Index

Ukraine
NATIONAL SPACE AGENCY


TITLE:                   NATIONAL SPACE AGENCY

SUBJECT COUNTRY(IES):    UKRAINE

POST OF ORIGIN:          UKRAINE

SERIES:                  INTERNATIONAL MARKET INSIGHT (IMI)

ITA INDUSTRY CODE:       AVS

DATE OF REPORT (YYMMDD): 991207

DELETION DATE (YYMMDD):  201207

AUTHOR:

APPROVING OFFICER:

OFFICER'S TITLE:

NUMBER OF PAGES:         8

-------
SUMMARY
-------

1.  ON NOVEMBER 5, 1999, SCO AND COMMERCIAL SPECIALIST
VISITED THE NATIONAL SPACE AGENCY OF UKRAINE (NSAU).
THE NSAU REPRESENTATIVES EXPRESSED WILLINGNESS TO
FOSTER COOPERATION WITH AMERICAN AEROSPACE COMPANIES,
AND ASKED EMBASSY TO ASSIST IN ESTABLISHING CONTACTS
WITH POTENTIAL AMERICAN FIRMS FOR SCIENTIFIC,
RESEARCH, TECHNICAL, AND JOINT VENTURE COOPERATION.
THIS REPORT PRESENTS A BRIEF OVERVIEW OF THE UKRAINIAN
SPACE INDUSTRY AND UPCOMING AEROSPACE PROJECTS.  THESE
OPINIONS WERE CONVEYED TO POST BY  NSAU WITH A REQUEST
TO NOTIFY INTERESTED AMERICAN COMPANIES.  END SUMMARY.

-----------------------------------------
STRUCTURE OF THE UKRAINIAN SPACE INDUSTRY
-----------------------------------------

2.  ADMINISTRATIVELY, THE UKRAINIAN SPACE INDUSTRY IS
SUPERVISED BY THE NATIONAL SPACE AGENCY OF UKRAINE
(NSAU), WHICH IS A GOVERNMENT AGENCY.

THE NSAU FOCUSES ON:
- LICENSING THE ACTIVITIES OF COMPANIES IN THE
UKRAINIAN SPACE INDUSTRY.

- CONDUCTING SCIENTIFIC AND TECHNICAL RESEARCH FOR THE
UKRAINIAN MINISTRY OF DEFENSE.

- DEVELOPING A STATE POLICY IN THE FIELD OF RESEARCH
AND USE OF SPACE FOR CIVIL NEEDS AND FOR NATIONAL
SECURITY.

- HELPING UKRAINIAN SPACE COMPANIES DEVELOP
INTERNATIONAL COOPERATION IN SPACE EXPLORATION

- DRAFTING LEGISLATION FOR THE EFFECTIVE USE OF
UKRAINIAN SPACE RESEARCH INSTITUTIONS AND SPACE
PRODUCTION FACILITIES.  IT LOBBIES THEIR INTERESTS IN
THE UKRAINIAN PARLIAMENT.

- OVERSEEING COOPERATING UKRAINIAN SPACE FIRMS IN
THEIR INTERNATIONAL TRANSFER OF SENSITIVE AND DUAL-USE
TECHNOLOGIES TO OTHER COUNTRIES.

- REPRESENTING STATE INTERESTS IN PUBLIC PROCUREMENT
OF SPACE EQUIPMENT FOR THE COUNTRY'S NEEDS.

ON THE MANUFACTURING SIDE, THE UKRAINIAN SPACE
INDUSTRY CONSISTS OF DNIPROPETROVSK-BASED M.K YANGEL
STATE DESIGN BUREAU "YUZHNOE", AND SOUTHERN MACHINE
BUILDING PLANT "YUZHMASH", WHO DESIGN AND ASSEMBLE
VARIOUS SPACECRAFT.  ANOTHER 16 STATE ENTERPRISES AND
7 PUBLIC OPEN JOINT STOCK COMPANIES OF THE UKRAINIAN
HIGH-TECH COMPLEX, PROVIDE  "YUZHMASH" VARIOUS
SPACECRAFT COMPONENTS AND MATERIALS.

