#6 - JRL 2006-179 - JRL Home
Moscow Times
August 8, 2006
Kremlin Warns of Strain in U.S. Ties
By Nabi Abdullaev
Staff Writer

The Kremlin warned Monday of possible retaliation against the United States for sanctions imposed on two major companies in the Russian defense industry.

"We cannot rule out certain negative consequences for bilateral relations" between Russia and the United States, presidential administration spokesman Dmitry Peskov said Monday. "This was an unfriendly act toward Russia, and it was not done in a spirit of cooperation."

Rosoboronexport chief Sergei Chemezov suggested Monday that a proposed deal for U.S. companies to deliver up to $1 billion in Russian military hardware to Afghanistan and Iraq could be jeopardized by the sanctions, Interfax reported.

Meanwhile in Washington, U.S. trade officials said that the United States was reviewing whether to withdraw longtime trade benefits for Russia and 12 other advanced developing countries, Reuters reported.

"You should not turn a blind eye to the possible detriment to U.S. companies," Peskov said. The Kremlin spokesman declined to speculate on the motivation for the sanctions, but added that if they had come in response to Russia's recent $3 billion arms deal with Venezuela, "this would not cast the United States in a good light."

Political and defense analysts said Russia's retaliation would be limited and phased in gradually, however, while the Kremlin would continue to pursue its strategic partnership with Washington on such global issues as nuclear nonproliferation.

The United States announced two-year sanctions against state arms trader Rosoboronexport and jetmaker Sukhoi last Friday, though they took effect July 28. The sanctions, imposed under the Iran Nonproliferation Act of 2000, bar U.S. government agencies from dealing with blacklisted foreign firms. They also apply to U.S. companies trading in military and dual-use technologies.

Both Rosoboronexport and Sukhoi have denied the allegation that they had sold weapons of mass destruction or dual-use technologies to Iran.

Defense Minister Sergei Ivanov asserted with "full certainty" Monday that the sanctions "had nothing to do with the nonproliferation issue."

His views were echoed by both of the companies involved.

"The sanctions imposed by the U.S. State Department are purely political in nature, and they are an example of unfair competition," Rosoboronexport's Chemezov said Monday, adding that the sanctions would have no impact on his company's bottom line. "We have no contracts in the United States," he said.

Last December, Rosoboronexport and Tehran signed a $1 billion arms contract that included 30 short-range TOR-M1 air defense systems.

Sukhoi has also denied the U.S. allegations, claiming that it has shipped nothing to Iran in the last eight to 10 years.

Mikhail Margelov, chairman of the Federation Council's Foreign Affairs Committee, said Monday that the sanctions discriminated against Russian companies and called for a strong response to U.S. pressure.

"These sanctions diminish the trust between Russia and the United States, and will complicate dealings between the two countries," said Sergei Markov, a Kremlin-connected political analyst.

Ruslan Pukhov of the Center for Analysis of Strategies and Technologies said the sanctions could jeopardize Boeing's bid to supply $3 billion worth of new planes to Aeroflot.

Russia could also refuse to take part in joint military exercises with the United States and use the sanctions as an excuse to increase exports of military hardware to regimes hostile to the United States, said Leonid Ivashov, vice president of the Academy on Geopolitical Affairs and former head of the Defense Ministry's main directorate for military cooperation.

"We can use these sanctions to expand our presence in the arms market by exploiting anti-American feeling in many countries around the world," Ivashov told Interfax on Monday.

"The United States was the first to break the unspoken agreement that the former Soviet republics are within Russia's exclusive sphere of influence, just as Washington considers Latin America to be," Pukhov said, referring to active U.S. involvement in Georgia.

Moscow would not overreact to the sanctions, however, said Fyodor Lukyanov, a political analyst and editor of Russia in Global Affairs magazine.

"Under Putin, the Russian elite has developed a broad notion of competition that ranges from business to politics," he said. "These sanctions will be regarded as part of the game, and the response will be calculated accordingly."

Lukyanov and Markov said that despite the overall cooling in U.S.-Russian relations and a number of aggressive foreign policy initiatives on both sides, cooperation continues at a high level on nuclear nonproliferation, a view echoed in a recent interview by Rose Gottemoeller, director of the Moscow Carnegie Center and a former senior official at the U.S. Department of Energy.

It is now obvious that Russia and the United States are moving in different directions in their foreign policies, Lukyanov said.

"There is no strategic partnership and there is no strategic confrontation," he said. "This means that we can talk, but on most issues negotiations will have to start from scratch, not from a basis of shared foreign policy interests."

Russian support is crucial to Washington's efforts to resolve the escalating conflict in Lebanon and to build a united international front aimed at curbing Iran's nuclear ambitions.

Russia could continue to resist U.S.-backed resolutions on Iran and the Middle East in the UN Security Council, analysts said.

Staff Writer Anna Smolchenko contributed to this report.