Sinéad O’Sullivan is a former Senior Researcher at Harvard Business School’s Institute for Strategy and Competitiveness.
Imagine if a country launched a 1.4-megaton nuclear warhead into space and detonated it 400 kilometres above the Pacific Ocean, generating such a huge burst of electromagnetic energy that it resulted in an artificial aurora while disrupting electrical systems over land masses up to 1,500km away and destroying several satellites.
Is this more likely to be the plot of a new Call of Duty game, or perhaps Christopher Nolan’s fictional continuation of Oppenheimer, Part Deux?
Reader, neither.
This actually happened in 1962. And the actor, naturally, was the United States of America.
In the early 1960’s, the United States conducted a series of nuclear tests in space, which were primarily aimed at studying the effects and potential military applications of deploying nuclear weapons in space.
The explosion test, called Starfish Prime, was a high-altitude nuclear test conducted as a joint effort of the Atomic Energy Commission and the Defense Atomic Support Agency.
One of the test’s consequences was to catalyse Russian enthusiasm for some ground rules: the Outer Space Treaty was adopted by the United Nations General Assembly a few years later, in 1967. (Its full title is the “Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies” — but who has the time to regurgitate that?).
Today, most people — including investors who have bet billions of dollars on SpaceX’s Starlink constellation — have probably not heard of Starfish Prime, and don’t worry much about the impact of mega-radiation war in space.
That was, until last week, when the chair of the US House of Representatives Intelligence Committee issued a statement warning of a “serious national security threat.”
Russia, it has been speculated, may be cranking up the temperature in Outer Space as it develops nuclear anti-satellite capabilities, further damaging relations between Moscow and the west.
Some experts think it’s a big deal. Some experts think it’s not.
Regardless, what we do know is that any nuclear weapon in space would — along with a great number of other consequences — pose a huge risk to the $300bn of private capital invested into the space sector in the last decade.
Finance and economics 101 tells us that a robust legal framework to protect property rights is one of the reasons lower risk investors prefer investing in the United States and other developed economies over emerging markets.
But in comparison to the hyper-evolved regulatory frameworks of these markets, the number of laws and regulations in the jurisdiction of space is decidedly thin. “Currently, there are only five international treaties, and a handful of non-binding UN General Assembly resolutions that govern space”, says Christopher Johnson, a space lawyer at the Secure World Foundation. Not five thousand, not five hundred — just five.
It is unideal that there are currently no globally binding rules that protect investor interests and assets in space. Consider the $180bn valuation of SpaceX, which is largely credited to its Starlink satellite communications constellation. This constellation could disappear in the space of minutes with the use of a single nuclear anti-satellite weapon in space — Russian or otherwise. It is possible many investors have not considered that a single adversarial event could destroy value so quickly.
So how does the legal landscape look at the international level — and what does this mean for Russian space nukes?
The Outer Space Treaty says that nations cannot militarise space, place weapons in space, or take ownership of any celestial space bodies. This makes it an established investor’s friend, not foe — especially if that investor is American.
It is overseen by the United Nations Committee on the Peaceful Uses of Outer Space (UN COPUOUS), but this body cannot legally mandate any nation to follow it. After all, in the jurisdiction of space, adherence is done via the complex mechanisms of diplomacy, something capital markets grossly lack.
Instead, nations are forced to operate within the boundaries of the Outer Space Treaty for fear of economic, trade or other sanctions in retaliation. This means a country can’t — without international condemnation (a decent, though not impugnable, deterrent) — blow up the Starlink constellation. This, you’ll agree, is decidedly great news for SpaceX (and even Tesla) investors, although if Russia did nuke space they — and Russia — might have bigger things to worry about.
This treaty also stipulates that nations can’t appropriate celestial bodies. That is bad news for the American VCs desperate to become asteroid miners. Or at least it was until 2015, when the US enacted the American Commercial Space Launch Competitiveness Act which basically said that US citizens have the legal right to mine and sell the resources on asteroids, even if nations didn’t. This interpretation of the Outer Space Treaty expressly disallows appropriation of resources by governments, but has allowed it by the private sector. Especially in the United States.
Of course, circumventing the Outer Space Treaty to serve American investor interests works great until other nations decide they want to suit their own national interests. Or, as we may see with the case of Russia, just decide to ignore the international treaty altogether.
While the “will Russia nuke us all from space?” question echoes around national security communities and breakfast tables with some existential urgency, the question for investors becomes: could there be an alternative?
With hundreds of billions of dollars of assets relying on “good faith” behaviour as relationships between the space superpowers creak, perhaps it’s time for investors to re-think their reliance on the Outer Space Treaty and come up with something a bit more grounded.
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