Russia Is Turning Elon Musk into Tony Stark

[frigidmagi]

bloomberg

If the Ukraine crisis did not exist, Tesla founder Elon Musk would want to invent it. The new Cold War between the U.S. and Russia is helping Musk realize his dream of wresting the U.S. space launch market from behemoths Boeing and Lockheed Martin, which control it through their United Launch Alliance.

Musk's biggest helper? An overweight, spiteful, nationalist Russian politician named Dmitri Rogozin, the deputy prime minister in charge of the country's defense industry.

On Tuesday, Rogozin threatened to stop selling ULA the RD-180 rocket engines that the U.S. company uses in its Atlas V rockets. "We will not be able to continue supplying RD-180 engines if they are used in the U.S. for non-civilian purposes, and we will not be able to continue servicing already supplied engines in U.S. territory," he said. This is Brer Fox flinging Brer Rabbit into the briar patch. Musk must have to stop himself from jumping up and down and singing: "I was born and bred in the briar patch!"

On April 30, Musk's rocket company, SpaceX, won an injunction from the U.S. Court of Federal Claims. This banned ULA from buying anything from RD-180 producer, NPO Energomash, or "any entity, whether governmental, corporate or individual, that is subject to the control of Deputy Prime Minister Rogozin." The ruling was based on Rogozin's inclusion on a U.S. list of individuals sanctioned in response to Russia's actions in Ukraine.

The ULA responded angrily and promised to resolve the situation quickly. The injunction was lifted on May 8, although the court case continues.

On its merits, the injunction did not deserve to stand. In Russia, state-owned enterprises account for 81 percent of the equally weighted average of the country's top ten firms' sales, assets and market value. By that measure of state concentration, only China and the United Arab Emirates are ahead of it in the world. If the U.S. decides not to deal with any of the government-controlled entities directly or indirectly controlled by sanctioned bureaucrats, it will create one of the harshest set of sanctions ever imposed on any country. This does not appear to be the U.S. administration's intent in drawing up the staged sanctions, at least not yet.

In the meantime, though, Russia may well shoot itself in the foot because Rogozin is so mad at the U.S. -- and Musk appears to be goading him on. After the Russian deputy prime minister quipped that, as a result of the sanctions, the U.S. will end up "using a trampoline" to send astronauts to the International Space Station, Musk tweeted: "Sounds like this might be a good time to unveil the new Dragon Mk 2 spaceship that SpaceX has been working on w NASA. No trampoline needed."

Musk's problem is that the U.S. Air Force won't consider SpaceX Falcon rockets for its launch program, because they are not yet certified. Though SpaceX says it can do the job for a fraction of ULA's price of more than $200 million per launch, the Boeing-Lockheed Martin joint venture has the advantage of having pulled off 68 consecutive trouble-free launches. SpaceX has only done nine so far, for NASA and some telecommunications companies, and one of the payloads was lost. Musk has been waging a no-holds-barred public war to get into competition with ULA, and has now seized on the joint venture's use of Russian engines as a powerful argument.

ULA has a second rocket, the Delta, which uses U.S.-built engines. If worse came to worst, ULA could switch all its launches to Deltas from Atlases, and it has a two-year supply of RD-180s to ensure a smooth transition. In the politically charged atmosphere of a new stand-off with Russia, however, it isn't the technology that matters so much as Musk's ability to present himself as a patriot, rushing in to save his country from malevolent Russians. My colleague Mark Gilbert suggested recently that investors in Tesla are really buying into Stark industries, the company of the comic book character Tony Stark, a.k.a. Iron Man. That is an apt metaphor. Like Stark, Musk wants to be the U.S. government's favorite high-tech supplier and has been rather successful so far: His projects, including SpaceX, have received generous subsidies.

More surprising than Musk's public lobbying is Rogozin's boorish cluelessness as to his country's interests. Russia, a leader in rocket technology, does not want to get locked out of the U.S. market, as China is. Yet the head of Putin's military-industrial complex threatens to halt engine sales, stop funding the International Space Station after 2020, and switch off GPS terrestrial measuring stations in Russia. Musk should be paying the man a salary for providing him with the business opportunity of a lifetime.

Musk does seem to be benefiting from this.

[rhoenix]

Gleefully, at that.

This whole situation is getting more and more interesting as time goes on.