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PRESS CONFERENCE WITH FEDERAL SPACE AGENCY HEAD ANATOLY PERMINOV ITAR TASS, 11:00, DECEMBER 27, 2005
[December 27, 2005]

PRESS CONFERENCE WITH FEDERAL SPACE AGENCY HEAD ANATOLY PERMINOV ITAR TASS, 11:00, DECEMBER 27, 2005


(Federal News Service (Russia))

Moderator: Welcome to ITAR-TASS and I wish you all the best in
the new year. I am glad to introduce our speaker today, the head of
the Federal Space Agency Anatoly Nikolayevich Perminov. Thank you
for coming. I suggest the usual format. First, Anatoly Nikolayevich
will tell you what he will see fit to tell you and then we will go
into questions and answers.

Perminov: Before I forget, I would like to wish you a happy New
Year and to thank you very good and timely coverage of the space
situation on the ground and above the territory of Russia.

I will just speak for 7-10 minutes. We have been working to
achieve three main strategic objectives: to make the use of outer
space effective for the solution of the tasks facing Russia,
second, broadening international cooperation and compliance with our
international obligations and third, strengthening and developing
the space potential. These three strategic objectives for 2005 are
subdivided into a multitude of tactical objectives which will surely
be touched upon during the questions and answers period.

In terms of the main documents on which we have worked we have
seen the competition of the federal space program for 2001-2005, the
GLONASS federal targeted program for 2002-2011 and, most
importantly, we worked on the new federal space program until the
year 2015.

What have been the accomplishments and setbacks? The main
tactical task, of course, was to restore the group of civilian
satellites in orbit. This year we made 24 launches of carrier
rockets. Last year there were 23. So, this year we launched one
than last year. And as I reported to you, we finally regained first
place in the world in terms of the number of launches. While the
Americans made 16 launches last year, this year they made 12. This
is not a case one-upmanship, but we do keep track of who is in the
first place in the world and who is in the second place. At present
we have made 24 launches and the Americans, 12. How many satellites
have we launched? We launched 20 purely Russian satellites and the
remaining ones are international under different programs.

The United States launched 12, Europe 5, China 5, Japan 2 and
so on.

If you are interested in space launching sites, I can tell you
briefly that if you take the distribution of launches among
countries, Russia accounts for 45.3 percent of all launches in the
world, the United States accounts for 22.6 percent and Europe is in
third place with 9.4 percent. In terms of commercial launches Russia
accounts for 45 percent, the US for 5 percent, Europe for 25
percent, the international Sea Launch project accounts for 20
percent and China for 5 percent.

We are in first place as regards the performance of launching
sites. Baikonur accounts for 32.1 percent of all launches. Second
and third places are shared by Vandenberg and Canaveral 11.3 percent
each. In terms of carrier rockets, Soyuz accounts for 18.9 percent,
Proton for 11.3 percent and Atlas for 6.1 percent, Sea Launch
accounts for 9.4 percent. So, Sea Launch is in third place. As you
see, the main load was borne by Soyuz.

We had three abortive launches: Molnia from Plesetsk, Molnia-3K
communications satellite; then CryoSat, an international launch; and
the Solar Sail was launched from a submarine in the Barents Sea.

As for the state of the group of satellites in orbit, we have
exerted every effort, together with the Defense Ministry, to meet
the target set under the GLONASS program. You know that the Defense
Minister yesterday delivered a report to the President and it
contained some good news for us because the President has given
instructions to us to work out proposals on adjusting the GLONASS
federal targeted program and to restore the group of navigation
satellites within the shortest time possible. We are already
fulfilling that task.

As regards the assets for putting satellites in orbit, in spite
of the lag in financing over the past years, this year I am happy to
report to you that all the programs were funded 100 percent. It is
the first year when the government fully met its commitment to
finance federal space programs. And in addition, the government has
approved the federal targeted program for the development of Russian
space launching sites. That is what I thought I would tell you for
starters. For the rest, I would prefer to answer your questions.

Moderator: Thank you. I am opening it up for questions.

Q: When is Roskosmos going to announce a tender for the
development of the Kliper and who will be the bidders?

