Media: US squeezing Russia out of weapons market with sanctions

Starting on Monday, January 29th, the United States can start introducing sanctions on individuals and companies located in any part of the world that enter into “significant” contracts with companies from the Russian defense sector, reports Russia’s RBC news agency.

Such sanctions are stipulated by the Countering America’s Adversaries Through Sanctions Act (CAATSA) enacted by United States President Donald Trump in early August 2017.  

The US State Department drew up a special list comprised of 39 Russian industrial defense companies including the state-run Rosoboronexport, Russian monopoly exporter of military products.  The law allows the U.S. to place sanctions on any individual or a company around the globe that after August 2nd entered into contracts with the companies designated under the State Department’s list.

The sanctions also target Russian companies operating in the domestic market. In early January, Russian Alfa-bank informed its customers from the Russian military industrial sector that it would not be able to provide services to them for fear of sanctions.

According to a source cited by Interfax, in 2017, Russia’s military exports amounted to USD $14 billion.

On January 30th, the U.S. Treasury Department released a list of Russian officials, close affiliates of Russian President Vladimir Putin, whom the U.S. will consider for individual sanctions. The list was dubbed as the Kremlin Report.

In September, Bloomberg reported that Russian largest banks such as Sberbank and VTB that maintain cooperation with Russian defense industrial enterprises could fall under the sanctions. According to Bloomberg, Russian authorities were considering setting up a separate bank specifically for servicing military contracts to circumvent the sanctions, and on January 18th, the Russian state authorities implemented this idea. The new bank that will deal with state defense orders will be created based on Promsvyazbank. In December, the Central Bank announced that Promsvyazbank was undergoing a restructuring, after which a new chair would be appointed to the bank, the head of the Russian Export Center, Petr Fradkov.

  Sanctions on Russia, USA, Russia