Empty sanctions

The head of Rosoboronexport does not believe in the effectiveness of US discriminatory measures

The story of the US State Department imposing sanctions against two leading Russian companies - FSUE Rosoboronexport and Sukhoi Holding Company - continued yesterday. General Director of Rosoboronexport Sergei Chemezov expressed confidence that the State Department will most likely reconsider its own decision. And he explained the reason for such confidence: the Americans initially had no grounds for introducing such sanctions, and the actions of the State Department can be qualified as unfair competition.

One way or another, Sergei Chemezov believes, the American demarche will not in any way affect the work of the company he heads, since “Rosoboronexport does not have any contracts for the supply of military products or spare parts to the United States,” and Russian military equipment and weapons supplied for export are not completed products of any American companies.

If these sanctions have an impact on anything, it will be on the effectiveness of American troops in Iraq and Afghanistan. The fact is that it was planned to supply Russian weapons to the armies of these two countries through American companies authorized by the US Department of Defense. Deliveries worth almost $1 billion were planned over several years. However, due to unexpected State Department sanctions, Rosoboronexport’s proposals, as Mr. Chemezov put it, “were left hanging in the air.” Units from Afghanistan and Iraq can only fight with Russian weapons. And today it reaches them, but only through third countries. Among these semi-legal supplies there are many counterfeit products from Eastern Europe and some other regions. So, only American companies will suffer from the introduction of sanctions, says the head of Rosoboronexport.

The sanctions will not affect the supply of titanium by the Russian company VSMPO-Avisma (even if Rosoboronexport, as planned, will become its main shareholder in the near future), including to the American aircraft manufacturing giant Boeing. (“Avisma” receives up to 40% of its revenue from sales of titanium products in the USA. Russia a year ago met 10% of the American industry’s demand for titanium. Last year, our country accounted for 28% of global titanium production.) As the chairman of the board of directors explained, “ Avisma" Vyacheslav Bresht, the State Department sanctions apply only to government agencies, while Boeing is a private company. In addition, VSMPO-Avisma has never supplied titanium to the American military industry.

At the recent Farnborough Air Show, Sergei Chemezov said that Rosoboronexport intends to acquire “more than a blocking stake” in Avisma. As a shareholder, the state intermediary in the arms trade intended to participate in the creation of a joint venture with Boeing for the processing of final titanium products, which would be supplied to a number of other enterprises. Rosoboronexport's plans extend much further - to the creation of a metallurgical holding based on key enterprises of special metallurgy. The near future will show how the US State Department sanctions will affect Rosoboronexport’s strategy. Although today we can already say with a fair degree of confidence that it is unlikely that it will be possible to move a company with an order book of $21 billion and powerful government support “off course.”

Nikolay POROSKOV