Space Launch Quota

The quota for launches of satellites to geosynchronous orbit on Russian boosters raises complex issues that touch on our non- proliferation objectives, our space launch and satellite industries, and on the integration of the Russia's space sector into the international economy. I welcome the opportunity to address these issues with you today.

The space launch quota was part of the solution to a non-proliferation problem we faced in the early 1990's. At that time, a Russian company had a contract to sell production technology for cryogenic rocket engines to India for a space launch vehicle. Transferring missile technology to India was a sensitive proliferation issue then, as it remains today. Following intense, high-level negotiations, an agreement was reached in which Russia agreed to cancel the contract to transfer rocket engine production technology to India and to abide by the MTCR guidelines, and the U.S. agreed to permit Russia to launch U.S. satellites to geosynchronous orbit, subject to a quota. That quota is now 16 through the year 2000, and the Administration has decided to increase that quota to 20. The agreement also imposes certain restrictions on the prices charged for these launches.

At the time of the 1993 agreement, the purposes of the quota were to protect the U.S. space launch industry from unfair competition from a non-market economy, as we worked to allow the U.S. satellite industry the benefits of access to Russian launches, and to give Russia access to the space launch market in return for important non-proliferation commitments. It also made sense from a non-proliferation point of view to engage thousands of high-tech scientists and engineers in legitimate commercial activity, in one of the few areas where Russia has world-class technology. In fact, we made clear to the Russians at the time that the continuation of the space launch agreement was contingent on Russian missile non-proliferation behavior.

Today the market for space launch has grown substantially beyond what it was in 1994, and the commercial rationale for quotas is much less than it was then.

But the non-proliferation problem is very much still with us, in particular Russian transfers of missile technology to Iran. We have devoted a great deal of effort over several years to halt cooperation between Russia's aerospace industry and the Iranian missile program. First Frank Wisher and now Bob Gallucci have led teams that have engaged in intensive exchanges with the Director General of the Russian Space Agency, Mr. Koptev.

This issue remains at the top of the U.S.Russian agenda, and our concerns have been addressed numerous times by President Clinton and President Yeltsin, most recently at the G-8 summit in Cologne last month. Vice President Gore has made this a major issue with a series of Russian Prime Ministers, including Mr. Stepashin, plans to address this issue in their meetings next week.

As part of the Administration's press on non-proliferation, Secretary Albright, National Security Advisor Berger, and other senior officials actively engage their Russian counterparts on the Iran missile problem at every opportunity.This intensive effort has achieved some important results, the most important of which is the passage of new export control legislation by the Duma and the Federation Council in the last few weeks. The new law provides a strong legal basis to stop transfers and punish violators. The Russian government has also committed itself to implementation of a plan of action drawn up by Gallucci and Koptev designed to bring about an end to cooperation between Russian entities and the Iranian missile program.

An important element of our non-proliferation strategy was our decision in early 1998 to tie an increase in the space launch quota to Russian performance on curtailing missile cooperation with Iran, just as we tied the original quota to Russian performance on missile cooperation with India. Our strategy includes other elements, including the trade penalties which we have imposed on 10 Russian entities for missile and nuclear cooperation with Iran. We believe it is both logical and in our security interest to control Russian access to the U.S. space launch market as long as Russian aerospace companies are cooperating with the Iranian missile program, and to encourage commercial space ventures consistent with our nonproliferation objectives.

By providing both incentives and penalties, our policy is intended to encourage the Russian government to police the Russian aerospace industry. We do not want to wind up with a situation in which some Russian companies are responsible and work with the United States, and others remain free to contribute to Iran's missile effort. Again, our policy is aimed at the organization that can resolve this across the board - the Russian government.We have recently decided to pursue an incremental increase of the space launch quota from 16 to 20 launches through 2000. This decision was taken not because the Russia-Iran missile problem has been solved, but because the Russian government has taken steps in recent weeks to support a strong non-proliferation policy and direct government agencies to implement it, to create institutional structures to enforce compliance and strengthen export controls, and to pass laws needed to punish wrongdoers. But we need to sustain the pressure to use these new tools to curtail technology transfers to Iran. That is why our increase is incremental, to give the Stepashin government time, perhaps another 6 months, to follow through on the commitments it has made to us.

We remain hopeful that our strategy will in the end give us the non- proliferation benefits of a cut off in assistance from Russian entities to the Iranian missile program, as well as the commercial and non-proliferation benefits of a strong commercial partnership between the U.S. and Russian commercial space industries. There are of course risks, but we continue to pursue an outcome that achieves both of these benefits for the United States.