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Stratfor has confirmed Aug. 7 the U.S. State Department's Aug. 4 announcement of sanctions, pursuant to Section 3 of the Iran Nonproliferation Act of 2000, against seven companies for being complicit in selling restricted technology to Iran. Two North Korean companies, a Cuban biotechnology company, two Indian chemical manufacturers, and Russian state weapons exporter Rosoboronexport and aerospace company Sukhoi are named in the announcement. The Russian companies received a warning more than two months ago about the possible consequences of their ties with Iran.
The sanctions are aimed at preventing U.S. government agencies from working with the foreign firms but could also affect private U.S. companies. However, the decision to impose sanctions was made without the consultation of all the relevant State Department staff, and the details are undetermined. The sanctions could affect U.S. government entities only, U.S. companies tied to the government or all U.S. companies. There are strong indications that the State Department decision will complicate matters for U.S. firms that have commercial relations with the now-sanctioned companies.
As far as business dealings with Russia, the U.S. company most affected by the sanctions could be Boeing, the world's second-largest defense company. Boeing also has major contracts with Sukhoi and with VSMPO, a firm Rosoboronexport is buying that supplies between 30 and 40 percent of Boeing's titanium -- a core ingredient for building planes and weapons. If sanctions do affect Boeing, the aerospace giant will have to look to other titanium-producing countries for supplies, though it will be hard to beat VSMPO's below-market prices. However, Boeing will only be affected by the sanctions if they extend outside direct U.S. government procurement. This is a gray area; Boeing could fall under these restrictions as a government contractor. The question then becomes whether the U.S. government can have military planes made of Russian titanium from a company under sanctions.
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