Did the White House Just Help Russia Ban Us From the International Space Station?

President Obama just denied funding for a rocket engine needed to replace the Russian RD-180. So what's up with that?

Jun 29, 2014 at 11:21AM

The International Space Station. Soon to be off-limits to the United States? Photo: Wikimedia Commons

Russia owns a piece of the International Space Station -- and it wants the U.S. to get off of it.

By now, you're probably familiar with the broad outlines of this story. It began in May, with Russian Deputy Prime Minister Dmitry Rogozin:

  • declaring that Russia would no longer sell America's space launch company, United Launch Alliance (ULA), the RD-180 rocket engines it needs to power its Atlas V rockets,
  • threatening to deny U.S. astronauts passage aboard Russian rockets to the ISS,
  • and announcing a desire to ban these astronauts access to the ISS entirely (a threat of doubtful legality).

Soon after, Air Force Undersecretary Eric Fanning promised to initiate a public-private partnership to develop a new rocket engine to replace the RD-180.

Congress moved swiftly to fund the initiative, with the U.S. Senate Armed Services Committee approving $100 million in funding to develop an alternative, liquid-fueled rocket engine to replace Russia's RD-180, and the House Appropriations Committee going them one better -- recommending $220 million be allocated to new rocket development. And in an amazing exhibition of true "public-private partnership," Lockheed Martin (NYSE:LMT), which along with Boeing (NYSE:BA) runs ULA, announced it has already signed contracts with "several" American rocket companies to begin working up "next-generation liquid oxygen/hydrocarbon first stage propulsion concepts" to replace the RD-180.

In no time at all, America was off to the races. If all went well, said Lockheed Martin, it could have a working rocket engine built -- and a rocket ship built to carry it -- by 2019... and maybe even sooner.

Reality check
And then, disaster struck.

On June 17, the Obama Administration released a statement opposing passage of H.R. 4870, the House Resolution that authorized spending $220 million to get America's new rocket engine off the ground. Complaining that these funds had been "unrequested" by the White House, and that "such a program would take eight years to field," the administration argued that the rocket engine Lockheed Martin has promised to build "would not reduce our reliance on Russian engines for at least a decade."


ULA's Atlas V rocket -- doomed to be rocket-engine-less for a decade? Photo: NASA

Complicating matters further, Russia appears to realize it has overplayed its hand as well. In just the past several days, Russian President Putin has called for an extension of the cease-fire between government and rebel forces in Ukraine (if you recall, this whole mess got started when the U.S. sanctioned Russia -- and Deputy PM Rogozin personally, in retaliation for Russian meddling in Ukraine). The Russian president has also instructed his country's parliament to rescind a March resolution authorizing military intervention in Ukraine, attempting to ratchet down tensions with the West.

ULA, meanwhile, says it's continuing to receive shipments of RD-180 rocket engines that it already has under contract from its Russian supplier. So far, says ULA, everything is still "business as usual."

What it means to investors
This is clearly good news for the Defense Department, which may no longer fear an immediate cut-off of its access to the RD-180. For investors, however, the situation has just become "clear as mud."

Will the presidents of Russia and the U.S. reach some sort of "space detente?" Will Russia convince ULA to keep buying its engines, in exchange for the U.S. promising not to develop an alternative?


Russian intransigence over the RD-180 sounded like good news for Aerojet Rocketdyne and its competing RS-25 rocket engines. But will it all come to naught? Photo: Wikimedia Commons

Such a scenario could derail Lockheed Martin's negotiations with its "multiple" rocket engine suppliers -- a list that we believe includes names such as Alliant TechSystemsOrbital Sciences, and GenCorp.. Billions of dollars' worth of development work -- and billions more in revenues from the sale of new, non-Russian-made engines -- are at stake.

Your Foolish takeaway
Personally, I hope that's not the way things play out -- and I don't think it's how they will play out. While President Obama's rejection of spending $220 million to fund an RD-180 replacement is worrisome, I don't believe this genie can be stuffed back into the bottle so easily.

In threatening to cut off our supply of RD-180 engines, and deny U.S. astronauts passage to the space station itself, Russia highlighted the folly of depending on an oftentimes hostile foreign government for America's access to space. This situation simply cannot stand -- and it won't.

Proof? At the same time as it objected to the cost of replacing the RD-180 with a new, American-made engine, the Obama administration emphasized its commitment to "promptly reducing our reliance on Russian technology," and assured Congress that "the Administration is evaluating several cost-effective options ... that will drive innovation, stimulate the industrial base, and reduce costs through competition."

In short, while this story of America's response to the RD-180 crisis continues to throw new twists and turns at us, it's not over yet. Stay tuned.

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threating his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Orbital Sciences. The Motley Fool owns shares of Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information