In an effort to punish Russia for its meddlesome involvement in Ukraine, the Obama administration announced on Wednesday a new round of sanctions that target banks, energy and defense companies, including Russian arms manufacturers.
“We live in a complex world and at a challenging time,” said president Obama from the White House. “And none of these challenges lend themselves to quick or easy solutions, but all of them require American leadership. And as commander in chief, I’m confident that if we stay patient and determined, that we will, in fact, meet these challenges.”
“I have repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine,” Obama continued. “I have made this clear directly to [Russian President] Putin.”
Most strikingly, the Office of Foreign Assets Control (OFAC) added the Kalashnikov Concern (formerly known as Izhmash), manufacturer of the world famous AK-47 and the popular line of Saiga rifles and shotguns, to the Specially Designated Nationals List, banning the importation of all of its products into the United States indefinitely.
Considering that as of 2012 about 70 percent of the Saiga line is sold to the civilian market, 40 percent of which is exported to the U.S., one can argue that this is quite a blow to the arms manufacturer.
The move also raises questions for current and prospective owners of the newly sanctioned firearms about transferring them and obtaining them in the U.S. To help eliminate some of the confusion, the OFAC included the following entries under its Frequently Asked Questions page:
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]
Thankfully, for gun owners, Kalashnikov is not the only maker of civilian-grade AK-47 rifles (for example, the Bulgarian-based Arsenal makes a quality AK), though it is the flagship brand. Moving forward, those in the market for Izhmash guns will likely see a spike in price as quantity diminishes and demand remains constant.Of course, this whole sanction-business could end if Obama repairs the fraught relationship between mother Russia and the U.S. Much of the consternation between the two has to do with Russia’s annexation of the Crimean Peninsula and its ongoing support of pro-Russian insurgents throughout the rest of the country, not to mention the fact that Putin has a penchant to test the patience and the will of the White House whenever he can.
One can argue that until the U.S. decides to really play hardball with Putin, who responded to the sanctions as if they were totally unwarranted, they can expect the Russian president to continue to play these cat and mouse games.
“I have already said they tend to have a boomerang effect, and without any doubt, in this case they are driving Russian-American relations to an impasse, causing very serious damage,” Putin said late Wednesday, according to a Kremlin transcript obtained by the New York Times. “And I am convinced that this is harmful to the national long-term strategic interests of the American state, the American people.”
Though, he did leave the door open to a resolution to the strife, but skeptics might argue that it’s just more empty rhetoric, more caginess, more of Putin being Putin.
“It is a pity that our partners are going on this way, but we have not closed the door to negotiations, to resolve this situation,” he said.