----------------------------------------------------
INTERNATIONAL FINANCE FOR COOPERATION WITH UKRAINIAN
SPACE INDUSTRY
----------------------------------------------------

3.  AFTER THE SUCCESSFUL "SEA LAUNCH" PROJECT, NSAU
AND THE WORLD BANK DEVELOPED A PROJECT "TO GUARANTEE
AGAINST NON-COMMERCIAL RISKS IN THE FIELD OF HIGH-TECH
INDUSTRY AND DEFENSE CONVERSION."  THE PROJECT WILL
MAKE AVAILABLE INTERNATIONAL FINANCE ON ATTRACTIVE
TERMS (LIBOR PLUS 2-3 PERCENT).  THIS WILL COMMENCE IN
THE FIRST HALF OF 2000 AND WILL HAVE US$ 50-200
MILLION WORLD BANK GUARANTEED FUNDS.

NSAU HAS NEGOTIATED A US$ 800,000 GRANT WITH THE WORLD
BANK FOR THE UKRAINIAN SPACE INDUSTRIAL RESTRUCTURING
PROJECT.  THIS PROJECT WILL STUDY THE FINANCIAL AND
ECONOMIC STATUS OF THE UKRAINIAN SPACE INDUSTRY,
DEVELOP FEASIBILITY STUDIES FOR RESTRUCTURING
UKRAINIAN SPACE ENTERPRISE, DETERMINE VIABLE PROJECTS
FOR THE UKRAINIAN HIGH-TECH ENTERPRISES, PROVIDE
TRAINING FOR SENIOR MANAGEMENT OF THE UKRAINIAN HIGH-
TECH FIRMS AND NSAU SPECIALISTS IN THE FIELD OF
MANAGEMENT, MARKETING, TECHNOLOGY AND PRODUCTION
MANAGEMENT.

----------------------------------------------------
RUSSIA MAY AFFECT INTERNATIONAL COOPERATION WITH THE
UKRAINIAN SPACE INDUSTRY.
----------------------------------------------------

4.  RUSSIA AND UKRAINE JOINTLY OWNED THE SOVIET SPACE
TECHNOLOGY.  LACK OF FUNDS FOR CREATING AN INDEPENDENT
AND CLOSED SYSTEM FOR SPACECRAFT PRODUCTION FORCED
TIGHT COOPERATION BETWEEN RUSSIAN AND THE UKRAINIAN
SPACE ENTERPRISES.  AFTER THE BREAK UP OF THE SOVIET
UNION, THE FORMER SOVIET REPUBLICS SIGNED AN AGREEMENT
ON PROPERTY SHARING, WHICH RECOGNIZED THAT EACH
REPUBLIC HOLDS THE OWNERSHIP RIGHTS ON PLANTS AND
ENTERPRISES LOCATED IN ITS BORDERS.  ONCE  UKRAINE
RECEIVES AN ORDER FROM AN INTERNATIONAL COMPANY, IT
ALSO BENEFITS RUSSIAN SPACE ENTERPRISES, BECAUSE THEY
ARE CONTRACTORS SUPPLYING PARTS, WHICH ARE NOT
PRODUCED IN THE UKRAINIAN FIRMS.  SIMILARLY, WHILE
IMPLEMENTING SPACE PROJECTS INITIATED BY RUSSIA AND
ITS FOREIGN PARTNER, UKRAINIAN SPACE ENTERPRISES SERVE
AS SUB-CONTRACTORS.  THUS, ON A FIFTY-FIFTY SHARE,
UKRAINE AND RUSSIAN HAVE JOINTLY CREATED AN "OCEAN"
SATELLITE FOR REMOTE SURVEILLANCE OF EARTH FOR
MONITORING CLIMATE AND ENVIRONMENT CHANGES.  ACCORDING
TO MR. KOMAROV, UKRAINIANS CAN NOT CLAIM THEIR ZENITH
AND CYCLONE SPACE ROCKETS ARE 100 PERCENT UKRAINIAN-
MADE, SINCE RUSSIA SUPPLIES PARTS FOR ASSEMBLING THESE
ROCKETS.  AS AN EXAMPLE: THE RUSSIAN "ENERGIA" COMPANY
SUPPLIED ONE OF THREE ENGINE STAGES OF THE UKRAINIAN
ZENITH SPACECRAFT.  ON THE OTHER HAND THE UKRAINIAN
ENTERPRISE "KHARTRON" PRODUCES CONTROL SYSTEMS FOR THE
RUSSIAN-MADE PROTON SPACE ROCKET CARRIER.  ACCORDING
TO NSAU OFFICIALS, ECONOMIC CRITERIA AND CONDITIONS
WILL INEVITABLY RESTRICT RUSSIA FROM UNFAIR
COMPETITION OR POLITICAL AMBITIONS.

