Russia: Failure is Always An Option

The inaugural launch of a Soyuz-2.1a from the ridiculously corrupt Vostochny Cosmodrome in Russia’s Far Eastern Amur Oblast was to be something big. Putin made the trip to view it and, naturally, it failed. Well, not completely: it was scrubbed after the computers took over, roughly at the T-90-second mark.

It’s a good thing the computers are doing their job, because Russians aren’t capable. Without the contribution of Ukraine’s Yuzhmash, they’ll probably continue to be the primary exporter of failure. Together with being a state sponsor of terrorism worldwide, they give the term “embrace failure” new meaning.

Second attempt will be later today. If that fails, Russian rocket scientists will start disappearing. Putin confirmed somebody’s going to jail already.

The Man from Y.E.A.R. — Yukos, Eutelsat, Arianespace and Roscosmos

Путін Хуйло.

Remember that $50 billion arbitration award to Yukos? Well, as with any judgement award, the tougher next step is actually getting paid. If you expect Russia to simply write a checks to a former Yukos shareholders, then go fly a kite.

They threatened to start seizing assets outside of Russia, so Putin’s commanding everything they own get a diplomatic property plate slapped on it. Afterwards, many buildings in Paris became part of the Russian consulate.

So now we find a couple of asset seizures from two Paris-based entities: Eutelsat and Arianespace. The Eutelsat assets seized were related to 15-year lease on the Express AT2 spacecraft, which launched in 2014, at $400 million. The Arianespace assets are related to rocket launch service, likely related to Soyuz launchers out of Kourou, and worth $300 million.

Would you be surprised if Luxembourg was next on the list?

Not at all, given Gazprom’s involvement with SES S.A.

Here’s the story by Michael D. Goldhaber, in American Lawyer (subscription)…

The Russian social contract rests on a tacit agreement between the businessmen and politicians not to talk about their mutual corruption. In Russia’s desperation to roll back history’s biggest arbitration award, this bargain is breaking down.

In July 2014, arbitrators ordered Russia to pay 
$50 billion to the oligarchs from whom it seized Yukos Oil Co. At a Feb. 8 hearing to set aside this award, Russian counsel Albert Jan van den Berg told the Hague District Court: “If we want to talk about the reality of this case, we have to go back to … the disintegration of the Soviet Union.… A handful of oligarchs were robbing state-owned companies blind.” On April 20, a Dutch court will decide whether “you stole it first” is a valid defense.

In the “loans for shares” program of 1995-1996, Russia allowed a larger group of oligarchs to transfer control of a dozen major companies to themselves in exchange for loans to help Boris Yeltsin balance his budget and thwart the Communists’ return to power. Russia chose Mikhail Khodorkovsky’s Bank Menatep to hold the initial Yukos auction and share tender. Two Menatep affiliates submitted the only bids. The winner bought 33 percent of Yukos in exchange for $159.5 million, committed to invest $200 million in the company and won the right to lend the state $159 million secured by another 45 percent of Yukos.

When Russia defaulted on that loan, Menatep organized a new auction, with two Menatep affiliates again emerging as the only bidders. One bought the secured shares for $160.1 million. Menatep’s total commitment was $518.6 million. By the next year, Yukos was publicly valued at $6 billion. Other crown jewels of the Russian economy that were privatized in this creative manner include Lukoil, Mechel, Norilsk Nickel and Sibneft.

Putin tolerated Khodorkovsky until he publicly questioned the integrity of another state oil deal in 2003, as we described in our ongoing coverage.Then prosecutors tested a long list of pretexts for hounding Yukos into liquidation. They never even considered going after Yukos for rigging a state auction, because that remained business as usual. Indeed, the state would recover Yukos’ main asset in 2004 by means of—you guessed it—a rigged auction.

As the 10th anniversary of Yeltsin’s “loans for shares” approached in 2005, the Duma passed a law at Putin’s urging that cut the statute of limitations for challenging a privatization. At that moment, a legal accounting seemed unlikely either for the oligarchs stealing Yukos, or for the government stealing it back.

But before Russia dismantled Yukos, the Menatep oligarchs had passed their shares to corporate shells based in jurisdictions that signed an investment treaty with Russia known as the Energy Charter Treaty. “It looks like someone mapping the Ebola virus,” a Russian counsel says of their tangled legal structure. In 2005, three offshore affiliates of Group Menatep (now GML Ltd.) filed claims for expropriation.

With Cleary Gottlieb Steen & Hamilton defending the arbitration, Russia argued only in passing that “loans for shares” sullied the oligarchs’ hands. The arbitrators, in their 1,888-point ruling of 2014, dismissed the argument in one formalistic point. Russia had failed to adequately connect Bank Menatep’s allegedly illegal “loans for shares” scheme with the claimants’ “investment” in Russia, they concluded, because the claimant entities were separate from Bank Menatep and its oligarchs. The reasoning of paragraph 1370 struck us as the award’s weak link immediately. The arbitrators didn’t back up their assertion of corporate separateness. And they never tested the alleged illegality.

