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US slams Russian companies over Iran

By Stephanie Kirchgaessner and Demetri Sevastopulo in Washington

Published: August 5 2006 00:02 | Last updated: August 5 2006 00:58

 

US relations with Russia hit another obstacle on Friday when the State Department imposed sanctions on two Russian companies ? one of which has close connections with President Vladimir Putin ? for selling arms to Iran. The move angered the Russian government.

 

The State Department imposed the sanctions on the two companies, as well as two Indian firms, two North Korean companies and a Cuban group, because it said they were exporting material that could contribute to the development of weapons of mass destruction by Iran or a cruise or ballistic missile system.

 

In imposing sanctions the State Department is hitting at a close friend of Mr Putin. Sergei Chemezov, who heads Rosoboronexport, served as a KGB officer with the Russian president in East Germany in the 1980s and has boasted that their relationship helped his company ?get a lot of issues resolved fast?.

 

The Russian foreign ministry said the move was an ?illegitimate attempt to make foreign companies work by internal American rules? and that the US was punishing its own companies by making it impossible for them to co-operate with leading Russian corporations. ?These sanctions, which the US unilaterally imposes on other countries and their organisations, are an obvious political and legal anachronism,? the ministry said.

 

The embargo could create problems for US companies such as Boeing, which is working with Sukhoi in Russia and is a large customer of VSMPO-Avisma, a Russian titanium company, which has been targeted for a takeover by Rosoboronexport.

 

The seven companies identified by the State Department will be barred from business with the US government and denied new export licences for two years.

 

The Kremlin?s appetite for arms sales with countries that ?compromise the political and economic independence and territorial integrity of other states? was raised by the Pentagon earlier this year. Donald Rumsfeld, defence secretary, has also said he was concerned Russia was supplying arms to Iran and Syria. Washington?s unease was exacerbated last month when Moscow sealed a deal to sell fixed-wing aircraft and helicopters to Venezuela.

 

The latest development heightened concerns of European companies that do business with Iran, according to attorney Judith Lee of Gibson Dunn & Crutcher, who said the sanctions were a ?provocative act?. ?The US is cutting off these companies from the US market because they are doing something that is legal in their own countries,? she said.

Financial Times

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