Perminov: The tender for the development of the Clipper has
already been announced. It will take place in January, on January
18. There are three bidding enterprises. It will be a closed tender.
But I can name the enterprises: RKK Energia, the Khrunichev and NPO
Molnia. And you will know the results of the tender.

Q: RIA Novosti. The Defense Minister reported to the President
yesterday and please correct me if I am wrong: he said that under
the GLONASS program we have 19 satellites in orbit now. But
according to other data, after the successful launch of three
GLONASS satellites there are now 17 satellites. So, my first
question is, what is the true number of satellites now in orbit? And
the second and important question. The President has set the
target of speeding up the launch of GLONASS satellites, so this
would be done earlier than planned. Can we do this? Are there
capabilities for that? What about financing?

Perminov: The defense minister did not make any mistake. We
have 17 satellites now. Your information is right. As for the
figure, 19, we have two satellites which used to be regarded as
spacecraft in the past. They are laser reflectors. They are still
functioning in the orbit and they have been used for the intended
purposes. We just do not regard them as spacecraft that are part of
the satellite group for the GLONASS system. So, 17 spacecraft can
really work today.

As for deadlines, yesterday and today I held a number of
meetings with the participation of the head of the enterprise,
Albert Kozlov, who said it is quite possible to have this done
earlier, if the program is somewhat modified in terms of financing.
So, by January 15 we will have all proposals prepared and reported
to the president.

Q: Rosoboronexport is known to have a division dealing with the
marketing of launch services. In what way have you interacted with
them? In what way have you divided markets? Second, what are the
decisions related to Egypt?

Perminov: We have signed a contract with Rosoboronexport. It
was signed during the MAKS exhibition and it outlines procedures,
including those related to the problems you have touched upon. We do
not have any problems in our relationships. On the contrary, our
interaction has been complementary. The thing is that
Rosoboronexport has a ramified network of representative offices in
all countries. We have agreed that we will use their opportunities,
their specialists for promoting space-related services. This lets us
reduce costs and this lets them work.

Really, there are some issues related to the fact that we lose
some contracts as they are made via Rosoboronexport, but this is the
Russian state anyway. So, even if we get orders via them, our
enterprises perform those orders.

As for your second question, the Egyptian E-Star spacecraft, a
tender has been announced for that system in Egypt and we have
energetically participated. Who wins the tender is hard to tell at
the moment. I just know that the Egyptian side wants the cost of the
project to be reduced as much as possible. The second condition is
that opportunities should be created for the assembly of this kind
of spacecraft in Egypt. That is, they want creating an assembly base
in Egypt. How much this may cost is a commercial secret. I know the
figures. We are now dealing with those problems.

If we manage to reduce costs so they would be lower than those
offered by others, we may benefit. Competition will decide.

Q: Who are the other bidders?

Perminov: A number of firms. Russia is represented by RKK
Energia.

Q: Are there any foreign firms?

Perminov: Yes.

Q: Could you name them?

Perminov: Naturally, you know such a firm as Alcatel. I think
it has huge advantages in that sphere, because it has a good
background of creating assembly facilities in other countries.

But we also have such capabilities. So, I repeat, the Egyptian
side will likely proceed from costs first and foremost. It is hard
to predict anything at the moment.

Q: You have mentioned that this year was not too favorable.
There were three unsuccessful launches, three breakdowns, and the
industry is to blame for them, because the hardware was faulty.

But there was also an incident with the Mozhayets-5. There were
problems with the Demonstrator. Actually, the number of failures has
been unprecedented this year. What is the Federal Space Agency going
to do, given that neither the Tsiklon-2 was launched nor the Strela?
Other spacecraft that have not been launched include the long-
awaited DK-1, the Meridian. The launches of the Cosat and Kompas-2
have been delayed. Let alone that for three years, which is
unprecedented, the group of early warning spacecraft has not
received any new hardware. There may be some problems in that
sphere. Thank you.

Perminov: We know your negative attitude to Roskosmos. So, let
me explain why those breakdowns happened. I would not lay the blame
on the manufacturing sector, because some launches were not properly
prepared. Unfortunately, as for the breakdown of the CryoSat at
Plesetsk, it looked like it was due to human errors, and information
was conveyed to the press. Flight orders were improperly computed in
interaction between Khrunichev and the Kharkov-based Khartron. So,
measures have been taken. And that was not due to any faults in the
hardware.

