The Second Major Barrier to Participation: Launcher Availability. and the Constraints of the Intelsat Agreements

Launcher availability, and its relationship with the ongoing negotiations on the definitive Agreements establishing Intelsat, overshadowed the post-Apollo nego­tiations.51 It was raised at a joint meeting of senior representatives from the State Department and NASA early in 1970.51 U. Alexis Johnson, the deputy secretary for political/military affairs, headed the delegation from State. Johnson was an enthusiastic proponent of international collaboration who had just pushed through a very controversial agreement to share rocket technology with the Japanese (see chapter 10). Paine and Frutkin represented NASA. Those present noted that

[w]e had anticipated, and the Europeans have now informally but unmistakably confirmed, that they cannot be expected to participate in the development of the shuttle unless they can be assured that they will be able to purchase shuttle launch­ings for any peaceful purpose. Put bluntly, this means they will not participate if they could be denied access to US launching capabilities whenever their purposes are judged undesirable by the US on narrow grounds of US national interest.52

As NASA saw it the entire collaborative project with Europe hung in the balance, its success crucially dependent on this one issue. Robert Packard in the State Department put it thus: “However ungrateful or disingenuous or misguided the reactions of many of our partners in Intelsat, we have managed to evoke their hostility and distrust in comsat matters to a greater degree than in most other areas of our relationships with them. This includes many of our closest allies and foreign associates.”53 A positive response to European demands “could well cause Europe to abandon large launcher development programs.” It would also make the Europeans more willing to trust the United States in the renegotiation of the Intelsat interim agreements. A negative reaction, by contrast, would not only mean losing a contribution of up to a billion dollars to the post-Apollo pro­gram. It would “confirm the position of those Europeans who preach the need for non-dependence on the US,” which would in turn “provoke decisions in Europe to channel funds into competitive and independent, as well as wasteful, European space programs.” It would also complicate the United States’ position in Intelsat, “strengthen[ing] those forces which argue that the US continues to seek by every means to dominate space telecommunications into the 1980’s.” The sentiments expressed here do of course have a familiar ring about them. As we saw in the previous chapter, the combination of US dominance in Comsat and the administration’s support for their position expressed in NSAM 338 had been a source of constant friction between NASA and Western Europe, and indeed between NASA and other arms of the US administration. Yet, while both Frutkin and Barnes were immensely irritated by European distrust of US motives in Intelsat (Europeans seem to think, Frutkin wrote, that the United States was “seeking by all means, fair or foul, to maintain political and technical control of Intelsat”54), it was also recognized that it was difficult to maintain international cooperation on the basis of the interim Intelsat agreements. In 1966-1967 the debate was dominated by worries over the “technological gap” and NASA strongly favored a proactive attempt to encourage technological sharing with European industries so that they could compete more effectively with US firms for comsat contracts in the space segment. The debate in 1969 had moved beyond this. As the negotia­tions over the definite agreements got under way, the entire structure of Comsat itself was being challenged, and questions were being asked regarding the United States’ willingness to provide launch assistance to foreign countries that wanted to establish their own comsat systems separate from the global system.

The negotiations over the Intelsat agreements brought home to the Europeans how vulnerable they were to American technological leadership. As we saw earlier,

NSAM 338, promulgated on September, 25 1965, denied American assistance in the development of foreign communication satellite capabilities, and further emphasized the determination of the US authorities to leverage that leadership, and the dynamism of their industry, to shape the contours of an international com­munication satellite system to their commercial and political advantage. Within a few years the evidence of a fruitful collaboration between the state and private industry was there for all to see. Between 1964 and 1970, NASA and the DoD (which developed its own system) had invested $207 million and $377 million, respectively, in research and development for communication satellites: Comsat had invested $143 million.55 The sophistication and capacity of four generations of Intelsat satellites increased apace. Intelsat I (Early Bird), the first satellite built by Hughes, was an experimental-operational satellite, with 240 two-voice chan­nels, that inaugurated commercial transatlantic communication in June 1965. The Intelsat II series added a television channel. The first successful Intelsat III launch, on December 18, 1968, had 1,200 two-way voice circuits and four-color television channels. This series ensured global coverage by 1969, ushering in the first and only global commercial communications satellite system, and so achiev­ing Intelsat’s prime mission objective. The first Intelsat IV satellite was success­fully placed in orbit in January 1971, as the final negotiations on the definitive Intelsat agreements were being settled. Positioned over the Atlantic, Intelsat IV had 3,000-9,000 two-way voice circuits and up to 12 color television channels.56

