July 1 (Reuters) - As Russia's military continues to pound
Ukraine with missiles and other lethal weapons, Western nations
have responded in part by targeting Russia's defense industry
with sanctions. The latest round came on Tuesday, when the
United States issued new sanctions on some arms makers and
executives at the heart of what it dubbed Russian President
Vladimir Putin's "war machine."
But a Reuters examination of companies, executives and
investors underpinning Russia's defense sector shows a sizable
number of players have yet to pay a price: Nearly three dozen
leaders of Russian weapons firms and at least 14 defense
companies have not been sanctioned by the United States, the
European Union or the United Kingdom. In addition, sanctions on
Russia's arms makers and tycoons have been applied
inconsistently by these NATO allies, with some governments
levying penalties and others not, the Reuters review showed.
Among the weapons moguls who have not been sanctioned by any
of those three authorities is Alan Lushnikov, the largest
shareholder of Kalashnikov Concern JSC, the original
manufacturer of the well-known AK-47 assault rifle. Lushnikov
owns a 75% stake in the firm, according to the most recent
business records reviewed by Reuters.
The company itself was sanctioned by the United States in
2014, the year Russia invaded and annexed the Ukrainian
peninsula of Crimea. The EU and UK leveled their own sanctions
against Kalashnikov Concern this year.
The company accounts for 95% of Russia's production of
machine guns, sniper rifles, pistols and other handheld
firearms, and 98% of its handheld military machine guns,
according to its website and most recent annual report. Its
weapons include the AK-12 assault rifle, an updated version of
the AK-47, some of which have been captured from Russian forces
by Ukrainian soldiers. The Kalashnikov Concern also produces
missiles that can be fired from aircraft or on land.
A former Russian deputy transport minister, Lushnikov once
worked for commodities tycoon Gennady Timchenko, a longtime
friend of Putin. The United States sanctioned Timchenko in 2014
following Russias invasion of Crimea, naming him as a member of
the Kremlins inner circle.
Neither Lushnikov, Timchenko or the Kalashnikov Concern
responded to requests for comment.
Its the same pattern with Almaz-Antey Concern, a
Moscow-based defense company specializing in missiles and
anti-aircraft systems. The company has been sanctioned by the
United States, EU and UK, but CEO Yan Novikov has not been
Almaz-Anteys website displays the motto Peaceful Sky is
Our Profession. The company makes Kalibr missiles, which
Russias Ministry of Defense has credited with destroying
Ukrainian military installations. In a statement last month, the
ministry said Russia had fired long-range Kalibr missiles at a
Ukrainian command post near the village of Shyroka Dacha in
eastern Ukraine, killing what the ministry claimed were more
than 50 generals and officers of the Ukrainian military.
Reuters was unable to independently verify that claim.
Neither Almaz-Antey nor CEO Novikov responded to requests
In response to a list of questions submitted by Reuters
about Western sanctions aimed at Russia, a Kremlin spokesperson
said "the consistency and logic of imposing sanctions, as well
as the legality of imposing such restrictions, is a question
that should be put directly to the countries that introduced
The Reuters findings come as Ukrainian President Volodymyr
Zelenskiy has said that current Western sanctions against Russia
are not enough as Russian troops make gains in their assault
on Ukraines eastern regions of Luhansk and Donetsk.
The Ukrainian military has been outgunned by Russian
artillery in places such as the industrial city of
Sievierodonetsk, which it ceded to Russian forces last week
after weeks of intense fighting.
Putin has portrayed his militarys assault on Ukraine as a
special military operation aimed at demilitarizing and
denazifying its democratic neighbor. On Tuesday, Russias
Foreign Ministry announced it would bar Jill Biden and Ashley
Biden, the wife and daughter of U.S. President Joe Biden, from
entering Russia indefinitely in what it said was a response to
constantly expanding U.S. sanctions against Russian politicians
and public figures.
U.S. National Security advisor Jake Sullivan said on Tuesday
that Russia's action was not surprising because "the Russian
capacity for these kinds of cynical moves is basically
The Russian invasion has killed thousands of Ukrainian
soldiers and civilians, but the exact number is unknown. The
United Nations human rights office said, as of Monday, that
4,731 civilians had been killed in Ukraine since Russias
invasion began on Feb. 24, including more than 300 children,
with another 5,900 civilians injured in the conflict. The agency
said most of the casualties were caused by the use of explosive
weapons with a wide impact area, including shelling from heavy
artillery and multiple launch rocket systems, and missile and
air strikes, and that the actual number of dead and wounded was
likely far higher.
The West has levied sanctions on a swath of Russias economy
to punish Moscow, an effort that so far has done little to deter
the Russian offensive. Like the bans on other Russian firms,
sanctions on weapons companies are meant to hamper their ability
to sell to foreign customers. These penalties limit their access
to imported components and generally make it more costly and
time-consuming to produce weaponry. Levying sanctions on the
people behind those firms goes a step further to make the pain
personal. It allows Western nations to go after any mansions,
yachts and other offshore wealth of those who supply Russias
military, and it limits where they can travel abroad.
