Concern Kalashnikov (Izhmash) Added to Russian Sanctions List

I wish I could say we did not see this coming. The holding company that owns the AK brand and Izhmash factory in Russia has been added to the US Treasury’s list of sanctioned Russian enterprises. While it is not immediately clear what this will mean for Saiga and Vepr supplies moving forward, things look grim for the foreseeable future. Importers will be unable to bring new stock into the US until the sanctions are lifted.

It is also unlikely we will see any new RPK-inspired Veprs from Molot entering the US. Formerly a separate company, Molot was “purchased” (see seized) by Izhmash back in 2006 after Russian courts determined that the rights to the AK design belonged to the Izhevsk-based company. In a 2013 press release, Concern Kalashnikov stated (translated):

Renaming Izhmash to Concern “Kalashnikov” is another step towards building the basis of a vertically integrated holding company of Izhevsk small arms companies. In the future, Concern “Kalashnikov” will include OAO “IMZ” Vyatsko-Polyansky Machine Works [Molot], “The Hammer”, THREADS, “Progress”, KBAL, L.N. Koshkina and other rifle and ammunition industry businesses. Presentation of the group is scheduled for 18-19 September 2013.

Per the US Treasury:

374. If I own a Kalashnikov product, is that product blocked by sanctions? Am I able to resell a Kalashnikov product at a gun show or other secondary market?

If a U.S. person is in possession of a Kalashnikov Concern product that was bought and fully paid for prior to the date of designation (i.e., no payment remains due to Kalashnikov Concern), then that product is not blocked and OFAC sanctions would not prohibit the U.S. person from keeping or selling the product in the secondary market, so long as Kalashnikov Concern has no interest in the transaction. New transactions by U.S. persons with Kalashnikov Concern are prohibited, however, and any property in which Kalashnikov Concern has an interest is blocked pursuant to OFAC’s designation of Kalashnikov Concern on July 16, 2014. If a U.S. person has an inventory of Kalashnikov Concern products in which Kalashnikov Concern has an interest (for example, the products are not fully paid for or are being sold on consignment), we advise that U.S. person to contact OFAC for further guidance on handling of the inventory. [7-16-2014]

375. If I have Kalashnikov products in my inventory, can I sell them?

If a U.S. person has an inventory of Kalashnikov Concern products in which Kalashnikov Concern has an interest (for example, the products are not fully paid for or are being sold on consignment), we advise that U.S. person to contact OFAC for further guidance on handling of the inventory. [7-16-2014]

The sanctions are expected to be a major blow to the firm. In 2013, the NY Times reported that US commercial buyers were responsible for nearly 30% of Izhmash’s yearly sales. US sales have also been critical to Russia’s development of the modernized AK-12.

US importer and distributor, Legion USA, has been contacted by Modern Rifleman, but has yet to respond.

 

http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20140716.aspx

http://www.nytimes.com/2012/08/15/business/a-kalashnikov-factory-in-russia-survives-on-sales-to-us-gun-owners.html?pagewanted=all&_r=0

 

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