Now, Russia’s only recourse is in the Netherlands. (The day before the 2014 award, a Russian missile killed 193 Dutch citizens over the Ukraine.) At first, in January 2015, Russia told the Dutch court that “legal infirmities surrounding Yukos’ founding” were not a basis for a set-aside. Then White & Case took over Russia’s case from Cleary. With White & Case’s guidance, Russia is making “loans for shares” central to its enforcement defense in Washington, D.C., France, England, Germany, Belgium and the Netherlands.

Russia only raised “loans for shares” in Dutch court early this year. Even though it had confiscated Yukos’ share registry in 2003, Russia presented the evidence as newly discovered because “the code was not cracked until October 2015.”

Yukos’ counsel, Shearman & Sterling’s Emmanuel Gaillard, teases Russian intelligence: “It took the FSB 12 years to crack a code? This is very disappointing.”

Russia argues in its Dutch challenge that the arbitrators lacked jurisdiction because the Energy Charter Treaty does not extend a nation’s consent to arbitrate toward investors who make an illegal investment. (Russia also renews its arguments that it never ratified the treaty and that the claimants are Russian nationals, among other things.) For all the same reasons, Russia contends that the usual exception to sovereign immunity for confirming an arbitral award doesn’t apply.

As a legal matter, the Yukos camp counters that Energy Charter jurisdiction is predicated on claimants’ status as “investors,” rather than their investment’s legality. Anyhow, they say, Russia clearly waived its “loans for shares” objection.

As a factual matter, the oligarchs say that Russia knew full well that Menatep lay behind the bid for Yukos—just as the arbitrators knew full well that Menatep lay behind the arbitration. Given the dire state of Yukos and Russia in 1995, and a ban on foreign bids, they say a half-billion-dollar commitment was nothing to sneeze at.At the end of the day, the oligarchs argue that “loans for shares” were legal because they were organized, overseen, monitored and later ratified by Russia.

The Global Lawyer accepts that the Russian “sale of the century” was an open secret, and a disgrace. We’ll let the Dutch courts assess its legality. Meanwhile the cat and mouse game begins. On Dec. 17, a Paris court declined to suspend enforcement of the Yukos award pending appeal.

Gaillard complains that “Russia is busy slapping diplomatic plaques after the fact on every piece of property it owns in Western Europe.” Russia persuaded Belgium to enact a “Yukos Law,” requiring that a judge preauthorize asset attachment. It pressured Belgian diplomats and French police to block local functionaries from taking inventory at buildings the oligarchs seized. Most ominously, Russia warned in a July 15 diplomatic note that it will consider any American enforcement as grounds for retaliation against U.S. citizens and businesses.

Even so, the oligarchs have provisionally seized close to $1 billion in assets in France—including $400 million owed by Eutelsat to the Russian Satellite Communications Co. for satellite capacity and $300 million owed by Arianespace to Roscosmos for rocket launchers. One billion down, says Shearman. Forty-nine billion to go, says White & Case.

Welcome Back, Baby!

Yeah, this is huge. The quick report, via Bloomberg Business

Elon Musk’s SpaceX showcased his dream of reusable spacecraft by making a Falcon 9 booster the first piece of an orbital rocket to land back on Earth minutes after lofting satellites toward orbit.

Space Exploration Technologies Corp. pulled off the soft, vertical touchdown after the two-stage rocket propelled its payload of 11 Orbcomm Inc. satellites aloft. It was the company’s first flight since a fiery blast destroyed a Falcon 9 rocket in June, minutes after lift off.

“Welcome back, baby!” Musk wrote in a Twitter post on his way to the landing zone.

Monday’s mission helped validate Musk’s vision for lower-cost spaceflight and provides SpaceX a boost in his race with fellow billionaire Jeff Bezos to develop craft that can survive fiery blasts and return to Earth to be reused. Instead of ditching the booster, SpaceX used thrusters and sophisticated navigation to steer it from space to Landing Zone 1, a former U.S. Air Force rocket and missile testing range.

Very cool.

Putin’s “Mafia in Space” Episode

Did Russia’s boss of bosses just bully his way through space? Reports of Russian FSB-owned spacecraft Luch/Olymp-K1 being moved to Intelsat 901’s 18.1-deg. West orbital location came to light earlier this month in a detailed report by Brian Weeden in The Space Review. Since Putin owns them, the Russian story — typically full of lies — was parroted by the BBC as “U.S. anxiety.”

Not true.

Was the old KGB club looking to intercept the Palestine Al Yawm feed? Probably not.

The spacecraft is being portrayed as a data-relay Luch payload, but it has much more — including special laser capabilities. It is a military spacecraft with multiple missions, including RPO, destroying space assets and providing satcom links to the Russian navy.

If the Luch/Olymp spacecraft came with 10 km of Intelsat’s, that’s cause for concern. Putin and his criminal state doesn’t care about anyone or any entity, and the Russians are testing the world order to see whether anyone’s able to respond with force.

Facebook, Ka-band and Africa

Using state of the art satellite technology, Eutelsat and Facebook will each deploy Internet services designed to relieve pent-up demand for connectivity from the many users in Africa beyond range of fixed and mobile terrestrial networks. Satellite networks are well suited to economically connecting people in low to medium density population areas and the high throughput satellite architecture of AMOS-6 is expected to contribute to additional gains in cost efficiency.

