The Budapest Maneuver: why small nations need their own “little NASA”by Mihail Istvanovics Várdai
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| A small country cannot afford to, nor does it need to, build its own rockets or send missions to the Moon on its own. Still, “hybrid agencies” can be created. |
There is one contradiction: although small states are becoming more dependent on space technology (navigation, communication, and Earth observation), they still act as mere consumers. For the EU’s push for autonomy in space, national initiatives are critical in contribution to this objective. While large countries actively develop their lunar outposts, smaller states face an immediate question: How do we graduate from consumer to partner?
Fragmentation is a major barrier to the success of smaller states in space. Hungary’s 2014 decision to dissolve its Space Office and split responsibilities between the Ministry of Foreign Affairs and the Ministry of Economy exemplifies this challenge. A decade later, the country still lacks a clear strategy. Currently, it remains unclear how the Hungarian government will handle this problem.
However, there are signs of an alternative strategy. Three cases provide evidence of the ability to become a participant in the space market and even lead in certain areas: Luxembourg in commercial and legal aspects, Poland in ESA membership, and South Korea in a centralized approach.
Three models, one reality
A small country cannot afford to, nor does it need to, build its own rockets or send missions to the Moon on its own. Small countries do not have the necessary population or industrial base. Still, “hybrid agencies” can be created. The critical thing is to choose the hybrid agency appropriate for the particular country.
Model 1: The legal first-mover, Luxembourg
Over nearly ten years, Luxembourg, a nation of about 660,000 inhabitants, has shown how a small country can become a leader in profitable aspects of the space economy. A step toward overcoming fragmentation came in 2018 with the creation of the Luxembourg Space Agency (LSA). However, it is important to remember that the idea behind the LSA was not to create a “NASA clone” but to develop a business development agency dedicated to the space industry. The LSA’s responsibilities include risk reduction, regulatory support, and coordination of a national ecosystem, rather than human spaceflight missions.
An important example of Luxembourg’s steps into the space economy is the 2016 decision to adopt the “Space Resources” policy. Luxembourg became the first European country to implement regulations giving private enterprises rights to asteroid and lunar resources, following the precedent set by the United States in 2015. In other words, Luxembourg created a “legal shield” for investors by demonstrating the legal certainty provided by incorporation within the country.
Among other things, Luxembourg attracted ispace to establish its European headquarters there, which resulted in the production of TENACIOUS, the first European-developed, produced, and assembled lunar rover. Luxembourg also used its national telecommunications provider to develop and launch GovSat, providing NATO and the European Union with military communications services.
Model 2: The ESA maximizer, Poland
When assessing possible models of national space capabilities, most small countries intuitively draw inspiration from NASA. However, given budget limitations and the infeasibility of total vertical integration (as practiced by the German DLR), the Polish Space Agency (POLSA) model offers a masterclass in turning membership into industrial policy. Poland’s entry into the European Space Agency (ESA) as a full member in 2012 and the establishment of POLSA in 2014 have resulted in remarkable successes. With the help of a unified organization, Poland turned its ESA contribution of €40 million into more than €320 million worth of contracts for Polish companies in just a few years.
| These models reveal a common truth: Small nations don’t need to reinvent the wheel. Instead, they can build hybrid agencies grounded in three pillars. |
Most recently, in 2025, Poland reached a deal to build a new ESA Technology Centre on its soil. The message is clear: without a space agency, membership is equivalent to simply paying ESA money. Conversely, a space agency turns membership into a coherent industrial policy. The main task of a small space agency is to absorb rather than develop directly; the ESA follows a “fair return” or geographic return principle. In essence, the space agency ensures that the money spent by the government on ESA is eventually invested back into domestic industry through contracts.
The example of Hungary and its first ARTES national call clearly proves this point. Hungary secured for three companies (PCB Design, C3S, and NI Hungary) approximately €5 million in ESA funding through the national call.
Model 3: The centralized challenger, South Korea
Some states aim for larger ambitions. In that regard, another path is represented by the Korea AeroSpace Administration (KASA), established in May 2024. KASA reflects a “late mover” strategy, consolidating all functions and powers are gathered in one body.
Unlike the minimalist approach used in Luxembourg or the absorptive model adopted in Poland, KASA is a large, centralized government organization with 293 staff members and a budget of $725 million for 2025. It has direct oversight over two organizations, KARI and KASI, and its ambitions are outlined as achieving a lunar landing by 2032 and sending a mission to Mars by 2045.
