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State Department sanctions may backfire on America


MOSCOW. (RIA Novosti military correspondent Viktor Litovkin) 

The Washington Post has reported that the U.S. State Department has approved sanctions against several foreign companies, including three Russian firms - the state-run arms exporter Rosoboronexport, the Tula-based instrument-making design bureau, and the Kolomenskoye machine-building design bureau.

Under the 2005 Iran and Syria Nonproliferation Act, American companies and individuals are prohibited from trading with or rendering assistance to the said companies.

Russia has learned about the department's decision from news agencies.

Rosoboronexport, which has the monopoly right to export arms and military equipment, described the sanctions as "mala fide competition."

The Russian Foreign Ministry said they are "an internal problem of the American authorities."

Russia's First Deputy Prime Minister and Defense Minister Sergei Ivanov said: "The three Russian companies have not violated international laws, rules or obligations assumed by Russia in the non-proliferation of weapons of mass destruction and missile technology. The U.S. administration seems to be dissatisfied with the recent growth in the sale of Russian arms and military equipment, and with the Russian defense orders for the national armed forces."

Washington is taking revenge on Russia for its energetic efforts to fill in the vacuum created by the U.S. sanctions, notably in Venezuela. Rosoboronexport is supplying Kalashnikov guns, Su-30MK Flanker-C fighters and other arms and military equipment worth $3 billion to Venezuela. It has military contracts worth $9.7 billion with Syria stipulating the supplies of antitank and anti-air systems, and is supplying Tor-M1 and mobile army air defense missile systems to Iran.

The State Department's sanctions cannot force the Kremlin to terminate these lucrative deals. Ivanov is right in that the Kremlin, Rosoboronexport and its partners have not violated any international laws or rules. They are not supplying arms to conflict zones or selling arms to warring sides. Moreover, they are trading only with UN-recognized states and their legitimate governments, rather than with individual firms and organizations.

Russia is a sovereign country that has never yielded to pressure, including in the form of economic sanctions imposed on its defense companies and arms exporters. Moreover, these sanctions will not affect its military-technical cooperation with other countries.

Rosoboronexport and the Tula and Kolomenskoye design bureaus have no contracts with the United States, and U.S. sanctions will not affect their relations with Syria, Iran, Algeria, Morocco and other countries to which they export their output.

The first to suffer from the sanctions will be American companies and U.S. arms modernization plans. The sanctions can boomerang on the U.S.

The Pentagon has more than once offered Rosoboronexport to sign a contract on the delivery of the Arena Active Protection System (APS), an active countermeasure system developed at Russia's Kolomenskoye engineering design bureau to protect armored fighting vehicles from shaped-charge projectiles.

It uses a millimeter-wavelength Doppler radar to detect incoming warheads, then fires a defensive projectile timed to detonate immediately above the target and spray it with a stream of splinters, thereby neutralizing the threat. The Arena's awareness range is 50 meters and destruction range up to 25 meters.

The United States, other NATO countries and Israel do not have comparable systems. Discussions of ways to adjust the Arena system to the Pentagon's technical standards lasted for months, and the sides eventually reached the stage of coordinating the price, the amount of supplies, and the companies that would fill the order. Under U.S. law, American military hardware must have only American-made spares and components, but the Pentagon was prepared to waive this "minor" detail. However, the sanctions imposed on the Kolomenskoye bureau can prevent the deal, but who stands to lose more?

There is one more sphere of international economic cooperation that can be hit by the sanctions.

Nearly all arms contracts between Rosoboronexport and foreign states are signed in dollars, with the payments mostly made through the Bank of New York. U.S. Congress has decided that banking secrets must be disclosed to facilitate the fight against international terrorism, which allows Washington to learn all the details of Russian arms contracts.

This has prompted Russian exporters to ponder conversion to the euro. European banks have so far remained immune to pressure from the U.S. administration and have not allowed the CIA to read their confidential information.

Converting from the dollar to the euro in international contract settlement is a relatively complicated process, because it has to suit all the sides involved. However, Russia has signed several such contracts, which means that Russian accounts with the Bank of New York will soon become much smaller.

The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.

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