Youre demonstrating that being a regime collaborator comes
with a cost, said Max Bergmann, a former State Department
official during the Obama administration who worked on U.S. arms
transfers and safeguarding U.S. military technology. They feel
it very personally. Youre creating a disgruntled class of
people that are tied to the Kremlin, said Bergmann, now
director of the Europe program at the Center for Strategic and
International Studies, a Washington-based national security
AMMUNITION MAKERS UNSCATHED
Other companies in Russias defense industry identified by
Reuters that have not been sanctioned by the United States, EU
or UK include the V.A. Degtyarev Plant, a facility 165
miles northeast of Moscow that makes machine guns, anti-tank and
anti-aircraft weapons that are sold to the Russian military. Its
weapons include the Kalashnikov PKM and PKTM machine guns, as
well as Kord rifles and machine guns, some of which are mounted
on armored vehicles.
The Degtyarev Plant did not respond to a request for
Also not sanctioned is the Klimovsk Specialized Ammunition
Plant, south of Moscow, where world-famous cartridges for
pistols and Kalashnikov assault rifles are produced, according
to an archived version of its website. Neither is the
Novosibirsk Cartridge Plant, an ammunition manufacturer that
calls itself one of the leading engineering enterprises of the
military-industrial complex of Russia.
Neither ammunition plant responded to requests for comment.
Last month, Reuters sought comments from sanctions officials
in the UK, EU and United States regarding the news agencys
findings that they had failed to punish a raft of Russian
defense firms and tycoons fueling Putins war effort. As part of
that process, Reuters provided those Western authorities with a
detailed list of more than 20 companies and more than
three-dozen people that had escaped sanctions.
The UKs Foreign, Commonwealth and Development Office, which
levies sanctions for Britain, said it could not comment on
future sanctions. It added that London and its allies had levied
the largest and most severe economic sanctions that Russia has
ever faced, to help cripple Putins war machine. The European
Commission and the U.S. Treasury Department, which handle
sanctions for Brussels and Washington respectively, declined to
comment on the specifics of Reuters findings. Elizabeth
Rosenberg, assistant secretary for terrorist financing and
financial crimes at the Treasury Department, said in a statement
that sanctions have made it harder for Russia to obtain what it
needs to procure and produce weapons.
On Tuesday, in conjunction with a meeting of leaders of the
G7 nations in the German Alps, the Treasury Department released
a new round of defense-related sanctions that included eight of
the weapons firms and two of the executives on the list provided
earlier by Reuters.
One of those newly sanctioned executives, Vladimir Artyakov,
has played key roles in Russias weapons industry for decades,
and serves as the No. 2 executive at Rostec, a
military-industrial giant with hundreds of subsidiaries
employing more than half a million people, according to its
website and annual reports. Artyakov is also the chairman of at
least five Russian weapons firms, among them Russian Helicopters
JSC, which builds several lines of military helicopters
including the Ka-52 "Alligator," some of which have been shot
down and documented in Ukraine.
He has not been sanctioned by the EU or UK.
Artyakov and Russian Helicopters did not respond to requests
Rostec has been sanctioned by Washington since 2014. On
Tuesday the United States targeted the company again, levying
sanctions on more than 40 Rostec subsidiaries and affiliates.
Among those hit was Avtomatika Concern, a company linked to
cyber warfare. It was on the list of Russian defense firms that
Reuters had submitted to the Treasury Department last month
seeking an explanation as to why the companies had not been
Rostec and Avtomatika Concern did not respond to requests
Other firms on Reuters list that were sanctioned just this
week by the Treasury Department include PJSC Tupolev, a maker of
fighter jets such as the Tu-22M3 bomber. The Ukrainian military
said Tu-22M3 bombers were responsible for a missile strike at a
crowded shopping center in the central Ukrainian city of
Kremenchuk on Monday, which killed at least 18 people and
injured about 60.
PJSC Tupolev and another firm on Reuters list, JSC VNII
Signal, have not been sanctioned by the EU or UK. JSC VNII
Signal is a producer of mechanical and navigational systems that
power Russian military tanks and some of the countrys most
advanced missile systems.
PJSC Tupolev and JSC VNII Signal did not respond to requests
TOP BRASS UNTOUCHED
Executives at a host of Russian weapons firms, meanwhile,
have largely escaped sanctions from Western authorities.
Nearly three months after a Tochka-U ballistic missile hit a
train station in the eastern Ukrainian city of Kramatorsk on
April 8, Russian weapons executives linked to the company that
makes those missiles have yet to pay a price. The strike killed
more than 50 people, including children, and injured more than
The Russian firm JSC Research and Production Corporation
Konstruktorskoye Byuro Mashynostroyeniya, known as KBM, has been
the primary manufacturer of Tochka-U missiles, according to a
U.S. Army database of worldwide military equipment. Neither
Washington, Brussels or London have sanctioned Sergey Pitikov,
KBMs chief executive.
