the workshops of the Center.

In the framework of ILS, the Khrunichev Center and Lockheed Martin agreed on mutual investment in expanding the produc­tion of Proton LV in 1998. There were plans of boosting their production to 16 units by the 2001 through these investments. The ILS was sup­posed to contribute $38 million and the Khrunichev Center $68 million. But as Lock­heed Martin did not get permission from the US State Department for investing its resources and the Khrunichev Center failed to make its own contribution due to a drop in returns from commercial contracts the production of the Proton-K has remained at 7-9 units a year. The average number of annual commercial launches is four.

Evidently, the Proton will now be used for commer­cial launches on a declining scale. Nevertheless, ILS has exclusive rights to such launches. The manufacturer - the Khrunichev Center - has no right to sign contracts with foreign clients. Thus Americans who remained on the market in the mid-1990s with the help of the Russian Proton are now ousting it from the same market.


In 1994 the Khrunichev Center signed an agreement with the German Daimler Benz Aero­space (DASA) for the commercial use of the Rockot LV for launching light spacecraft into low orbits. On March 22, 1995 the Eurockot Launch Ser­vices GmbH joint venture was registered in Bremen with DASA having a 51% stake in it and the Khrunichev Center 49%. At the first stage DASA promised to invest $30 million in a space launch complex at the Plesetsk space center in northern Russia chosen as the site for the commer­cial launches of Rockot.

On July 1, 1995 the Russian government passed a resolution allowing to rebuild the launcher at pad 133 in Plesetsk for the Rockot. At that time the first commercial launch was planned for 1996. Due to delays in funding by the Ger­man side, the date of the first launch was con­stantly put off. The first test launch of a Rockot with two mockups of Iridium satellites was con­ducted only in May 2000. During that time in 1997, DASA had transformed into Daimler­Chrysler Aerospace and in October 1999 joined the European Astrium aerospace concern.

In 1994 the Khrunichev Center purchased 35 UR-1000NUTTKh (SS-11) ICBM, from the Rus­sian Defense Ministry for commercial launches. The missiles were decommissioned under the START I treaty even though their service life had not expired.

The price of a Rockot launch announced by Eurockot is $12-13 million for a single payload and $12.5-14 million for multiple launches. The estimated frequency of launches is up to six a year, even though the technical and launch com­plexes permit the reduction of the time between launches to eight days.

However, at the moment Eurockot LV has only several contracts in its portfolio for no more than $60 million. The first launch of two American-German GRACE scientific satellites was conducted on March 17, 2002. Two Ameri­can Iridium communication satellites are to be launched in June. Next year two minisatellties - the Czech MIMOSA and the Canadian telescope MOST - are to take off together with the Rus­sian Monitor-E satellites. The launch of the Japanese experimental SERVIS-1 with a Rockot is also scheduled for the beginning of next year.

The Khrunichev Center has not been getting a big flow of receipts from the Rockot program that it had expected primarily because most ex­perts at the beginning of the 1990s had grossly overestimated the market of small payloads. Ac­tually the market proved to be much smaller.

The Khrunichev Center links its plans of com­mercial launches of small satellites to low orbits with its new light Angara-L LV. However, it is being marketed by ILS, not by Eurockot.

International Space Station

On September 3, 1993 in Washington, DC Rus­sia and the United States signed an agreement on building a new space station. The project in­volved the space agencies of Russia, the United States, Canada, EU countries and Japan. RSC Energia was chosen as the core company on the Russian side.

In autumn 1993, the Khrunichev Cen­ter conducted confidential talks with Boeing - the American core company involved in the ISS project. The talks centered on the first compo­nent of the station that later became the Inter­national Space Station (ISS). Representatives of Khrunichev suggested that it be the energy module developed on the basis of the old project of a functional cargo block of the Almaz com­plex. In its size and key elements it was identi­cal to the modules of the Mir station. The func­tional cargo block was supposed to receive, store and distribute fuel in the integrated pneumohydraulic system, host scientific, ex­perimental and other special purpose equipment and act as a storage place for disposable re­sources and reserve equipment. In addition, it was expected to guarantee the power supplies of the ISS at the initial stage of assembly, control movements, maintain the altitude of the sta­tion's orbit and also dock with future ISS com­ponents: the American Node 1 module (later named Unity) and the Russian Zvezda service module.

In October 1993 a $215 million contract for the construction of the block was signed in Moscow despite the resistance of RSC Energia. Later, given two significant changes in the module, the sum of the contract was raised to $250 million. The functional cargo bloc called Zarya was launched on November 20, 1998.

For safety's sake, in the process of making Zarya the Khrunichev Center built a standby copy of it the FGB-2. At the moment of the Zarya launch to the ISS, the standby was in a state of one year's readiness, which means that if there had been any failure in the Zarya launch, the standby unit could have been prepared for launch in 12 months. As there proved no need for launching the FBG-2, the Khrunichev Center started seeking the most beneficial way of applying the partly manufactured module. In December 2001 it signed a contract with Boeing on developing the commercial space module SCM on its basis. The American company agreed to invest $50 million in the project. In addition the Khrunichev Cen­ter signed a letter of intent with the European Astrium Company on its involvement in build­ing CSM. The spending of the Khrunichev Cen­ter on the FGB-2 as a standby of Zarya is estimated at $53 million. The launch of the module is ten­tatively slated for the end of 2003.

Advanced programs

In the 1990s the Khrunichev Center worked on a number of promising projects, the biggest of which was the Proton-M LV, the Angara family of light, medium and heavy launch vehicles, the Breeze-M and Breeze-KM boosters, the oxygen-hydrogen booster for the Proton and Angara families, the Yachta generic space bus, the land remote sensing satellite Monitor and the com­munication satellite Dialog developed on its ba­sis.

