RapidEye’s Chinese Suitors Scared Off by a Single Word: ITAR

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PARIS — Former RapidEye AG Chief Executive Wolfgang Biedermann remembers the day a large Chinese delegation arrived in Brandenburg, Germany, to try to purchase his struggling company and its five in-orbit Earth observation satellites.

The time was mid-2011 and RapidEye’s financial backers had decided to file for the German equivalent of the U.S. Chapter 11 bankruptcy protection.

RapidEye’s satellites, launched in mid-2008, were in good health, but the company’s owners were worried that its debt load was more than advisable. The bankruptcy proceedings, they reasoned, would allow a fresh start under new ownership.

Enter the Chinese.

“They were in Brandenburg with a fairly sizable delegation and they spent several days talking to our administrators,” Biedermann said in an April 20 interview. “I recall we were giving them the presentation and one of our slides mentioned the word ‘ITAR.’ We did not focus on it but they did and really the whole thing deflated for them at that point.”

ITAR, or International Traffic in Arms Regulations, is among a suite of rules that, for the past decade, has put satellites and most satellite components on the U.S. Munitions List (USML) for export purposes.

This has made satellites and satellite parts more difficult to export, even to U.S. allies. Combined with other regulations, ITAR has made it impossible for any U.S. satellites to be exported to China.

Some U.S. government officials have argued for years that the ITAR restrictions have been more successful in preventing U.S. companies from winning export orders than they have been in protecting sensitive U.S. technology.

In an April 18 proposal to reform the ITAR rules, the U.S. State and Defense departments adopt that view for the most part. But there are exceptions, and China is perhaps the most obvious.

The proposed ITAR reforms would not change anything with respect to Chinese access to U.S. satellite systems, even those that are far from the leading edge of technology in a world where more and more nations are using satellite systems.

In its reform proposal, the U.S. administration is nonetheless adamant that even a system like RapidEye — with a 6.5-meter ground resolution and a 77-kilometer swath width more suited to agricultural and land-use surveys than to spying — will not be taken off the U.S. Munitions List under the reforms.

“China is deploying imagery, reconnaissance, and earth resource systems with military utility,” says the document, titled “Risk Assessment for United States Space Export Control Policy.” “Examples include Yaogan satellites, the Haiyang-1B, and the Huanjing disaster/environmental monitoring satellite constellation. China is planning eight satellites in the Huajing program that are capable of visible, infrared, multispectral, and synthetic aperture radar imaging. In the next decade, even as Beijing fields a larger and more capable array of reconnaissance satellites, it probably will continue to employ commercial satellite imagery to supplement its coverage.

“China currently accesses high-resolution, commercial electro-optical, and synthetic aperture radar imagery from all the major providers including Spot Image (Europe), Infoterra (Europe), MDA (Canada), Antrix (India), GeoEye (United States), and Digital Globe (United States).

“Recently, China attempted to acquire a fully functional, European imaging satellite constellation, but was blocked by USML re-export laws due to U.S. technology being on the satellites. As part of the Administration’s recommendations in this report, this technology would remain subject to the USML.”

Biedermann said China’s interest in purchasing RapidEye “dropped like a lead balloon” once they learned that some ITAR-controlled parts were onboard the RapidEye satellites.

Biedermann said his recollection is not so much that China was “blocked” from buying his company as that the Chinese delegation’s interest in the purchase evaporated because of ITAR. “For us it was not a big issue. For them it was,” he said. “I know that they were not among the three finalists we reviewed for the purchase.”

RapidEye was purchased in August 2011 by Iunctus Geomatics Corp. of Canada.

In addition to making use of the products of the world’s major commercial Earth imagery providers, China’s Twenty-First Century Aerospace Technology in mid-2011 agreed to pay about $170 million for exclusive use over seven years of a three-satellite constellation of optical Earth observation satellites, each with a 1-meter-resolution imager, to be built by small-satellite specialist Surrey Satellite Technology Ltd. (SSTL). The satellites are scheduled for launch in 2014.

This Beijing-based company already had been a partner in the SSTL-coordinated Disaster Monitoring Constellation by providing the Beijing-1 satellite, with a 4-meter ground resolution. Beijing-1 has been in orbit since 2005.

 

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