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. Last Updated: 07/27/2016

U.S. Punishes Arms Trader, Sukhoi

APA Su-30 fighter jet flying over Fort Tiuna in Caracas during Venezuelan independence day celebrations on July 5.
The United States has slapped sanctions on state arms trader Rosoboronexport and jetmaker Sukhoi, accusing them of helping Iran acquire weapons of mass destruction.

Officials in Moscow reacted angrily, criticizing Washington for attempting "to impose U.S. laws on foreigners."

The sanctions on Friday came as relations between Moscow and Washington were strained over a number of other issues, from tensions over the Middle East to frustrations over the United States blocking Russia's World Trade Organization bid to Russian delays in announcing large contracts that U.S. firms hope to win.

The United States has been seeking greater help from Moscow in getting Iran to drop its nuclear program, citing fears Tehran is planning to make a bomb. Iran insists its nuclear work is for peaceful purposes only.

The two companies denied in statements any wrongdoing, while the Foreign Ministry hinted that a tit-for-tat response would hurt U.S. companies in Russia. The Defense Ministry said the sanctions were likely a response to Russia's arms deal last month with Venezuela.

Last Monday, Russia voted for a U.S.-backed United Nations Security Council resolution that called for Iran to halt its uranium enrichment program.

Questioned about the timing of the trade restrictions, a senior U.S. government official said there was "never a good time" to impose sanctions, adding: "They know the law," The New York Times reported Saturday.

"In effect, the United States is punishing its own companies by preventing them from working with the most advanced Russian enterprises," the Foreign Ministry said in a statement posted on its web site Friday evening.

The Foreign Ministry's statement was the first indication of the sanctions, which were not officially announced by the U.S. State Department but were later confirmed by unnamed officials within the department.

It was not immediately clear how the sanctions would affect the Russian companies. The sanctions were imposed under the Iran Nonproliferation Act of 2000, a law that bars U.S. government agencies from working with companies judged to be aiding Iran in acquiring weapons of mass destruction.

The sanctions came into effect July 28, and will last for two years.

Of the five other companies put on the State Department's blacklist, two are from India, two from North Korea and one from Cuba, Reuters reported, citing an unnamed State Department official.

"The sanctions apply to the specific entities and their successors, sub-units or subsidiaries, and not their respective countries or government," Reuters quoted the official as saying Friday.

The official, who spoke on condition of anonymity, said the U.S. government had "credible information" that equipment and materials that could help Iran make weapons of mass destruction had been sent to the country since 1999.

The Foreign Ministry on Friday denied that the Russian companies had supplied WMD technology to Iran.

"We want to especially stress that Russia limits its cooperation with Iran to supplying exclusively defensive weapons that are not capable of destabilizing the situation in the region," the Foreign Ministry said.

Late last year, Russia agreed to supply $1 billion worth of weapons to Tehran by 2008, including up to 30 short-range Tor-M1 air defense systems.

News of the sanctions came a week after Russia struck a $3 billion arms deal to supply Venezuela with 24 Sukhoi fighter jets and 53 helicopters. There are also plans to build a factory in Venezuela that will produce AK-47 assault rifles and ammunition.

The United States put an embargo on arms sales to Venezuela in May.

President Vladimir Putin and his Venezuelan counterpart, Hugo Chavez, signed the deal in the Kremlin on July 27.

Chavez visited Russia as part of a tour that included several nations critical of the United States, including Iran, Cuba and Belarus. Chavez also said he would visit North Korea, but that leg of the trip was later called off.

In Tehran, Chavez and Iranian President Mahmoud Ahmadinejad talked up the idea of an anti-U.S. alliance.

During his tour, Chavez said Venezuela could also supply weapons to "friendly countries that also require a minimal level of defense."

U.S. annoyance at the arms deal with Venezuela could well be the reason behind the sanctions, the Defense Ministry said over the weekend.

"The sanctions are apparently a U.S. reaction to the Russian breakthrough on the Venezuelan arms market," the ministry said in a statement, Itar-Tass reported.

Rosoboronexport and Sukhoi denied any wrongdoing on Saturday.

"We haven't shipped any products to that country in the last eight to 10 years," Vadim Razumovsky, spokesman for Sukhoi said Saturday in televised remarks.

Rosoboronexport chief Sergei Chemezov said his company had acted in full accordance with international law.

"Many foreign companies, including those from NATO member states, have conducted similar deals," Chemezov told Channel One television.

Rosoboronexport, in a statement carried by Interfax late Friday, said the sanctions could harm efforts to combat illegal weapons production across the globe, including in Iraq and Afghanistan.

Kalashnikov rifles have been produced without license in many parts of the world for decades.

Rosoboronexport called the sanctions "an unfriendly act toward the Russian state and an attempt to destabilize Russia military and technical cooperation with other nations."

It was unclear from the Foreign Ministry's statement whether Russia saw a link between the sanctions and trade disagreements with Washington involving the two blacklisted companies and other deals.

This year, Gazprom has repeatedly delayed the announcement of foreign partners for the Shtokman Arctic gas fields. Two U.S. oil and gas majors, Chevron and ConocoPhillips, have been seeking to participate in the multibillion-dollar project, which is designed to produce liquefied natural gas and sell it primarily on the U.S. market.

Another major deal under consideration is Boeing's bid to supply $3 billion-worth of planes to Aeroflot.

Sukhoi is working on a project with Boeing to design a 100-seater regional airliner, while Boeing is eager to secure imports of titanium, a metal used in the aerospace industry, from Russia.

Rosoboronexport has been widely seen as planning to acquire VSMPO-Avisma, the world's largest producer of titanium.

The state arms dealer also controls AvtoVAZ, the country's biggest carmaker, which has a joint venture with U.S. auto giant General Motors.