U.S. sanctions against two leading Russian arms exporters mark a new low in already chilly ties between the White House and the Kremlin and could hurt business deals worth billions of dollars, reported Reuters. The United States announced sanctions on Friday on seven firms from Russia, India, North Korea, and Cuba for selling restricted items to Iran, which Washington fears is trying to make nuclear weapons. The sanctions were imposed on Russian state export agency Rosoboronexport -- headed by a close friend of President Vladimir Putin -- and state-owned warplane maker Sukhoi. "This is going to be very serious because this threatens President Putin and some of his very closest people," Pavel Felgenhauer, a Moscow-based defence analyst, told Reuters. "The official reaction from the Kremlin, especially when it sinks in about how serious this is, will be severe. I think there will be countermeasures." The Kremlin has so far made no comment. The foreign ministry has called the sanctions an "illegitimate attempt" to make foreign companies work by American rules. Moscow's press reacted sharply, the daily Izvestia calling the U.S. move "practically a declaration of economic war against Russia". Kommersant's frontpage headline said: "The Strategic Partnership between the U.S. and Russia has Ended." Analysts said the sanctions could hurt the chances of U.S. companies bidding for business in Russia, though they noted that only purchases by U.S. government agencies -- and not firms -- would be directly affected by the sanctions. Rosoboronexport has said it is planning to acquire the world's biggest titanium maker, Russia's VSMPO-Avisma, which supplies 35-40 percent of the titanium used by U.S. plane maker Boeing. But Izvestia said the chilly ties could affect a range of major trade deals, including a decision by flag carrier Aeroflot on whether to award a $3 billion aircraft contract to Boeing or its European rival Airbus. CHILLY TIES Putin and U.S. President George W. Bush say they are friends but during the Group of Eight summit in July Putin traded barbs with Bush over the state of democracy in Iraq. Bush raised U.S. concerns over Russian democracy privately with Putin. Ties between Moscow and Washington reached a high point after the Sept. 11, 2001, attacks on the United States when Putin rushed to pledge solidarity in fighting terrorism. But since then, relations have been strained by differences over the Middle East, European gas supplies, accession to the World Trade Organisation and competition for allies in the former Soviet Union. The State Department said it imposed the sanctions after Washington received information the companies had transferred materials to Iran that could contribute to the development of weapons of mass destruction or missiles. Last year Russia made a contract to sell Iran TOR-M1 ground-to-air missile systems and to modernise the Islamic Republic's Russian fighters, bombers and military helicopters.
