UPDATE 2-U.S. high-tech export curbs threaten space work with Russia

Tue Apr 29, 2014 9:33pm IST

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* U.S. sanctions hit high-tech exports to Russia arms sector

* Russian space industry seen badly hit

* Deputy PM says Russia will retaliate (Adds more detail, Rogozin, Inmarsat)

By Gabriela Baczynska

MOSCOW, April 29 (Reuters) - Extensive cooperation in space between Washington and Moscow came under pressure on Tuesday after the United States banned high-tech exports to Russia under new Ukraine-related sanctions.

Russia pledged tit-for-tat measures in revenge for U.S. sanctions it said would hit its space industry, a symbol of national pride and a sphere of fierce competition with the United States dating back to the Cold War.

A deputy prime minister suggested that U.S. astronauts, who depend on Russian rockets to get to the International Space Station (ISS), use trampolines to reach it instead.

However, analysts said Moscow was unlikely to curb its shuttle service to the ISS, for which U.S. space agency NASA pays more than $60 million per person, as it provided essential financing for the cash-strapped industry.

The White House said on Monday the United States would deny export licences for any high-technology items that could aid Russian military capabilities and revoke existing licences.

"The seriousness of these measures is absolutely obvious for us," Deputy Foreign Minister Sergei Ryabkov told gazeta.ru in an online interview, highlighting high-tech cooperation between the two countries, including launching satellites, either American-made or containing U.S. components.

"All this hits at our high-tech enterprises and industries."

Deputy Prime Minister Dmitry Rogozin, responsible for Russia's defence industry and known for anti-Western rhetoric, suggested space may be the next frontier in the standoff over Ukraine, which has taken relations between Washington and Moscow to their worst since the Cold War.

"The United States introduced sanctions against our space industry... We warned them, we will reply to statements with statements, to actions with actions," he wrote on Twitter.

"I propose that the United States delivers its astronauts to the ISS with the help of a trampoline," he added.

RUSSIA SET TO SUFFER

The United States and the Soviet Union were locked in the so-called "space race" for decades. Russia's Yuri Gagarin was the first man in space in 1961 and Neil Armstrong of the United States was the first man on the Moon in 1969.

With the Cold War over, competition gave way to cooperation.

While NASA was banned earlier this month from contacting the Russian government due to sanctions, operation of the space station, a $100 billion research project owned by 15 countries, remains exempt.

But Sergei Oznobishchev, director at the Institute for Strategic Assessments think-tank in Moscow, said many other joint space projects would suffer immediately.

"This is a very sensitive issue since our defence industry was completely unprepared for such developments," he said. "Both sides will suffer but Russia will lose out more in terms of technology transfer."

"For us, this cooperation was largely a technology school."

Analysts said Russia still lagged in production of high-tech electronic components - including microchips for satellites - and that meant its space and arms sectors were overwhelmingly reliant on imports from the West.

Depending on the scale and scope of the sanctions, at stake could be up to five commercial satellite launches contracted by foreign clients by the end of this year at the Khrunichev Center, a state-run Russian spacecraft maker.

"We are ready to carry out all the commercial launches we have planned for this year and we hope that will be the case. We have all the necessary permits to that end," said Alexander Bobrenyov, the Khrunichev Center's spokesman.

But in a sign of market concern over the sanctions, shares in British satellite operator Inmarsat fell on Tuesday despite the company saying the schedule of satellite launches for its new faster broadband network was not affected.

The new satellites are due to be carried on the Russian Proton Breeze M rockets launched from Kazakhstan. (Additional reporting by Megan Davies and Steve Gutterman in Moscow, Paul Sandle in London, Writing by Gabriela Baczynska, Editing by Nigel Stephenson and Tom Heneghan)

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