Russia says US bans its arms firms over Iran sales

By Oliver Bullough and Tom Miles

MOSCOW (Reuters) – Washington imposed sanctions on two of
Russia’s leading arms firms over their links with Iran on
Friday, a step Moscow said was a “clearly illegitimate” attempt
to impose U.S. laws on foreigners.

Russia’s Foreign Ministry said in a statement that the
State Department had slapped sanctions on state export agency
Rosoboronexport and state-owned warplane maker Sukhoi, meaning
they could no longer work with U.S. firms.

“This is a clearly illegitimate attempt to make foreign
companies work by internal American rules,” the statement said.

Russia said the sanctions had been imposed under a U.S. law
which penalizes companies for working with Iran in the sphere
of weapons of mass destruction.

The U.S. later said it had imposed sanctions on seven
companies from North Korea, Russia, India and Cuba for their
arms deals with Iran.

Iran and Russia signed a $1 billion defense deal in
December, Russian media said at the time. Russia agreed to
supply TOR-M1 ground-to-air missile systems to the Islamic
Republic and also agreed to modernize its air force.

Russia is also building an atomic power station at Bushehr
on Iran’s Gulf coast.

The statement said the sanctions would stop U.S. companies
from working with the two Russian firms, a potential blow to
the Russian Regional Jet civil aviation project, which Sukhoi
is working on with aerospace giant Boeing.

A Sukhoi official said it had broken no regulations.

“We have competed on the U.S. market for a long time, we
carefully study the laws and have never violated anything and
do not intend to,” Alexander Klementev, deputy director of
Sukhoi told Ekho Moskvy radio.

“Sukhoi has sent absolutely nothing to Iran in the last 6
or 7 years.”

Rosoboronexport is one of the world’s biggest arms sellers,
accounting for around 70 percent of Russia’s $6 billion of
sales in 2005.

TITANIUM?

It was not clear from the Russian statement whether the
sanctions would also cover the two firms’ subsidiaries. If so,
they could soon affect U.S. imports of titanium, an important
metal in the aerospace sector.

Rosoboronexport is planning to acquire the world’s biggest
titanium maker, Russia’s VSMPO-Avisma, which supplies 35-40
percent of Boeing’s titanium as well as 60-70 percent of that
used by its European rival Airbus.

Aircraft part maker Goodrich Corp. is also a customer.

Rosoboronexport owns Russian carmaker AvtoVAZ, which has a
troubled joint venture with U.S. auto giant General Motors,
which could also be affected.

“The U.S. is punishing its own companies, taking away their
possibilities to cooperate with leading Russian companies,” the
ministry said.

Washington and Moscow have clashed frequently over trade
policy and Iran over the past few years, with U.S. officials
angering President Vladimir Putin with criticism of his
democratic record and foreign and energy policy.

Washington says Iran is using its civilian nuclear program
as cover to develop atomic weapons.