Space diplomacy: balancing opportunities and threats

Horizons article
January 27, 2023

Investments in space have been on the rise in the last couple of years, despite the heavy risks that are involved. In this edition of the Horizons, we take a deeper look at the underlying drivers behind these investments and discuss geopolitical interests in space.

Rocket science investments

Last December, SpaceX raised $750m, which brings the total amount of funding raised in 2022 to more than $2 billion and puts the total company value at $137 billion. The cash will help the company to fund its ambitious space faring plans. SpaceX success contrasts sharply with Virgin Orbit that saw its shares tumble after its first UK rocket launch failed. While Virgin launched two missions in 2022, it has not met its goals for number of launches or revenue and needed a $24 million cash infusion from Branson’s Virgin group. It shows the complexity of space investments. While the returns can be huge, especially for a company like SpaceX that has a (near) monopoly in satellite launches, human spaceflight, and heavy lift payloads. Despite its current success, even SpaceX has had troubles with failed launches and explosions. It is called “rocket science” for a reason; risks include unproven business models, uncertain customer bases, and lengthy time horizons for space businesses to mature. This is making investors careful, especially when markets are volatile.

Broaden Your Horizons
  • Space investments in China are on the rise; this article gives a nice chronologic timeline of China’s Space activity. China is planning to put astronauts on the moon and their current advancements have NASA concerned.
  • The possibility of space exploration is still very far away but there already is controversy about moon land claiming. Negotiations are underway to avoid conflict and damage to spacecrafts.
  • Africa is well positioned around the equator, which is beneficial for spaceports. Until now, however, there has been very little activity regarding space.
The new space race

Despite the challenging investment climate, another factor is likely to influence space travel: geopolitics. During the cold war, Russia and the US raced to put the first man on the moon. Since then, NASA’s space faring capabilities slowly declined. In 2011, NASA had to decommission the space shuttle, leaving the Russian Soyuz as the only option until Musk came along with the SpaceX Dragon. NASA, however, is still trying to get back into space with Boeing’s Space Launch System (SLS). Moreover, with the Artemis program, the US and 20 other nations are planning to explore the moon. At the same time, however, China is planning a moon mission with Russia for the 2030s. Their so-called International Lunar Research Station (ILRS) is seeking partners to join the endeavor. In addition, even private companies, led by SpaceX, have lunar ambitions. During the cold war, prestige was the main driver of the space race. Today, with a better understanding of the economic and political consequences, the stakes are even higher in the new space race.


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