That quote is not from a press release issued in 1999. It’s from Eutelsat’s announcement of a partnership with Facebook on 5 October 2015, leasing Ka-band capacity on Spacecom’s forthcoming spacecraft. In 1999, satellite was seen as the “leapfrog” technology, intended to bypass old wireline or tower-based schemes to get the Internet out to the people of Africa. Although “good for data” Ka-band payloads were not widely available back then, the same disadvantages are still lingering:

  1. the high cost of space segment
  2. customer premises equipment is not cheap
  3. latency will always be an issue

Unless Facebook dollars subsidize the first two costs, we’ll only need to deal with physics.

The RF signal to and from the geosynchronous spacecraft will always require a 1/4-second to complete, then add a little bit of time to get the content, then another 1/4-second to serve it up. We’re not getting into video or any rich media — just the basics. Fine. People without any connection will be happy with whatever they get. High-throughput or not, you get what’s allocated to you.

Let’s consider reliability. First, there’s the issue of a reliable electric supply. Do we have enough of that in Sub-Saharan Africa? Next, there’s the signal itself. Even with a good link budget, and backing-off on the data rate a bit, you’re dealing with a considerable amount of rainy conditions for wider areas, so you can expect the signal to fade or experience complete outages during the rainy season.

Considering satcom’s promise hasn’t been kept for so many years, true “leapfrogging” is happening everywhere. In Rwanda, for example, 4G LTE is being built out and it kills any comparison to satcom alternatives using geo satellites. Using LEOs from O3b Networks works well, but somebody stills has to make the economics work.

So good luck to to Facebook and their internet.org effort.

I Rip Your Head Off, Comrade

What’s does “the soviet system” mean to you? Not much: it’s just one fuck-up after another.

You’ll recall the billion-dollar project to build a new Cosmodrome in Vostochny, where corruption, poor design and execution have been met with threats from the criminals in the Kremlin. Think they’re back on track?

Think again.

Seems the pride of the Russian space program’s future, the Soyuz-2 launch vehicle will not fit. So much for getting one up from Vostochny by December, bitches. The Moscow Times story from Friday has the details…

The cutting-edge facility was meant be ready for launches of Soyuz-2 rockets in December, but an unidentified space agency official told the TASS news agency late Thursday that the rocket would not fit inside the assembly building where its parts are stacked and tested before launch.

The building “has been designed for a different modification of the Soyuz rocket,” the source said, according to news website Medusa, which picked up the story from TASS.

The quote could not be found on TASS, a state-owned news agency on Friday. TASS’s report instead quoted a spokesperson for the Center for Ground-based Space Infrastructure (TsENKI) – a federal space agency organ tasked the managing with Vostochny cosmodrome.

“Work with the rocket at the integration and testing complex now can not be conducted because the facility is not ready,” the spokesperson said in the report. “There are still imperfections in the construction.”

Good thing Putin has Syria to obscure any bad news coming from within Russia.

I Fink You Freaky, Teletubbies

It’s a Mad, Mad, Mad Max Fury Road

Cracker-jack job, mate! One of my favorite movies, mashed-up into a trailer with Fury Road

Many thanks to Ezequiel López.

Road Trip: Kepler 452b

NASA’s timed announcement yesterday got quite the bump from social media. It’s only one of 1,030 exoplanets, so let’s not get too excited.

NASA’s Kepler mission has confirmed the first near-Earth-size planet in the “habitable zone” around a sun-like star. This discovery and the introduction of 11 other new small habitable zone candidate planets mark another milestone in the journey to finding another “Earth.”

The newly discovered Kepler-452b is the smallest planet to date discovered orbiting in the habitable zone — the area around a star where liquid water could pool on the surface of an orbiting planet — of a G2-type star, like our sun. The confirmation of Kepler-452b brings the total number of confirmed planets to 1,030.

“On the 20th anniversary year of the discovery that proved other suns host planets, the Kepler exoplanet explorer has discovered a planet and star which most closely resemble the Earth and our Sun,” said John Grunsfeld, associate administrator of NASA’s Science Mission Directorate at the agency’s headquarters in Washington. “This exciting result brings us one step closer to finding an Earth 2.0.”

It’s also worth noting this planet is 1,400 light years away. Pluto, for comparison, is 4 light hours away. That’s why it took 4+ hours to send commands to the New Horizons spacecraft. So if we send a signal to Kepler 452b, it would take 1,400 years to get there.

To get to Kepler 452b at the same rate it took New Horizons to get to Pluto (10 years), it would take us approximately 30 million years. Ain’t nobody got time for that! The only way we could make this kind of trip is to be able to “fold space” or change dimensions. Heim Quantum Theory may help us get there by changing dimensions. Fascinating.

Two Launches in One Day!

Both Atlas V and Ariane 5 rockets went up recently. Both were equipped with rocketcams, but the weather was better at The Cape than in Kourou, so the Atlas launch’s lookback was really cool.