Ahmadinejad's Ark, and Why Boeing Must Stop It

The story would be comical if it were not so serious.

On Wednesday, Iran announced the successful launch of a Kavoshgar-3 "research rocket" into space. Tagging along for the ride -- a mouse, two turtles, and a whole passel of ... worms. Call it Ahmadinejad's Ark.

Ahmadinejad's Ark
Upon televising the event, Iranian President Mahmoud Ahmadinejad promptly boasted that the launch proves Iran has arrived as a cosmic power. It's a worthy rival to the West in space, and within the decade, will put a man in orbit. In furtherance of which, Ahmadinejad also announced the development of a light booster rocket and three new, Iranian-built satellites. One year after Iran launched its first homegrown telecom satellite into orbit, Iran is announcing that it's joined the space race in earnest.

And yet, rebutting the Iranian leader's announcement, the Washington-based Center for Strategic and International Studies (CSIS) pointed out that "Worms in space serve no [scientific] purpose." If you want to test life support systems so as to ensure your first astronaut will be able to breath, and not freeze to death, CSIS argues, you don't send turtles -- you send another hominid, such as a chimp. So what, a Fool can wonder, was Iran's real purpose in sending this motley menagerie skywards?

The answer, I fear, is as simple as this: If you send a rocket into space, and it stays up there, you've launched a lift rocket. Innocuous. Civilian. Commendable, even. But what do you call a rocket that goes up into space, and then ... comes back down? This, my friends, we call an ICBM.

Turtles in space
According to CSIS: "The launch was clearly part of Iran's effort to advance military technology and assert political dominance in space. ... It's also a show of confidence. Space rockets give you prestige and influence, and that is what Iran seeks." But the truth of the matter is a little more sinister than that, folks. As the international huddle over what to do about Iran's nuclear weapons program continues, and reports of potential preemptive strikes by Israel or the U.S. filter out, Iran just sent us a message: "We've put rockets in space twice now. We've got a new booster ready. (See how shiny it is?) We can do it again -- and next time it might not be carrying turtles."

OK. Message received. What's this got to do with investing?
Fair question -- here's the answer. Earlier this week I penned a little piece here describing how the Pentagon recently requested $9.9 billion for missile defense. At the same time it was doing that, however, they were busy ruining their reputation for the projects' feasibility, by launching, then failing to shoot down, a facsimile Iranian missile.

This was, to put it mildly, "bad news" for the U.S. defense and aerospace industry. Earlier this week, the government promised to abandon the $9 billion investment it's already made in the project led by Lockheed Martin (NYSE: LMT  ) to return to the moon, wind down the Constellation program, and move instead toward a system of hiring private contractors to handle space projects on the cheap.

So the administration has already demonstrated antipathy to government-funded rocket projects. When Boeing (NYSE: BA  ) , Harris (NYSE: HRS  ) , and Raytheon (NYSE: RTN  ) teamed up to fumble the nuclear football on Sunday, they handed Pentagon doves a silver-plated excuse to trade away missile defense funds in this year's annual Congressional budget battle, and further reduce government support for the nation's rocket builders.

Foolish takeaway
To an extent, I would understand the logic behind such a move. We're still in the middle of the Great Recession. Money's tight, and we've got to cut spending somewhere. That said, there are certain things that the Administration wants to do -- bring UnitedHealth (NYSE: UNH  ) and its insurance industry peers to heel, make college more affordable, and ensure that Bank of America (NYSE: BAC  ) and Goldman Sachs (NYSE: GS  ) don't wreck the U.S. banking industry again. But there are other that it must do ...

Seems to me, Iran's just added "missile defense" to that list of "musts." Its threat to produce an honest-to-goodness ICBM could secure funding already allocated to missile defense projects. It could even cause the Pentagon to revisit past decisions to kill missile defense projects: the Kinetic Energy Interceptor, Airborne Laser -- any or all of these could be put back in play if the Pentagon perceives the threat to be real. So in spite of recent missile defense setbacks, companies with expertise in this area might see their fortunes reverse as this story develops.

Because flying turtles are no laughing matter.

What single company has the most to gain from a refocusing of funds on missile defense? Take a free trial to Motley Fool Rule Breakers, and find out.

Fool contributor Rich Smith is does not currently own any stocks named above, UnitedHealth Group is a Motley Fool Inside Value pick, a Motley Fool Stock Advisor selection, and the Fool owns shares of UnitedHealth Group. The Motley Fool has a disclosure policy.


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