The key point with KASA, however, is that it symbolizes an organizational shift rather than just scale. Traditionally, most South Korean space efforts were concentrated in KARI, which limited the growth potential of the private sector. KASA was created not only to expand government efforts but to effectuate the shift from the “Old Space” system, where the government was leading, to a “New Space” approach, where the private sector leads. While the fourth Nuri rocket launch was carried out as a joint effort, the seventh will be purely commercial.
Lessons for small nations from these models
Depending on resource availability and political will, these lessons can be applied to kickstart a space ecosystem for small nations:
- Nations with a well-developed financial or legal industry, such as Luxembourg, can position themselves as the “law firm of space,” focusing on lawmaking rather than rocket launch capabilities.
- Nations already operating within the ESA framework will miss out on a cost-effective solution without a POLSA-like body; the “fair return” strategy is best suited to nations that adopt an industrial policy strategy.
- Nations with developed manufacturing industries can benefit from a KASA-like body to move from manufacturing for others to manufacturing their own payloads; such a change requires serious investment of at least $500 million annually.
These models reveal a common truth: Small nations don’t need to reinvent the wheel. Instead, they can build hybrid agencies grounded in three pillars.
The three pillars of a “hybrid agency”
No matter which model a small state pursues, an effective agency will depend on three core foundations based on these examples as well as current knowledge concerning United States Space Force commercial models:
1. The “buy what we can” approach
The Cold War approach of building capabilities from scratch must not be pursued anymore. A small agency needs to act as a smart buyer. Following the principles set by the US Space Force’s Commercial Augmentation Space Reserve (CASR) concept, pre-arranged agreements with commercial satellite operators can be made. In peacetime, they deliver commercial data; during times of crisis or war, their capacities can be requisitioned for national needs. This is the most efficient way to maintain resilience for a small country, which lacks its own strategic reserve.
2. “Fair return” maximization (the Polish model)
The main task of the agency is to absorb and redirect resources. Each euro spent on ESA must be turned into contracts for the domestic industrial sector. Luxembourg applied this principle by using its ESA membership not as a final goal but as a means of obtaining ESA funding to partially finance the development of the “ispace” rover via the LuxIMPULSE project. Without an agency, the nation risks simply becoming a donor.
3. “Dual-use” protection (the “Visegrad 4” model)
Following Russia’s large-scale invasion of Ukraine, NATO has recognized space as an operational domain. For countries in Central Europe on the front lines of defense, space is an essential component of their security posture. This requires dual-purpose functionality: satellites capable of monitoring flooding for agriculture and tracking troop movements for defense. Luxembourg implicitly follows this model by depending on SES and GovSat for security. Since small nations lack the finances to build extensive strategic military satellite constellations, the leasing model is not just efficient but inevitable.
The risk of inaction
Critics may argue that a national agency is unnecessary or too costly for small states. But as Poland’s €320 million return from its €40 million contribution shows, the real cost is inaction. This approach is a dangerous illusion, because without a national space agency, small countries remain passive players who do not get involved in “optional programs” where actual technology transfer occurs. Additionally, there is no doubt that the commercial sector (“New Space”) is moving faster than government. Without the creation of a “Front Door” organizational framework, startups in your own country may struggle to survive, let alone find skilled specialists, which could result in attrition.
| In the 21st century, a nation without a coherent space agency is invisible and at risk. |
It is worth mentioning that Hungary has just made its first small but important step forward. It created its first ARTES national call, and three Hungarian companies have managed to receive €4.8 million from ESA. However, without a national space agency, this result could remain an exception. Meanwhile, Poland is moving closer to becoming a space “reservoir” nation.
If South Korea was able to create its own NASA, and Poland built its own space agency, then Hungary, the Czech Republic and Slovakia have no excuse for doing so either.
The takeaway
A national space agency for a small state is not a luxury. It is part of our critical infrastructure, similar to a central bank or a foreign ministry.
- It does not require 10,000 employees: 50 to 100 strategic coordinators will suffice. The LSA operates with a lean, strategic approach.
- It does not need an extravagant budget, only the authority to redirect existing national ESA contributions and defense spending.
- It does not have to build rockets but instead it should select a specific role: a legal pioneer like Luxembourg, an ESA maximizer like Poland, or a centralized competitor like KASA.
In the 20th century, a nation without a flag on the Moon was considered irrelevant. In the 21st century, a nation without a coherent space agency is invisible and at risk. Whether through asteroid mining laws in Luxembourg, ESA integration in Warsaw, or centralized manufacturing in Daejeon, the “little NASA” model is the only way to ensure our sovereignty reaches into orbit.
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