There were also irregularities in the Solar Sail launch. Those
problems have not been unique. This has constantly recurred. We
started analyzing this and we have asked our colleagues in the
European Space Agency not to rely on old rockets whose production
has long been discontinued and which have been in storage for many
years, those removed from submarines, of the Volna type. I do not
think that it is worth using systems of that type for space
launches. They are not intended for that. For example, the United
States has never done anything of the kind. Perhaps, they are right.

There is a conflict between attempts to reduce costs and the
need to carry out launches and conduct tests. So, this can often
result in failures.

As for yet another breakdown, manufacturers really share the
blame. Without pressing the point too hard, I must say that military
representatives are present at enterprises and it is their duty to
monitor all the military products that are intended for the Defense
Ministry. And I think the space forces have drawn conclusion. I
think it won't happen again.

As regards the replenishment of orbital groups in every
department, I have already said that we have done all that could be
done at present. And as regards remote Earth sensing, of course,
that group of satellites needs to be replenished. We are sure that
next year we will launch Resurs-DK, the joint Belka space asset, a
Russian-Byelorussian project. The monitor is gradually beginning to
work in panchromatic mode, there is hope that it will work. So, we
already have three remote sensing satellites in orbit.

Q: Alexei Rashevsky, Russia today TV channel. What are your
plans for next year, and especially international projects?

Perminov: Speaking about international projects the prime
project is manned space flights and joint work on the ISS. That work
proceeds according to plan. The plans for 2006 have been made. Just
three days ago we signed an agreement with NASA regarding the
structure of our relations next year with reference to concrete
launches, workplaces, cargo delivery, cargo removal and so on --
that is a breakthrough.

We have solved all the issues with NASA for next year regarding
the number of proposed launches of Shuttles to the ISS and further
work in this area with five states. We hope that in the first six
months of 2006 we will reach a comprehensive agreement with NASA on
ISS until the year 2011. That's in the field of manned flights. But
we also have extensive cooperation with the European Space Agency in
four main areas.

This year there was a serious ministerial-level conference of
the European Space Agency -- 18 states -- that took fundamental
decisions on four areas, and these include some in Russia's favor.

The only thing is that no final decision has been taken on the
Clipper, but no negative decision has been taken either. So,
immediately after the conference the head of the European Space
Agency Jacques Dordain arrived here with his experts, reported the
results of the conference and we agreed the entire plan for 2006 and
the following years in every area.

As for Russian territory, Roskosmos, the plans consist in
fulfilling the federal space program. In the first year, 2006 and
until 2015, fulfilling the GLONASS targeted program updated in
accordance with the President's directive. We will take part in the
federal targeted program for the development of Russian space
launching sites in every area. The emphasis will be on the
replenishment of the orbital group, and modernization of all types
of space assets. The second area is modernization of carrier rockets
and their improvement. But also the creation of new ones such as
Angara for international projects Baiterek for ground launches,
Zenit and so on. And, as has rightly been said here, it is necessary
to have a robust to the system of replenishing the remote
sensing satellite group. These are the main areas.

Q: I would like to have a clarification regarding the
agreements with the Americans. Will the mutual settlements be under
a barter scheme or in terms of energy or cash? I do not expect you
to give me the sum, but what has been the decision regarding payment
for launches?

Perminov: Starting from this year we have given up barter in
favor of cash. All the agreements have been signed: Americans have
one workplace on every spaceship; delivery of cargoes will also be
paid for in cash; removal of cargoes from the ISS will also be for
cash. And the same goes for all the other issues. All these
contracts have already been signed.

Q: Could you indicate the approximate sum?

Perminov: No, we too have our commercial secrets.

Q: The newspaper Gudok. I would like to ask you how many
launches are scheduled for 2006? And looking forward a bit. The
Americans, the Chinese are planning at least to start developing the
Moon in the coming decade. What are we doing in this area?

Perminov: I don't have the data on the number of launches. The
program is still in the works. And I am afraid I can't give you the
exact figure.

Q: At least it is not less?

Perminov: Of course, not. And for the second area, of course,
the Moon is a very attractive program. Our federal space program
does not envisage manned flights to the Moon. At present only the
United States have such a plan and even that have not been finally
announced.