The three Western allies have likewise spared Alexander
Denisov, the CEO of NPO High Precision Systems, KBMs parent
company. High Precision Systems oversees production of a wide
range of missiles, artillery, grenade launchers and machine guns
used by Russian troops and outfitted on military helicopters,
aircraft, tanks and warships.
Sanctions on Russias arms companies and tycoons have been
applied inconsistently by the Western allies. The United States
and EU have sanctioned High Precision Systems, for example,
while the UK has not. The United States has sanctioned KBM, but
the EU and UK have not.
High Precision Systems, Pitikov and Denisov did not respond
to requests for comment. KBM confirmed that Pitikov is its chief
executive, but did not respond to additional questions submitted
Europe and the United States have failed to coordinate
sanctions even on makers of banned weapons.
Since the outset of Russias invasion in late February,
Western governments and human rights groups have decried its use
of cluster munitions: small bombs delivered by missiles or
rockets, which scatter and explode over an area as large as a
city block. A 2008 international treaty bans their use or
production under any circumstances because of the devastating
effects on civilians.
Russia used a Uragan which translates to Hurricane
rocket launcher system to fire cluster bombs in Kharkiv on March
24, killing eight civilians and injuring 15 others, according to
the U.N. human rights office and Ukrainian officials.
The Uragan is made by JSC Scientific and Production
Association Splav, a Russian firm whose systems have been sold
abroad to countries including India. The company has been
sanctioned by the United States, but not by the UK or EU. Its
CEO, Alexander Smirnov, has escaped sanctions altogether.
Splav and Smirnov did not respond to requests for comment.
Its much the same for Splavs parent company, NPK Techmash.
The United States and the EU have sanctioned the firm, but the
UK has not. Techmash CEO Alexander Kochkin has not been targeted
by American or European authorities.
Techmash and Kochkin did not respond to requests for
In a June 10 statement, the European Commission said there
is an effort to align sanctions lists as much as legally
possible among allies to achieve the maximum cumulative effect
of the sanctions with all our like-minded partners. In cases
where the lists do not align, the Commission statement said,
people and companies not currently on the EUs sanctions list
could be added later if there is sufficient evidence.
"Nothing is off the table," the statement said.
One of the highest-profile Russian firms to escape Western
sanctions is VSMPO-Avisma Corp, which is the worlds
largest titanium supplier and 25% owned by Rostec. It supplies
Russias defense industry, but also counts major Western
aerospace companies among its clients.
Based in Verkhnyaya Salda, in central Russia, VSMPO-Avisma
has subsidiaries with facilities in the United States,
Switzerland and the UK, as well as sales and distribution staff
in the United States, Europe and Asia, according to its website
and annual reports. Thats no doubt a factor that has allowed
the company to escape punishment, according to three sanctions
and Russian defense experts who spoke with Reuters.
VSMPO-Avismas vice chairman and majority shareholder,
Russian billionaire Mikhail Shelkov, ranked by Forbes this year
as Russias 59th-richest person, likewise has not been
According to past press releases, VSMPO-Avisma has long-term
contracts to supply titanium to United Aircraft Corp, a Rostec
subsidiary that oversees production of Russian fighter jets such
as the Su-34 that have been shot down in Ukraine. United
Aircraft has been sanctioned by the United States, EU and UK.
VSMPO-Avisma also sells to Europes Airbus, and it
supplied U.S. aerospace behemoth Boeing Co up until March,
when the Arlington, Virginia-based company said it stopped
purchasing titanium from Russia. Boeing had announced just
months earlier, in November 2021, that VSMPO-Avisma would be its
largest titanium supplier for current and future Boeing
VSMPO-Avisma and shareholder Shelkov declined to comment.
Boeing said in a statement that it has worked since 2014 to
diversify its sources of titanium around the world, and that its
current inventory and sources "provide sufficient supply for
Airbus did not answer specific questions about its
relationship with VSMPO-Avisma. But in an emailed statement it
said potential sanctions on Russian titanium would massively
damage the entire aerospace industry in Europe while doing
little to harm Russia because those sales are but a small
portion of that nation's overall exports.
In 2020, foreign sales accounted for about two-thirds of
VSMPO-Avismas $1.25 billion in revenue, according to the
companys most recent annual report.
That puts Western officials in a tough spot, said Richard
Connolly, director of Eastern Advisory Group, a UK consultancy
that advises governments and businesses on the Russian economy
and its defense industry. Slapping sanctions on VSMPO-Avisma
would curtail its lucrative export trade, but it would also
force major players in global aviation to switch suppliers or
risk sanctions themselves.
Thats the classic sanctions conundrum: If you want to hurt
somebody, youre going to hurt yourself, Connolly said.
(Reporting by Chris Kirkham in Los Angeles and David
Gauthier-Villars in Istanbul; Additional reporting by Tim Hepher
in Paris; Editing by Marla Dickerson and Vanessa O'Connell.)