Economically speaking, the United States was the main investor in, and benefac­tor of this system. As the State Department reported to Congress in 1970, “Since 1964 the 76 members of the Intelsat consortium have invested $350,000,000 in the system and America’s share (and voting power) is currently about 52% or $226 million. Ninety-two percent of the total spent ($323,500,000) went to American contractors.”57 There was no foreign procurement for Intelsat I. It was 2.3 percent in Intelsat II and 4.6 percent in Intelsat III. It rose to about 26 per­cent in the first four of eight in the Intelsat IV series, for which Hughes Aircraft subcontracted $19.6 million abroad. It then fell back to about 10 percent for the next four in the series.58

The benefits reaped in the space segment were supplemented by the domi­nance of US firms in the ground segment. Congress was told that, by 1970, 28 countries had invested some $250 million in 50 earth stations, in which at least 50 percent of the hardware had been provided by American manufacturers.59 Indonesia was one such country. A ground station built near Jakarta that was car­rying 95 percent of Indonesia’s international communications was equipped with hardware provided by an American company. It was operated by an American firm that employed only relatively uneducated Indonesian technicians, and that was slated to reap all the profits from the operation for the first 20 years.60

Situations like this were obviously not tenable in an “international” organiza­tion. France, which firmly believed in the technological, commercial, political, and cultural value of communications satellites—and who realized that increased investment and improved technology were keys to improving Europe’s situation in Intelsat procurement—took the lead. As mentioned in chapter 3 , in 1967 it agreed with Germany to build an experimental communication satellite called Symphonie as a first step toward the acquisition of the technological and indus­trial know-how needed to compete meaningfully with American firms for Intelsat contracts. Symphonie was a small (185 kilograms) satellite that was to be launched with ELDO’s Europa II rocket in 1973. Its capabilities were marginally better than Intelsat I and II. It would be placed in geostationary orbit at longitude 15°W, where it could provide the overseas territories and provinces of France “with cul­tural television programmes and commercial or governmentally run telephone ser­vices,” as one French engineer put it in September 1970.61 The first flight model would be a “technical test phase.” It would be followed by a “non-commercial experimental operational phase,” in which interested countries could build the ground stations needed to receive its signals. In 1970 there were still some doubts about the more contentious “operational phase” that would follow.

The negotiation of the definitive Intelsat agreements got under way in January 1969. The Europeans moved forcefully to ensure that they had a greater say in the running of the new body that would emerge. After long, difficult, and bruis­ing discussions the definitive agreements were adopted in May 1971 by a vote of 73-0, with 2 member countries absent and 4 abstentions including France.62 The legal and political anomaly, whereby Comsat was both the representative of an international organization, the defender of US corporate interests, and the manager of the space segment was abolished. The definitive arrangements unam­biguously split the administrative and financial side of Intelsat from the technical operations. It vested authority for the former in an Assembly of Parties, the prime political organ of Intelsat, in which all Member States had one vote. Technical matters fell into the domain of a more restrictive Board of Governors, the exten­sion of the ICSC, and in fact the heart of power in the Intelsat system.

The European demand that Intelsat should help develop technology in those countries that lagged behind the United States—another issue that had been raised in 1964—was again rebuffed by the American delegation, now with the support of the developing countries. The latter saw no reason to subsidize the economy of an industrialized region by placing contracts for hardware that was more expensive than the best bid. All the same a compromise wording was found that left the door open for some concessions in procurement policy. Article XIII of the definitive agree­ments not only specified that procurement would be open to “international invita­tions to tender.” It also allowed that, if there was more than one bid that offered the “best combination of quality, price and the most favorable delivery time,” the contract would be awarded primarily so as to stimulate worldwide competition, thus nominally breaking the grip of US firms on the supply of goods and services.63

Article XIV(d) was one of the most controversial items in the Intelsat defini­tive agreements, and one of particular pertinence here. It dealt with the rights of Intelsat member countries “to establish, acquire or utilize space segment facili­ties separate from the Intelsat space segment facilities to meet its international public communications services requirements” (my emphasis). Comsat went into the negotiations demanding that “the definitive arrangements should contain an absolute prohibition against any Intelsat member’s participation in the estab­lishment or use of any communications satellite system other than the Intelsat system for international telecommunications purposes.” The draft agreement put forward by the US delegation suggested “sanctions for the breach of this obligation by way of suspension and eventual expulsion from Intelsat.”64

The US delegation led by Comsat won little if any support, either from gov­ernment authorities at home or from other nations in Intelsat. The compromise

hammered out, against strong American opposition, allowed for separate regional comsat systems under two conditions. First, such a system had to be “technically compatible [. . .] with the use of the radio frequency spectrum and orbital space by the existing or planned Intelsat space segment.” Second, and more ambiguously, the new system would be allowed if it did not cause “significant economic harm to the global system of Intelsat.”65 These two conditions (technical compatibility and absence of significant economic harm) would first be voted on by the Board of Governors, where votes were weighted, and a complex formula was established to curb the powers of any single major country, or bloc of industrialized coun- tries.66 The board’s recommendation would be passed on to the Assembly of Parties, where each country had one vote. To be implemented its recommenda­tions required the support of two-thirds of those present and voting.