In August 1994 the Khrunichev Center was de­clared the winner in the contest for developing the heavy space rocket system Angara ordered by the Russian Defense Ministry. In 1997 it sug­gested altering the project by applying the ideology of composite modular rockets assembled out of multipurpose modules. Thus, not only heavy launch vehicles would be developed but a whole family of carriers of different class depending on the number and type of modules. The Center suggested a whole range of launch vehicles to replace all the existing ones: Angara-1.1 would replace Kosmos-3M, Start and Rockot, Angara-1.2 - Cyclone-2 and Cyclone-3 made in Dni­propetrovsk, Angara-3 - the Russian Soyuz-U, Soyuz-2 and the Ukrainian Zenit-2, Angara-5 - Proton-K and Proton-M. The program was resisted by Rosaviakosmos and the Russian Defense Ministry, however, because it would mean rocket production would be curtailed at all other fa­cilities. Nevertheless, the Khrunichev Center continued its work on Angara LV at its own ex­pense.

By 1999, money started running out due to the decline in orders for Proton LV commercial launches. Evidently due to this on July 28, 1999 the Khrunichev Center signed an agreement with Lockheed Martin selling the rights for marketing the whole Angara family for $68 million. Payments under the contract began in January 2000. This created a paradoxi­cal situation where an American company subsi­dized the development of launch vehicles that were supposed to be used both for commercial satellite launches and for taking to orbit Russian civilian and military payloads.

The first commercial launch of the lightest An­gara-1.1 modification was planned for the end of 2003. While the Khrunichev Center could fund the development of the LV and the construction of the RD-191M engine for it, finds were insufficient for building a space launch complex for the Angara in Plesetsk. The Khrunichev Center is now trying in every way to at­tract government funding for this. In October 2001 it also took a $40 million loan for two years. So far work in Plesetsk, however, has been too slow to stick to the initially planned date of the first launch.

In addition, ILS, having the right for the com­mercial launches of Angara, will probably give preference to the comparable Atlas V family of modular launch vehicles developed by Lockheed Martin. Even at the time when the agreement was signed the ILS leadership said that the share of Angara in total sales volumes would be approximately 30%. In actual fact the share may be even lower.

Nevertheless, the Khrunichev Center foresees even more promising options for advancing the An­gara system. It is even considering the possi­bility of developing a recoverable Baikal stage capable of returning to the launch site area without an intermediate landing on the ba­sis of a disposable first stage. This project, however, belongs to the very distant future.

In rocket making in addition to the Angara and the abovementioned Proton-M LV and Breeze-M booster the Khrunichev Center has been work­ing on the oxygen-hydrogen booster KVRB that could be applied both on Proton-M and heavy versions of Angara increasing their energy capa­bilities.

The development of the Yachta generic space bus is a new direction in the operations of the Center. It is meant to be launched with the Rockot, the Angara-1.1 or the Angara 1.2. The electric thrusters allowing for a transfer of a satellite from a low tran­sitional orbit to even a GSO, give the bus a high energy potential.

The low orbit LRS of the Monitor family and the Dialog geostationary communication satel­lite have been developed on the basis of Yachta. The first Monitor-E is to be launched at the be­ginning of 2003. Talks are already under way on the sale of part of the data from it to the govern­ment of Venezuela. The Khrunichev Center hopes that Monitor satellites will be in demand in the framework of the European environ­mental monitoring program GES the funding of which was launched in October 2001.

The first communication satellite Dialog-E1 is to be launched at the end of 2003 or the begin­ning of 2004. The contract for its use was signed on October 24, 2001 between the Khrunichev Center and the Russian Satellite Communication Company (RSCC). Considering that this will be the first satellite in its class the RSCC has chosen very cautious terms of using Dialog-E1: it will make annual payments for renting all the transmitters of the satellite. In addition the Intersputnik International Organiza­tion of Space Communications has signed a con­tract for building two Dialog satellites and launching them in 2003 in the framework of its Inersputnik-100 program. The Khrunichev Center, however, has still not received any payments under this contract, and therefore sees the prospects of its cooperation with Intersput­nik as illusionary.

Current status

At present, owing to the decline in the number commercial launches of the Proton-K LV the Khrunichev Center is no longer in the bril­liant position as in 1996-1998. In 1997-1998, this decline had been predicted. While in 1997 under all commercial programs receipts totaled $497 million and in 1998 $541 million, in 2000 receipts were expected only at $118 million. Due to the cancellation of quotas and the signing of new contracts, it is possible that the Khrunichev Center has managed to earn a little more in 2001 -  $150-180 million, accord­ing to different estimates.

Nevertheless, commercial programs remain the main article of its funding. During the past few years 20-30% of the operations of the Center were ordered by Rosaviakosmos, 7-10% by the Defense Ministry and 60-75% were conducted under commercial programs.

The Khrunichev Center links its future with the commercial use of the Proton-M and the Rockot, the beginning of the Angara family use, the con­struction of new modules for the ISS and small satellites on the basis of Yachta generic space bus.

The rivalry over control for the Center contin­ues. In May 2002 there appeared media reports that, in keeping with the program of reforming the defense industry approved by the govern­ment the Industry and Science Ministry to­gether with other interested agencies should draft proposals on incorporating individual de­fense facilities. The Khrunichev Center is among the first to be incorporated shortly. The state will than own 100% of its shares. Later, Khrunichev will join one of the integrated structures that are to be set up in the frame­work of the reform program.

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