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U.S. Slaps Sanctions on 3 Defense Contractors

By Lyuba Pronina
The United States has blacklisted three Russian defense contractors it says are "transferring lethal military equipment" to countries supporting terrorism.

The companies, all state owned, are Rostvertol, which manufactures the Mi-24 attack helicopter and the giant Mi-26 transport helicopter; the Tula Design Bureau of Instrument Building, or KBP, which makes anti-aircraft and anti-tank systems; and Bazalt, which makes grenades and other munitions.

"It is the policy of the United States government to deny all U.S. government assistance, contracts and defense-related licenses to these entities," the department bureau of nonproliferation said late Thursday in the public notice printed in the official Federal Register.

"We made the determination that these three companies were involved in the transfer of weapons to state sponsors of terrorism and we are declaring them sanctioned under American law," a U.S. State Department official said by telephone from Washington on Friday.

Those "state sponsors of terrorism" are Syria, Sudan and Libya, according to The New York Times, but the official would neither confirm nor deny the report.

While of little consequence commercially, the sanctions, which will be reviewed in one year, added fuel to the growing political fire between the two Cold War foes over a range of issues, including Georgia and Iraq.

Government officials and the enterprises themselves all expressed outrage and astonishment at the move, which was compounded by a statement released by Washington the same day slamming President Vladimir Putin for threatening to carry out attacks on Chechen rebel bases in neighboring Georgia.

"Military-technology cooperation between Russia and these countries is absolutely legitimate," Foreign Ministry spokesman Boris Malakhov was quoted by Interfax as saying.

"We are particularly disappointed that such a groundless action was taken by our partner in the anti-terror coalition," he said. "Our demarche has been made known to the American side."

Visiting U.S. Undersecretary of State John Bolton defended the sanctions, saying they had to be imposed because U.S. laws regarding terrorism had been violated.

KBPs deputy chief designer, Leonid Roshal, said by telephone Friday that the sanctions were an attempt by Washington to divert the attention of the world community away from its policies on Iraq and Georgia.

"U.S. officials have clearly stepped up their confrontation with Russia and decided to squeeze a few Russian enterprises that bear no relation to them," Roshal said, adding that his companys work would not be affected.

"We are not under the command of the U.S. State Department," he said.

"Experience shows that Russian weapons, air defense systems and anti-tank systems are better than the Americans, and that makes the U.S. nervous," he said.

Roshal said this is the third time the State Department has blacklisted KBP. The last time was after the company delivered Kornet-E anti-tank missiles to Syria in 1998. "They said that by delivering the Kornet missiles to Syria we considerably weakened the capabilities of Israel, Americas strategic partner," he said.

He added that KBP had not signed any contracts with Syria since then and it has only held talks with Sudan and Libya.

He said his companys main clients are China, India, the United Arab Emirates and Greece.

A Rostvertol spokesman was quoted by The Associated Press as saying that the sanctions are just an attempt by Washington to edge Russian companies out of a competitive market, noting that his company had just signed deals with countries in South America and Asia.

In 2000 and 2001, Rostvertol delivered as many as 10 Mi-24 helicopters to Sudan, according to Marat Kenzhetayev, an expert with the Center for Arms Control think tank in Moscow.

Rostvertol has also sold dozens helicopters to Syria and Libya, according to the London-based International Institute for Strategic Studies.

As for Bazalt, Kenzhetayev said it had sold a few thousand anti-tank grenades to Sudan.

State-owned arms export monopoly Rosoboronexport declined to comment Friday.

But the head of the agency, Andrei Belyaninov, said last month that it works "within the international obligations that Russia has."

"Therefore, we do not work with countries where there are international bans," he said.

The last time the United States imposed sanctions on Russian entities was in 1999, when President Bill Clintons administration blacklisted several Russian companies and institutes, including the Scientific Research and Design Institute of Power Technology, the Mendeleyev University of Chemical Technology and the Moscow Aviation Institute.

Washington said they were guilty of breaking nonproliferation agreements on missile and nuclear technology cooperation with Iran.

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