The final agreements were not specific as to how “significant economic harm” was to be established, other than saying that two-thirds of the delegates in the Assembly of Parties had to agree on it. On one interpretation, to proceed with a separate system required a positive vote from member states, that is, two-thirds of them had to agree that the new system would not do the global system signifi­cant economic harm. On another interpretation, comsat systems could proliferate unless Intelsat made a negative finding, that is, unless two-thirds of those voting agreed that the system would cause significant economic harm to Intelsat.

This distinction was crucial for the proponents of a separate comsat system. On the first interpretation, a so-called positive finding, the onus was on the can­didate for a new system to persuade two-thirds of the member states that it would not do significant economic harm to the global network. On the second interpre­tation, a negative finding, the onus was on two-thirds of the Intelsat Assembly of Parties to show that it would. The assumption was that the requesting member was confident that the separate system would not be at the expense of the global system. Countries like France that wanted to develop separate regional systems obviously preferred the “negative” interpretation, since this placed the onus on their opponents to muster widespread support to stop them.67

The definitive agreements did not empower Intelsat to make binding determi­nations on any of its parties. It was reduced to a consultative body, which could only make advisory recommendations. Thus a member or group of members could proceed with developing a separate system even if the Intelsat Assembly voted that it would do significant economic harm to the international organi – zation.68 The only factor stopping a member state defying Intelsat would be the opprobrium of those in the body who sought to defend and respect its proce­dures, and who would be incensed to find revenue-producing traffic diverted to a separate system to the exclusive benefit of a limited number of (necessarily industrialized) countries.

For NASA, Comsat’s attempts to protect Intelsat from competition were unnecessary and counterproductive. Europe was a decade behind the United States in the development of communications satellites—a decade in which US business would still dominate the market. Anyway US industrial support would be essential for Europeans to build advanced communications satellites for the 1980s, thus ensuring a net dollar inflow into the country for both the payload and the launcher. In short NASA was emphatic that the advantages of foreign participation in future space programs “far outweighed any benefit we could hope to get from continuing to restrict launch services so as to protect Intelsat.”69 Hence the conclusion:

What is required is a positive internal policy directive, short and clear enough to be unequivocal, permitting the Department of State and NASA to make clear as appropriate that the US will agree, in any broader agreement on major foreign con­tributions to the post-Apollo program, to make STS launch services available on a reimbursable basis for any peaceful purpose. The internal statement should come from the White House so all agencies can and will reflect it.70

The same assurances would have to be provided for the supply of reimbursable launch services in the 1970s, before the shuttle was operational.

By mid-July 1970 the State Department and NASA had devised a satisfactory formula, in their view, as regards the availability of launchers (the DoD hav­ing withdrawn from the issue).71 They were persuaded that some proliferation of communications satellites systems was unavoidable if the United States was to maintain credibility in the negotiations over the final version of the Intelsat agreements. To meet this new situation NASA declared that NASM 338 should be revised to allow for reimbursable launchings or to sell shuttles “to those who will have participated substantially in the development of the shuttle,” like the Europeans. New international agreements being finalized in Intelsat would no longer express President Kennedy’s proposal for a single global comsat system; they would have to allow for “domestic, regional or specialized communications systems.” In this more relaxed regime it was suggested that the United States would launch foreign comsats unless “the appropriate organ of Intelsat reached a negative finding with respect to such a system.” In this situation the United States would be “obliged to withhold our own collaboration,” that is, it would not col­lude with a petitioner that wanted to override a majority vote in Intelsat.72

NASA was aware that while this was as far as they could go at the moment, it would not satisfy Europeans. As Frutkin explained to Packard in the State Department, “[T]oo many interests in Europe would wish to regard such a qual­ified assurance as negative at this point, exactly as was done with the Symphonie launch correspondence some years ago.”73 On that occasion the United States had stipulated that, to respect the Intelsat agreements, it would only launch the Franco-German satellite if it was to be used for experimental, not operational purposes. Imposing conditions on launching comsats to satisfy Intelsat was anathema to the Europeans, who felt that, if they judged that they were respect­ing the agreements, it was not up to the United States to use their monopoly on access to space to thwart European ambitions. A Congressional rapporteur on an ESC meeting held in Bonn early in July reported back to Washington that he was told “time and again” that European participation in post-Apollo required an “iron-clad agreement by the United States to make available launch vehicles and services, unconditionally, for any peaceful purpose.”74 In sum, the launcher issue was never going to be resolved as long as some influential members of the European space community demanded unconditional access to American launch services. The stark choice between a major contribution to the post-Apollo pro­gram and the maintenance of a costly and putatively obsolete European launcher was also seen as the choice between deriving advanced technological knowledge from the United States and being at the mercy of the United States’ interpreta­tion of the definitive Intelsat agreements.