All the other countries would like to do Moon programs: Europe,
China, India. But to date only the United States plan is planning
manned flights. China so far has been using unmanned probes, the
European Space Agency will initially also use unmanned probes. The
Indian Space Agency has indicated that it plans Moon exploration,
but also with unmanned probes.

We don't have specific manned exploration projects and we don't
plan to land our cosmonauts on the Moon, this is not in our federal
space programs.

Q: I would like to react to your remark about dislike, you
shouldn't have been saying that.

Perminov: We will be able to disclose all this.

Q: I would like to ask you whether the funding that the GLONASS
program did not receive in the previous years since it started will
be made available or will that money be disbursed pursuant to the
President's directive?

Perminov: There is no question about some kind of back pay.
There is certainly a need for an effective modernization of the
program because, to look at technical details, we face a serious
transition to Uragan-K space vehicles, and these are totally new
vehicles which have new elements with higher performance
characteristics.

While today one Proton carrier launches three spacecraft, plans
call for reducing the weight, improving quality, and we intend to
launch up to six spacecraft of that type with one launcher. Besides,
service life is to be extended. While we now have ten years for
GLONASS-M, plans call for extending that to 15 years. This
transition was planned for a period of 2007 and 2008. But now that
new deadlines have been set, it is very likely that it will be
necessary to complete work as soon as possible and increase the
number of spacecraft to 18, GLONASS-M type, and the deadlines will
now have to be reduced with GLONASS-K to be used and 24 satellites
of that type to be put into the orbit by 2008. This will require
additional funding and we are going to make relevant proposals.

Q: I have a question related to the social sphere. You are in
charge of industrial aspects, but people are involved anyway. First,
space launch sites. Baikonur has marked its anniversary. What can
you say about the housing problem there? Clearly, Popovkin and
Ivanov deal with that, but Roskosmos is in charge of redistribution
of social and human resources.

What about Svobodny? Has the final decision on its liquidation
been made? What is the situation with social issues at Khrunichev,
Energia?

Perminov: As for the Baikonur cosmodrome, we have decided with
the Defense Ministry to have all facilities there handed over
gradually to Roskosmos. This should be done stage by stage, rather
than overnight, which could be fraught with social protests.

We are planning to complete this handover by the end of 2007.
This will let the Defense Ministry calmly deal with housing
problems. They have dealt with that. In particular, the space troops
ommander has dealt with that problem. He visits the launch site. He
works there. I know that at the highest level a decision has been
made to provide about 200, in the near future -- housing
certificates have been issued. As you know, in line with the
president's instructions, their value will now be totally different.
The housing problem is no longer as grave at Baikonur as it used to
be, as far as I know.

As for the handover procedures, everything has been done
properly. By the way, the latest launch was a joint launch
accomplished with the space troops. At their request, we did that
together. Even though we were to accomplish that ourselves, that
concerned the GLONASS project.

As for Svobodny, the launch site belongs to the Defense
Ministry. Our goal is accomplishing two commercial launches there.
So, we have agreed, and Sergei Ivanov has publicly stated that the
Defense Ministry will give us this opportunity. Those launches will
be accomplished in the coming two years. That is, those units
dealing with that will be deployed there.

As far as I know, a metering facility will stay there. Civilian
infrastructure is being formed, which Minister Yakovlev has
discussed with the governor. So, as this will be done gradually,
over several years, there will be no outbreaks there.

As for the total output of enterprises, I do not have concrete
figures here, but I know that the sector has performed well enough
and we are approaching the yearend confidently. The results are
mostly positive. The aerospace industry's output is 12.7 percent up
from last year. No other sector, except the oil and gas sector, has
posted any similar results. The sector's growth rate is 2.5 times
higher than Russia's average.

Naturally, as the sector tends to stabilize, the social status
of its employees tends to improve. True, we have some problem
enterprises whose financial and economic state leaves much to be
desired. But we have dealt with those problems while proceeding from
existing legislation.

A special meeting chaired by Deputy Prime Minister Sergei
Ivanov discussed this problem recently, and it was decided that
strategic enterprises' bankruptcy should be avoided. Relevant
decisions have been made and deadlines have been fixed for the
development of relevant programs. Serious decisions will be made in
that sphere.

