Putin’s Biggest Arms Firm Gets Slide on Sanctions

The U.S. Treasury Department targeted the maker of AK-47 assault rifles and seven other Russian defense firms for sanctions, but gave a pass to a Russian arms exporter that owns a controversial $554 million contract with the U.S. to supply helicopters to the Afghan military.

U.S. Treasury Secretary Jack Lew did not include state-run Rosoboronexport, Russia's largest arms exporter, on the long list of Russian banks, firms and individuals hit by U.S. economic sanctions to counter Moscow's aggression in eastern Ukraine, a Treasury spokeswoman said Friday.

The spokeswoman declined comment on whether Rosoboronexport was left off the list at the request of the Defense and State Departments. The sanctions were "carefully calibrated in order to intensify the pressure on the Russian government and we can expand the scope of these sanctions," the spokeswoman said.

Rear Adm. John Kirby, the Pentagon press secretary, said "I'm not aware of a specific request of the Department" to keep Rosoboronexport off the sanctions list.

For more than two years, bipartisan groups in the House and Senate have tried and failed to stop the helicopter deal with Rosoboronexport. Initially, the arguments against the deal focused on Rosoboronexport's supply of arms, including Mi-17s, to the forces of Syrian President Bashar al-Assad in Syria's civil war.

In 2012, 16 senators signed a letter to then-Defense Secretary Leon Panetta charging that the U.S. was being complicit in mass murder by dealing with Rosoboronexport. The reference was to the civilian death toll in Syria, which has now passed 150,000, according to the United Nations.

The arguments against the deal have now shifted to Ukraine and Russian President Vladimir Putin's role in backing separatists in eastern Ukraine, who are suspected of shooting down a Malaysian airliner Thursday, killing all 298 aboard.

In April, Sen. Bob Corker, R-Tennessee, and others introduced the "Russian Aggression Prevention Act of 2014" calling for sanctions on Russian banks and firms including Rosoboronexport to punish Russia for its actions in Ukraine and threats against NATO allies.

Defense Secretary Chuck Hagel has consistently backed the deal, arguing that the Mi-17s are easier to maintain and more user-friendly for the Afghans to fly than American-made helicopters.

On Thursday, Marine Gen. Joseph Dunford, commander of the International Security Assistance Force in Afghanistan, echoed Hagel's arguments at his Senate confirmation hearing to become the next Marine commandant.

Taking away the Mi-17s would have a "catastrophic" effect on the Afghan National Security Forces as they attempt to take on the roles of the withdrawing coalition troops, Dunford said.

"The reason I use the word ‘catastrophic,' which I don't think is hyperbole, is because the inability of the Afghans to have the operational reach represented by the Mi-17 will seriously deteriorate their ability to take the fight to the enemy," Dunford said.

"But the more important reason I use the word catastrophic is their inability to take the fight to the enemy will actually put young Americans in harm's way in 2015 and beyond," Dunford said.

Plans call for the Afghans to maintain a fleet of about 80 Mi-17s, with about 30 of the aircraft to be used by Afghan Special Forces, Dunford said.

Gen. John F. Campbell, the Army's vice chief of staff, made similar comments on the value of the Mi-17s at a Senate confirmation hearing last week on his nomination to succeed Dunford at ISAF.

Russia's ITAR-Tass news agency approvingly cited Dunford's remarks in an article touting the merits of the helicopter deal.

"He (Dunford) believes that without Mi-17 operational capabilities Afghan military forces will fail to ensure security successfully and will not become a reliable partner in the fight against terrorism," ITAR-Tass said.

Putin has warned of retaliation against U.S. companies in denounced the wide-ranging sanctions on Russian firms that included the "Kalashnikov Concern," maker of the AK-47.

The Treasury Department said that Kalashnikov "produces a number of military weapons, including multiple grades and versions of assault rifles, grenade launchers, sniper rifles, military shotguns, and aircraft cannons. Kalashnikov Concern is the largest firearms producer in Russia and is a subsidiary of Russia's State Corporation of Russian Technologies (Rostec)."

ITAR-Tass, quoting a Kalashnikov spokesman, said the sanctions could impact U.S. gun owners who favor the Kalashnikov AK-47 assault rifle. "This means that the sanctions the U.S. has imposed on Kalashnikov contravene the Interests of U.S. customers," ITAR-Tass said.

While Congress debated acting against Rosobornexport, the firm was maintaining a major presence at the Farnborough International Airshow in Britain to show its wares for potential foreign buyers.

-- Richard Sisk can be reached at richard.sisk@monster.com