Russian Deputy Prime Minister Dmitry Rogozin, who Putin had placed in charge of Russia’s space effort, today said in a television interview that it makes no sense for them to try to compete with SpaceX in the launch market.

“The share of launch vehicles is as small as 4% percent of the overall market of space services. The 4% stake isn’t worth the effort to try to elbow Musk and China aside,” Rogozin said in an interview on the RBC-TV channel on Tuesday.

He estimates the real market of space services at approximately $350 billion, with the creation of payloads, and not the launch of these payloads in space, accounting for the bulk of the sum. “Payloads manufacturing is where good money can be made,” he said.

Translation: We can’t figure out how to cut our costs and build better and cheaper rockets without eliminating many government jobs, so we have decided not to try. And we are going to make believe this failure is a good decision.

In response to the competitive threat from SpaceX, Putin’s government decided to consolidate their entire space industry into a single government corporation, run by their space agency Roscosmos. This reorganization however has failed entirely. Rather than encourage innovation and a lowering of costs, it served to make Russia’s entire aerospace industry a servant of politicians, who are more interested in distributing pork than building an efficient and competitive business.

Rogozin is thus essentially admitting here that Russia has lost its international commercial space business, and is therefore rationalizing that loss by claiming they never really wanted it in the first place.

This story confirms that Russia will be launching far fewer rockets in the coming years. Their dominance as one of the world’s launch leaders is now fading.