Monday, April 07, 2014

The Crimean Crisis and Canadian Aerospace Activities

          by Brian Orlotti

Russia’s recent annexation of the Crimea region of the Ukraine has caused repercussions in at least two Canadian space and aerospace firms.

As outlined in the April 24th, 2013 Broadband TV News article, "Satellite Viewing Grows in the Ukraine," the use of satellite downloads is now the most popular way to access television signals in the Ukraine. Until recently, the region has been considered a high growth area for international firms focused on supplying satellite technology.

As reported in the April 1st, 2014 Canadian Press article "MDA suspends ground work in Ukraine satellite program," BC based MacDonald Dettwiler (MDA) has invoked the "force majeure" clause in a contract for ground infrastructure facilities for the Ukrainian communication satellite program because of the country’s political instability.

According to the article, the work is expected to be delayed four to six months and the final costs
Oleksandr Zinchenko. Photo c/o Wikipedia.
associated with the stoppage are "yet to be determined.

Of course, MDA possesses substantial business interests in this area and no one knows the long-term effects of a delay in the program. 

As outlined in the December 15th, 2009 SpaceRef Canada article, "MDA To Build Communication Satellite System for Ukraine," the original deal was signed in 2009 for $254Mln USD ($279Mln CDN) and was believed to be the beginning of a long-term and profitable relationship. 

According to Oleksandr Zinchenko, then the director-general of the National Space Agency of the Ukraine (NSAU), "'we are very excited for this contract award, which is the first major step in a long-term strategic partnership between NSAU and MDA in the fields of satellite communications and Earth observation."

But MDA isn't the only Canadian company dealing with the challenges of the latest crisis. According to the March 21st, 2014 Canadian Press article, "Bombardier Russian venture at risk over Crimea crisis," the current situation could also hamper the attempt at Dorval based Bombardier Aerospace to finalize a joint venture with Russian state-owned defense firm ROSTEC (formerly Rostekhnologii) to build Q400 turboprop aircraft in Russia.

Pierre Beaudion. Photo c/o CBC.
In August 2013, Bombardier signed a letter of intent to sell up to 100 Q400 turboprops valued at about $3.4Bln USD ($3.74Bln CDN). The company had also reached a tentative deal to setup a turboprop assembly line in Russia and was expecting to sign final agreements this year. Bombardier has also been courting various Russian airlines, moving into what it sees as a huge untapped market. In 2013, Russian aircraft leasing company Ilyushin Finance Co. agreed to purchase at least 32 Bombardier flagship CSeries jets in a deal valued at about $2.56 billion USD. 

According to Bombardier CEO Pierre Beaudoin:
For Bombardier, Russia is not that big today, but it’s a very large potential country. Like many international companies we are going to follow this very closely.
Bombardier expects the CSeries to contribute $5-8 billion USD a year in new revenue later this decade, as Beaudoin told analysts and investors in New York on March 20th.

But Beaudoin was also unable to say how long these deals could reasonably be delayed, citing uncertainty over whether the situation in Crimea will escalate.

Of course, other Canadian firms have continued working with Russia with little or no disruption. Despite the trepidation and uncertainty, some are even saying the effects of the Crimean situation are mostly symbolic and won’t cause long-term damage. 

For example, as outlined in the April 5th, 2014 eCanada Now article "Canadian company broadcasting HD feeds of Earth not affected by Russian aggression against the Ukraine," Vancouver based UrtheCast Corp., which recently worked with the Russian space agency Roscosmos to mount two HD cameras aboard the International Space Station (ISS) and send images back to Earth, continues to work with Russia, often sending their engineers there.

Scott Pace testifies during a Senate appropriations defense subcommittee hearing on Capitol Hill in Washington, DC on March 5th, 2014. The hearing dealt with national security space launch programs. Photo c/o Pete Marovich/Bloomberg.

The April 3rd, 2014 Guardian article "NASA cuts ties with Russia over Ukraine crisis, except for space station," went further when it quoted Scott Pace,director of the Space Policy Institute at the George Washington University Elliott School of International Affairs, as saying that it was noteworthy that co-operation relating to the ISS remained intact.

Pace also said that there would likely be disruptions for NASA scientists who exchange data or work on experiments with Russian researchers, but while the communications ban applies to direct communication between NASA and Roscosmos, it does not include meetings attended by Russia and other countries.

Chris Hadfield. Photo c/o Chris Young/CP.
As for the Canadian Space Agency (CSA), its keeping to business as usual, at least for now. 

The April 4th, Toronto Sun article "Canadian Space Agency keeping ties with Russia for now," has even referenced a Friday CSA statement which read, "while the government views the current situation in the Ukraine with great concern, the Canadian Space Agency will continue to work with its Russian counterpart to ensure the safe and effective operation of the International Space Station."

The article also quoted retired Canadian astronaut Chris Hadfield, who said that space agencies must often work together through disputes, small and large:
It would be great if everybody was always together on everything, but we surely aren't. This isn't the only area of dispute between nations. Canada and the U.S. have areas that we dispute all the time, and yet we co-operate on most things.
Brian Orlotti.
Hadfield’s words doubtless reflect the desire of many to see space continue to be a force for bringing people and nations together through commerce and science rather than the ideological battleground of the past.

Let's sit back for awhile and see where that takes us...

Brian Orlotti is a Toronto-based IT professional and the treasurer of the Canadian Space Commerce Association (CSCA).

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