Q: You have spoken about plans to increase the number of Soyuz
and Progress spacecraft in the interests of our cosmonauts and
foreign astronauts and space tourists. Will this happen next year?
Astronauts from which countries are preparing for space flights now?

Perminov: That's a good question, yet it is not easy to answer
this. In the past, we wanted, we asked for orders, but a moment has
come now when we have to cope with the orders we have received. We
have to manufacture a backup spacecraft for the ISS as soon as
possible. Naturally, this has to be done as agreed with the United
States. Plus a waiting list has formed of people, so called
tourists, who would like to fly, including under international
contracts. And not only as tourists, but also under international
obligations and requests from various countries. This prompted the
need, as you have rightly pointed out, to urgently build Soyuz,
manned Soyuz rockets.

But every manned Soyuz, since it is extra, leads to a Progress.
We have already been set such a task, which falls mainly on RKK
Energia. And it is currently working on a plan to increase
production volume and to hire new specialists in this area in order
to create new jobs.

On the positive side, of course, it means additional funding
which will give a fillip to enterprises, most notably RKK Energia.

According to unofficial data, for the first time in many, many
years that enterprise will not be in the red at the end of the year.
The first three-quarters were not much different from what they
usually were, but I promise that in the fourth quarter it will
report surplus. The cost of the shares of that enterprise has
increased by 2.8 times. At present it is indisputably the leader in
the aerospace industry. That is a very good sign.

Q: Interfax. You have said that we have moved into the first
place in terms of launches and we are launching satellites, but
I think our budget is 20 times less than that in the US. Perhaps, it
makes sense to raise the issue of increased funding from the budget?
It is increasing anyway, but perhaps, not fast enough. That's one
question. And my other question is a follow up to the GLONASS topic.
What can one look forward to? Will we manage to launch all the 24
satellites before 2008?

Perminov: Yes, the Roskosmos budget is indeed 30 times less
than in the US, but the US has a number of serious programs under
way which are much costlier than ours. Take the Shuttles, for the
example. They have not left the scene. On the contrary, it has been
confirmed that their launches are necessary, at least the NASA head
has officially confirmed the figure 18. Every launch costs half a
billion dollars. So, whether they like it or not, such financing is
indispensable for them.

I repeat, we can no longer engage in competition. It is
impossible to compete, given the current level of financing. We are
lagging behind in many spheres such as unmanned spacecraft,
interplanetary research, exploration of other planets. Nothing can
be done about it.

Besides, average wages of those working in the aerospace sector
are substantially lower than those of NASA specialists, for example.

As for the second question, the possibility of increasing the
group to 24 spacecraft by 2008 or in 2008, I think it is hard to do
this. We have to elaborate. I cannot tell you for certain that this
will be accomplished. I repeat, we will consider all program related
to the GLONASS project until January 15.

Q: Unlike other sectors, the formation of holding companies has
not started in the aerospace sector. Will this start next year? In
your opinion, has the appointment of new general directors to
virtually all key enterprises in the sector been justified?

Perminov: Perhaps, you do not know the real situation. The
government has approved a plan for the formation of integrated
companies. We have acted strictly in line with those plans. If we
fail to do something in line with the plans, they summon us to the
Cabinet meetings and ask for explanations.

True, we have been in no haste. During a special Cabinet
meeting, I provided explanations. I said we wanted to analyze
developments in other sectors, where many holding companies have
been formed after which we would be able to decide. This process has
been particularly active in the aircraft building sector. We are in
no haste to form integrated companies. But we are not lagging behind
the plan.

As for the appointments, personnel reshuffles at a number of
enterprises, they have yielded positive effects, and employees,
workers and specialists have perceived them with understanding. At
the moment, we have no worries about those enterprises, because they
are led by specialists who know those enterprises, who can perform
international commitments with no detriment to Russia's aerospace
sector. We can see that the situation tends to improve at those
enterprises.

This is already the case at RKK Energia, at Energomash, our
leading enterprises. This is also the case at Kosmash. Just several
months have passed since new appointments at Khrunichev. Naturally,
the situation cannot improve overnight, but positive changes are
about to take place there.

Moderator: questions? No questions. Thank you very much,
Anatoly Nikolayevich.

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