(Bloomberg) -- The world’s largest spaceport is showing the strain of Russian President Vladimir Putin’s ongoing war in Ukraine.

Russia has run the historic Baikonur Cosmodrome in Kazakhstan since the end of the Cold War and the two governments have pledged to make it the hub for a new Soyuz-5 rocket program that will compete against Elon Musk’s SpaceX. 

But plans for the site meant to help propel Russia’s efforts in the new space age risk running off course. Putin’s invasion of Ukraine and subsequent sanctions have severely curtailed launches amid an exodus of customers — from both national space agencies to commercial firms like Eutelsat OneWeb — that have historically relied on Russian rockets to get their technology into orbit.

The complex relationship between Russia and Kazakhstan is playing a growing role, too. While the latter is still closely connected to long-time ally Moscow, it’s also been busy building relationships with countries, particularly those in the European Union, to diversify economic and political ties.

That’s a deliberate strategy, according to Kirill Nourzhanov, associate professor at the Australian National University’s Centre for Arab and Islamic Studies.

“In the current climate, Kazakhstan deems it necessary to have as little to do with official Russian programs, including space programs, as possible,” he said.

Read More: Putin’s War Is Deepening a Tussle for Influence in Central Asia

Russia’s space agency, Roscosmos, didn’t respond to an emailed request for comment about its partnership with Kazakhstan. “The Russian space industry has competencies in virtually all areas of space development,” Roscosmos head Yury Borisov told Russian news agency Tass last month. “There are many countries that want to cooperate with us.”

Core to Russia’s concerns about Kazakhstan are the implications for the Soyuz-5 rocket, which is designed for launches to one of the most lucrative segments of the new space economy, low-Earth orbit.

The Soyuz-5 is supposed to launch from Baiterek, a new part of Baikonur that’s under construction and expected to cost about 90.8 billion tenge ($198 million). But the new rocket is years behind schedule, hit by sanctions first imposed after Putin’s annexation of Crimea in 2014 and extended following the full-scale invasion of Ukraine in February 2022. 

Kazakhstan in March seized part of the site following a local court ruling that ordered TsENKI JSC, a unit of Roscosmos, pay about 13.7 billion tenge after the Moscow-based company failed to fulfill an agreement to provide an environmental-impact assessment. 

The two sides are “negotiating to conclude a settlement agreement,” the aerospace committee of Kazakhstan’s Ministry of Digital Development, Innovations and Aerospace Industry said in a statement. “The implementation of the Baiterek project is currently ongoing for the joint launch of the promising Russian Soyuz-5 carrier rocket.” 

Falling Behind

Without the Soyuz-5, Russia risks falling further behind Western and Asian competitors, which are boosting their space-faring capacity. 

Even when it’s ready — which is expected no sooner than late-2025 — the rocket may struggle, since many commercial satellite operators will no longer use Russian rides.

“The major problem of this project is the absence” of customers, said Pavel Luzin, a visiting scholar at Tufts University’s Fletcher School of Law and Diplomacy. “In reality there’s not any client in the world for these rockets.” 

Money is proving a particular hurdle for Moscow’s plans to upgrade the aging facility where the first person in space, cosmonaut Yuri Gagarin, took off for orbit more than 60 years ago. A 2021 deal with the United Arab Emirates to seek investment to renovate part of the cosmodrome fizzled out. 

“It has become clear that the costs and complexities involved are much greater than we had originally hoped,” Ibrahim Hamza Al Qasim, deputy director general of the UAE Space Agency, said. “There is currently no plan in place for further involvement.”

That’s left Russia looking at options closer to home. It’s been trying to move more launches to Vostochny, a new spaceport near its border with northeastern China intended to be the home base for a new family of rockets called the Angara. But the cosmodrome and rocket projects are behind schedule, said Pawel Bernat, senior lecturer at the Polish Air Force University.

“The original plan was they would have the Angara rocket ready and Vostochny ready,” he said. “Because they are late, the Russians kind of changed their approach to Baikonur and Kazakhstan.”

Rockets Launch

For now, though, Kazakhstan and Russia are sticking with their partnership: Their leaders pledged to cooperate in areas like space following Putin’s visit to the former Soviet republic in November. Russia also wants to add to its space presence, and has earmarked 609 billion rubles ($6.7 billion) through 2030 to create its own orbital station.

And it’s business as usual at the launch site. An older-generation Russian rocket took off from Baikonur on Dec. 1 to send supplies to the International Space Station, one of the only places where the US and its partners continue to cooperate with Moscow. Another Soyuz rocket is scheduled to launch an observation satellite from the site on Dec. 16, according to Russian media. 

Kazakhstan, however, has signaled it’s ready to wield more power and look beyond its long-time ally.

“Kazakhstan is working to expand cooperation in the space sector in the Central Asian region, within the Commonwealth of Independent States, the Organization of Turkic States, the UN and other international organizations,” the aerospace industry ministry said. It is also ready to work with Russia and China, it said.

And the country is already making headway in shifting beyond Moscow. It has started using Musk’s Starlink satellite constellation to provide internet access to rural areas. In October 2022, it signed a memorandum of understanding with the Turkish Defense Industry Agency to collaborate on satellite development. It’s also partnered with Airbus SE’s defense and space unit to run a testing and assembly complex.

Ultimately, finding new space partners may make good sense for Kazakhstan, given the challenges facing Roscosmos.

“The Russian space sector will become weaker and less significant globally, and these processes have already started,” Bernat said. “There’ll be less and less money to spend and further develop space technologies. The Russian space sector hasn’t been innovating for a long time.”

--With assistance from Leen Al-Rashdan.

©2023 Bloomberg L.P.