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The American space program is in better shape today than at any point since the Apollo 11 Moon landing 25 years ago. With the decision to include Russia in the international space station partnership, confirmed on Thursday by Vice President Gore and Russian Prime Minister Chernomyrdin, NASA's time of troubles has past. There is every reason to expect that the House of Representatives, which nearly canceled the space station a year ago, will approve the project by a comfortable margin when it votes this coming Wednesday.

What accounts for this remarkable turnabout? Over the past five years, NASA has been the focus of mounting criticism -- increasing scorned as an agency whose time had past. Although technical failures and managerial shortcomings were the proximate problem, NASA's fundamental quandary was far more fundamental. The space race was perhaps the quintessential manifestation of the Cold War, and with the end of the Cold War and the demise of the Soviet Union, NASA's very reason for being was called into question.

President Kennedy confronted a Soviet adversary with a race to the Moon, and America won this competition. President Clinton entered office committed to transforming our relationship with Russia to one of partnership, building a cooperative framework in which both countries can benefit. Four decades of Cold War consolidated a vast superstructure of adversarial institutions, such as NATO and various arms control arrangements, which will take years to transform.

But just as cooperation between France and Britain on the Concord supersonic transport paved the way for British integration into the European Community, cooperation on the space station will pave the way for integration of Russia into the community of industrial democracies.

This is not to say that the path ahead will be easy. I recently spent ten days in Moscow, and saw first-hand many of the difficulties that lie ahead. While there is no reason to doubt the feasibility of the joint station effort, many obstacles remain.

The primary Russian contractor on the space station, NPO Energia, appears to remain committed to a traditional Soviet-ear management style, with the power of the General Designers maintained by excluding outside supervision. In this way, pet projects could be continued (exemplified by the multitudinous Soviet Lunar landing projects of the 1960s), even in the face of the opposition of higher officials, who would remain unaware that their orders had been contravened.

Inadequate supervision ("failure to penetrate the contractor" in NASA parlance) contributed to the initial problems with the Hubble Space Telescope. More recently, NASA's Jet Propulsion Laboratory had an inadequate understanding of the failed Mars Observer spacecraft built for it by Martin Marietta. With traditional Soviet-style management culture so intensely devoted to avoiding penetration by external agencies, similar problems may be anticipated on the space station.

The seeming deterioration at the Institute for Space Research (IKI), formerly headed by Roald Sagdeev, is astonishing. Offices are unlit, and the hallways are lit by only the barest minimum of lights needed to find ones way. While IKI was never a beehive of activity, it now appears largely deserted. Given these conditions, the recent decision to delay the launch of a robotic Mars probe by two years, from 1994 to 1996, must come as no surprise.

Similarly, the Mir space station mission control center is only activated during those periods of time when the ground center is in contact with Mir. When Mir is not in direct communications with the ground, the control center is closed up and the personnel disperse to their other renumerative occupations in the informal economy.

All of this would be very disturbing if viewed as symptoms of uncontrolled institutional disintegration. Fortunately, these are the results of an intentional and well conceived policy which has been systematically implemented throughout large sectors of Russian society. Beginning last year, the core skilled and professional personnel at major aerospace institutions were encouraged to find additional means of income in entrepreneurial activities, and were offered the use of the institutions facilities to this end. Today, much of the workforce has at least two jobs: an official position, which provides institutional identity but not much money, and a job in the informal sector which provides the bulk of their income.

Thus many of the large Soviet-era institutions have transformed themselves into "virtual organizations" -- the latest Western management craze. They are able to call upon a large pool of talented personnel if the need or opportunity arises, without having to support the full cost of these personnel.

The primary challenge facing these institutions is the fact that raw material and energy prices have been decontrolled, and risen to world market prices. During the Soviet era, prices were kept artificially low, and these institutions and their facilities are predicated on cheap raw materials, energy and electricity. The lights are out at IKI because they can't pay their electric bill, a not uncommon phenomenon.

The primary challenge facing joint Russian-American projects is the declining purchasing power of the dollar. This has been obscured by the continuing and inexorable decline of the dollar-ruble exchange rate, which as with many other Russian statistics fails to capture the most important aspect of the situation. Though the declining value of the dollar is widely appreciated in Moscow, there appears to be an almost complete unawareness of this development in Washington.

All of the discussions of joint projects over the past several years have been predicated on the temporary undervaluation of the ruble relative to the dollar, which rendered Russia an extraordinarily inexpensive labor market. While the precise sources of the decline of the dollar remain obscure, it is quite clear that over the past year the purchasing power of the dollar in Russia has declined by at least 50% -- two dollars are required today to purchase what one dollar would have brought a year ago. There was every reason to anticipate that the temporary over-valuation of the dollar in Russia would eventually subside, but it was not widely anticipated that the devaluation of the dollar would come so soon or on such a scale.

Commercial and other joint projects which seemed quite attractive a year ago must now seem less certain. The just-concluded space station negotiations reportedly were complicated by Russia's demand that the $400 million payment for joint space activities agreed to last year be doubled to $800 million. Further requests for more money for less work may be anticipated as the Russian economy continues to recover.

These challenges will pose unique difficulties in the years ahead. But the future of the American space program, and the future of our relations with Russia, depend on meeting these challenges. Surely the agency that first landed humans on the Moon is adequate to this task.

1. John Pike is the Director of the Space Policy Project of the Federation of American Scientists, in Washington, DC.