“Today a new moon is in the sky”, these were the newsreel reports 60 years ago, when on the 4th October 1957 Sputnik was launched into orbit by the Soviet Union. The shiny beach-ball sized radio transmitter, built in just 2 months, certainly ignited the space race and inspired many: the US formed NASA in its wake and less than 4 years later the USSR used the same R-7 missile to put cosmonaut Yuri Gagarin into space, in another 4 years Neil and Buzz would put American footprints on the Moon.
But the major achievement and concern at the time was this 50 tonne R-7 intercontinental ballistic missile (ICBM) that successfully launched Sputnik into space. The USSR had successfully advanced the concept from the Nazis and tested the first ever ICBM just 6-weeks earlier; after 3 failed attempts the 4th flew over 6,000km putting the whole world in the range of Russia. "The Korolyov bureau had to create an intercontinental rocket capable of carrying a hydrogen bomb to any point on the planet". So being able to tune in to a space-beep was, for some, overcast by the realisation that for the first time in human history we had the capacity to make ourselves extinct. Cue the Cold War (and Space Race).
So it’s good that 60 years on we can celebrate mankind’s first venture into space–and that we have avoided the side-effect of a nuclear holocaust. Of course, it’s worth not forgetting all the close calls in: 1962 (Cuban Missile Crisis); 1980 (US faulty computer), 1983 (Soviets mistook clouds’ reflection for ICBMs); 1995 (Russia mistook Norwegian scientific rocket). And accidents continue to happen: in 2007 the US loaded 6 armed nukes onto a B-52 bomber without realising, flew it 25,000km and left it unguarded for 36 hours; or in 2010 when the US lost contact with 50 ICBMs for an hour because of a wrongly installed circuit; or the many likely other incidents we don’t know about from the 9 nuclear-equipped states.
Since Sputnik USSR/Russia has successfully launched a lot of ICBMs: over 1,750 R-7 variations. But now these mostly are used to take supplies and astronauts of all nationalities to the International Space Station. What was once feared and designed for war is now more utilised by Russia to facilitate international scientific co-operation – with the 3 Americans, 2 Russians and an Italian orbiting on the ISS right now having launched from the same Baikonur Cosmodrome that Sputnik launched from, using a Soyuz variant of the same R-7 rocket.
History provides some helpful context when considering North Korea’s recent antagonising ICBM experiments bypassing Japan and South Korea. 60 years on and all that past wariness and suspicion have been reignited, but this time those most concerned are towards the East. We in the West must not forget how major some of these developments are. Of course there’s still no proof that Kim Jong-un’s scientists have overcome the massive challenges of miniaturising a nuclear warhead to be stably dispatched by a high velocity ICBM. But once they do, the risks of such developments accidentally or recklessly being the source of panic or worse will greatly increase. This is a major uncertainty for the region particularly for South Korea which we do not believe has been adequately priced in. Take Korea Gas 2042s, which offers better value than most opportunities in the region: it still trades at the same spread of 96bps that it did prior to the North’s successful ICBM test, which is actually 10bps tighter than the average spread over the past 3 years.
60 years on from the advent of ICBMs the world can take some solace that things turned out quite well and hope that the resonant threats and absurdities from Pyongyang will be resolved with time, economic coaxing and military sensitivity. For now, continue to make the most of life and invest sensibly–expecting the world not to end. Who knows what advances the next 60 could bring?