-----------------------------------------------------
GOVERNMENT SUPPORT TO THE UKRAINIAN SPACE ENTERPRISES
-----------------------------------------------------

5.  THE TWO EDICTS OF THE PRESIDENT OF UKRAINE NO.
1191/98 NO. 1190/98 ADOPTED ON OCTOBER 27, 1998,
DELEGATED TO THE NSAU THE GOVERNING RIGHTS OF THE
UKRAINIAN COMPANIES INVOLVED IN THE MANUFACTURING OF
SPACE EQUIPMENT.  THE MOST IMPORTANT CLAUSES OF THE
EDICTS ARE IN EFFECT UNTIL JANUARY 1, 2009.  THE TWO
LAWS FACILITATE INTERNATIONAL COOPERATION WITH
UKRAINIAN COMPANIES BY STATING:

-- NO CUSTOMS DUTY AND VAT ARE TO BE COLLECTED FROM
THE GOODS AND MATERIALS FOR THE PRODUCTION OF SPACE
EQUIPMENT (AGGREGATES, SYSTEMS FOR SPACE COMPLEXES AND
THEIR SPARE PARTS THEREOF, SPACE ROCKET CARRIERS, AND
LAND-BASED SPACE SYSTEMS) IF SUCH GOODS AND EQUIPMENT
ARE NOT PRODUCED ON THE TERRITORY OF UKRAINE;

-- NO VAT IS LEVIED FROM THE SALES OF SPACE COMPLEXES
AND EQUIPMENT, IF THE  FINANCE FOR THEIR PRODUCTION
WAS PROVIDED OUT OF THE STATE BUDGET;

- NO LAND TAX FOR UKRAINIAN SPACE ENTERPRISES.

THE PRESIDENT'S EDICTS ALSO EMPOWER NSAU TO DETERMINE
SCIENTIFIC AND TECHNICAL POLICY FOR THE PRODUCTION OF
SPACE CARRIERS FOR THE NEEDS OF THE UKRAINIAN MINISTRY
OF DEFENSE, TO DETERMINE COMMERCIAL UTILIZATION OF
BALLISTIC MISSILES (SUBJECT TO ELIMINATION IN
COMPLIANCE WITH THE INTERNATIONAL AGREEMENT ON THREAT
REDUCTION), TO FACILITATE DEFENSE CONVERSION AT
MILITARY SPACE ENTERPRISES WHICH HAVE PRODUCTION
FACILITIES FOR THE MANUFACTURING OF BALLISTIC
INTERCONTINENTAL MISSILES OR PARTS (BY UTILIZING THE
HI-TECH PRODUCTION FACILITIES OF UKRAINIAN SPACE
ENTERPRISES), AND TO ATTRACT DOMESTIC OR FOREIGN
INVESTMENT INTO THE UKRAINIAN SPACE INDUSTRY.  NSAU
WILL REPRESENT THE STATE IN PUBLIC PROCUREMENT OF
SPACE EQUIPMENT FOR THE COUNTRY'S NEEDS.

----------------------------------------------------
INVITATIONS FOR COOPERATION WITH AMERICAN COMPANIES
----------------------------------------------------

6.  THE CURRENT ECONOMIC SITUATION HAS ENCOURAGED NSAU
TO LOOK AT AMERICAN COMPANIES FOR POTENTIAL
PARTNERSHIPS IN HIGH-TECH JOINT VENTURE AND DEFENSE
CONVERSION PROJECTS, AND AS POTENTIAL CUSTOMERS FOR
VARIOUS COMMERCIAL OR SCIENTIFIC EXPLORATION SPACE
LAUNCHES.  NSAU IS CONSIDERING COMMERCIAL PROJECTS FOR
UKRAINIAN SPACE ENTERPRISES AND POTENTIAL FOREIGN
PARTNERS.  NSAU HAS COMMITTED TO REGULARLY UPDATING
POST ON THEIR PROJECTS.  RECENTLY, NSAU ASKED POST TO
INFORM AMERICAN COMPANIES OF THE AVAILABILITY OF THE
FOLLOWING PROJECTS:

- TELECOMMUNICATION AND INFORMATION SYSTEMS PROJECTS
WITH NSAU.

