What Elon Musk's conversations with Putin could mean for the U.S. government

Elon Musk's alleged conversations with Russian President Vladimir Putin have raised national security questions highlighting the U.S. government's reliance on SpaceX, the tech billionaire's astronautics company.

Why it matters: The situation puts the government in the difficult position of choosing to continue its relationship with Musk despite the liability he could pose, or sever ties and lose access to services it relies on.

Driving the news: Musk has been in "regular contact" with Putin since 2022, the Wall Street Journal reported Friday.

• SpaceX has contracts with the Department of Defense, which relies on the company to get its satellites into orbit.
• SpaceX also has multiple contracts with NASA which relies on the company's rocket launches to take astronauts into space and bring supplies to the International Space Station.

The big picture: Musk acknowledged while campaigning for former President Trump at a Pennsylvania town hall earlier this month that he has a "top-secret" security clearance, the Journal reported.

• Dan Meyer, a national security attorney, told Axios that Musk's conversations with Putin would only have violated his security clearance if he failed to properly report them to the government — which remains unclear.
• If his clearance was violated, the federal government's first step would be to verify if any classified information was leaked, followed by legal proceedings to have Musk defend his security clearance, Meyer said.
• If Musk is in violation, SpaceX — which holds the majority of his companies' government contracts — might require restructuring to separate Musk from his corporate management role or risk losing the contracts, Meyer said.

Zoom in: "That can be a big deal because you could lose control of your company that way," Meyer said, adding that security clearance issues for a CEO can also be "destabilizing" for a company.

• However, the situation also puts the U.S. government in a tough spot. There are few alternatives if contracts with Musk have to be canceled, Meyer said.
• "This is why you don't let yourself get into a position where there's only one provider of the service," Meyer said.
• Walter Isaacson, Musk's biographer, highlighted the government's reliance on SpaceX in a 2023 New York Times interview. "No other company," he told the paper, "been able to make reusable rockets, or get astronauts into orbit, or get some of these heavy satellites into high-Earth orbit."

What they're saying: For the government, the situation has "no easy fix" given how "essential" SpaceX has become, Meyer said.

• If Musk has become a national security concern, "NASA's Security team will have to find alternative means of isolating their classified information from exploitation" from foreign intelligence services like Russia's Federal Security Service, he added.
• "NASA was our greatest achievement, post-Word War [II], because it was ours and not open to foreigners," Meyer said.

• Now, "the United States is open for business on our enemies' terms," Meyer said.

State of play: NASA Administrator Bill Nelson told Semafor Friday that if the reported conversations between Musk and Putin are true, it would be concerning for the Pentagon, NASA and intelligence agencies.

• The Pentagon did not immediately respond to Axios' requests for comment.
• SpaceX referred Axios to its statement released on Friday, which called the Journal's report an "incredibly misleading story ... based upon completely unsubstantiated claims from unnamed sources."
• The statement didn't address Musk's alleged conversations with Putin.

Between the lines: Musk has become an outspoken and prominent member of the right in recent years and this isn't the first time his actions have created tensions with the Biden administration.

• The White House condemned Musk last year for backing an antisemitic post on X.
• Earlier this year, the White House slammed Musk for questioning why President Biden and Vice President Kamala Harris hadn't been the target of assassination attempts.

Zoom out: Musk, who has endorsed Trump for president, is also one of the former president's biggest donors for his 2024 campaign.

• Trump, who has long faced scrutiny over his relationship with Putin, has also allegedly remained in contact with the Russian president since leaving office.
• Trump has denied the allegation.

Go deeper: How Elon Musk's empire changes with a second Trump term