- THE MODERNIZATION AND DEVELOPMENT OF NEW SPACE
CARRIERS.  (AFTER UKRAINE PROCLAIMED ITS NON-NUCLEAR
STATUS, THE UKRAINIAN GOVERNMENT STARTED A PROGRAM FOR
THE DISMANTLING OF SS-18 AND SS-24 INTER-CONTINENTAL
BALLISTIC NUCLEAR MISSILES, STATIONED IN SILOS ON THE
UKRAINIAN TERRITORY, AND CREATION OF DNIPRO SPACE
ROCKET CARRIER PRODUCTION ON THEIR BASIS).

- UPGRADING OF CYCLONE SPACE ROCKET CARRIER- US$ 50
MILLION OF PORTFOLIO INVESTMENT IS NEEDED.

- OPENING COMMERCIAL SPACE LAUNCH CENTERS CLOSER TO
THE U.S.A. (IN FLORIDA OR BRAZIL).
- PRODUCTION OF SATELLITES AND CONTROL SYSTEMS.

- PRODUCTION OF MEDICAL EQUIPMENT WITH THE UKRAINIAN
OPEN JOINT STOCK COMPANY "RESEARCH AND DEVELOPMENT
INSTITUTE FOR RADIO AND ELECTRONIC MEASURING".

- DEVELOPMENT AND PRODUCTION OF DRUGS AND VITAMINS AT
THE FACILITIES OF THE OPEN JOINT STOCK COMPANY
CHERNIHIV RADIO PLANT "CHEZARA".

- MANUFACTURING OF CASH REGISTERS AND THE  BUILDING OF
SUPERMARKETS WITH THE STATE ENTERPRISE "KIEV RADIO
PLANT" AND ITS CONTRACTING SUBDIVISIONS.

- SATELLITE TV BROADCASTING WITH UKRAINIAN STATE
ENTERPRISE "UKRKOSMOS".

- MODERNIZATION OF THE CENTER FOR MARITIME SATELLITE
NAVIGATION AND INTRODUCTION OF INMARSAT M4 STANDARD
TOGETHER WITH THE UKRAINIAN STATE ENTERPRISE
"UKRKOSMOS AND SOUTHERN MACHINE BUILDING PLANT
"YUZHMASH".

------------------
CONCLUDING REMARKS
------------------

7.  POST WILL PROVIDE REPORTS ON INDIVIDUAL PROJECTS
AS THEY BECOME AVAILABLE.  HOWEVER, U.S. INVESTOR AND
EQUIPMENT SUPPLIERS ARE URGED TO EXERCISE CAUTION
BEFORE CONCLUDING INVESTMENTS IN UKRAINE.  POST
SUGGESTS CONSULTING THE COUNTRY COMMERCIAL GUIDE
AVAILABLE AT: HTTP://WWW.STAT-USA.GOV AND TO DISCUSS
PROSPECTIVE INVESTMENTS WITH EMBASSY STAFF, AMERICAN
CHAMBER OF COMMERCE, ACCOUNTING FIRMS, LEGAL COUNSEL
AND OTHER SOURCES.  FOR DETAILED INFORMATION, PLEASE
CONTACT YOUR NEAREST USDOC EXPORT ASSISTANCE CENTER,
WITH COPY TO: DAVID HUNTER, CS KIEV SENIOR COMMERCIAL
OFFICER; OR OLEKSANDR ZAVHORODNIY, CS KIEV COMMERCIAL
SPECIALIST, TEL: (380-44) 417-2669; FAX: (380-44) 417-
1419; E-MAIL: [email protected] ; OR
OLEKSANDR SERDIUK, CHIEF OF THE DEPARTMENT OF
INTERNATIONAL RELATIONS OF THE NATIONAL SPACE AGENCY
OF UKRAINE (11 BOZHENKA STR, KIEV, 252022, UKRAINE,
TEL.: 380(44)261-5740, FAX: 380(44) 269-5058).
(USFCS/KIEV/OZAVHORODNIY/BBABUS/DHUNTER)

PIFER






  
Source: U. S. Department of Commerce - National Trade Data Bank, June 21, 2000