The Treasury Department has officially listed new sanctions with Russia on its website, and many firearms enthusiasts are fuming. The sanctions block the company Kalashnikov Concern and effectively ban the future importation of more Saiga, Izhmash, and Vepr AK-47 Rifles and Shotguns.
Who is Kalashnikov Concern?
Well the short story is its the merger of two mega giants of Russian firearm manufacturing, Izhmash and Izhevsk/Izhmech. Just ONE YEAR AGO in June 2013, the guy who literally invented the AK-47, world-renown small arms designer Mikhail Kalashnikov, gave his blessing to the merger of two of Russia’s largest and oldest arms manufacturers, Izhmash and Izhevsk/Izhmech by allowing them to use his name in their new company, FOR FREE.
It was said at the time that the “brand value” for the Kalashnikov name was estimated at $10 BILLION dollars. Kalashnikov himself said “I’m happy to support the decision to establish a concern ‘Kalashnikov.’ It’s an honor for me! After all, my name does not belong to me anymore, it has already become the property of the whole country, all Russians,”. He did not ask for a single cent in royalties.
At that same time just one year ago in 2013, the Russian Degtyarev Arms Plant did a press release with a very unlikely spokesman: Steven Seagal. The action movie star was to be the focus of a marketing campaign for the firearms manufacturer. Seagal joined Deputy Prime Minister Dmitry Rogozin on a visit to the facility in Russia. He had met with Putin involving other matters just a few months earlier.
“You’re ready to fight American [manufacturers] with your teeth and your intellect, and if Americans are prepared to promote and support you, that says we’re learning new ways to work on corporate warfare markets,” Rogozin said.
So here we are, one year later, and things have changed quite a bit.
The Treasury Department was so sure that these new sanctions would be seen by many gun owning American citizens, and even licensed gun dealers, that it added a “Q&A” about Kalashnikov AK-47 rifles right on its website. The website lists info for individuals who currently own an AK-47 made by one of the listed companies, and even goes as far as to address concerns of dealers with inventory of said rifles for retail sale.
From the Executive Order. . .
The following entities have been added to OFAC’s SDN List: KALASHNIKOV CONCERN (a.k.a. CONCERN KALASHNIKOV; a.k.a. IZHEVSKIY MASHINOSTROITEL’NYI ZAVOD OAO; f.k.a. IZHMASH R&D CENTER; f.k.a. JSC NPO IZHMASH; f.k.a. NPO IZHMASH OAO; a.k.a. OJSC CONCERN KALASHNIKOV; f.k.a. OJSC IZHMASH; f.k.a. SCIENTIFIC PRODUCTION ASSOCIATION IZHMASH JOINT STOCK COMPANY), 3, Derjabin Pr., Izhevsk, Udmurt Republic 426006, Russia; Registration ID 1111832003018 [UKRAINE2]
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]
We have seen it before, and will see it again. Tell the average gun guy that a particular firearm will be banned from importation, and naturally we will begin shopping for as many of those rifles as our budget will allow. Its obvious when an item becomes “banned” from importation, no new rifles can be brought in and eventually the supply runs low. At that time, if the product is still in demand, the value goes up on the remaining rifles here in the USA.
We saw one of the larger distributors get in a batch of IZHMASH SAIGA 12 Gauge AK-47 Shotguns yesterday and they sold out in a matter of minutes. There are no doubts that some of those rifles will end up for sale online at a markup, directly based on the new restrictions.
We fully expect to see speculation all over the internet in the coming days, as well as a correlated spike in the prices on both the retail and individual firearm sales markets online. The motto of the few firearm blogs who have posted on this situation all seem to be the same. NOW is the time to buy, if you don’t already own one.
Here is some awesome yet bittersweet info about Kalashnikov Concern. Its a sad day to learn we are no longer able to trade freely with these guys..More to follow as the story develops.
HISTORY OVERVIEW – Kalashnikov Concern
The holding company carries on the glorious history of an armoury founded in 1807 by the order of Emperor Alexander I. It manufactured most types of small arms in 19th and 20th centuries. During World War II, the total number of rifles and carbines manufactured by Izhevsk Weapons Plant exceeded total production of all German plants. During the two centuries, the company produced vast volumes of antitank rifles, aircraft machineguns, aircraft cannons, guns, handguns and other weapons.
After the WWII the plant launched mass production of Kalashnikov rifles that are still used by armies and special forces worldwide. Izhmash was established in 1975.
By 2008, Izhmash comprised over one hundred companies, some of which were on the verge of bankruptcy. In 2010, Russian Technologies carried out an audit which revealed a poor state of the holding company. Only 32 companies were actually operating with a multi-level management system, high overheads and doubled up functions. The combined liability of Izhmash in early 2011 was RUR 19 billion. The use of the existing modern equipment hardly exceeded 20%.
Russian Technologies took on the restructuring process through bankruptcy and merger. One of the objectives was to retain its research, industrial and human resources and to turn Izhmash into a leading global small arms manufacturer.
Izhmash was established in 2011 through assets consolidation, the process that finished in April 2012. As a result, there was a threefold increase in profits and a 10% cut in costs.
In a short time Izhmash managed to establish control over financial flows, improv production financing, payment systems and service of current payments.
In 2011, Izhmash increased the utilisation rate of modern multipurpose equipment from 20% to 70%. The effect from the efforts to enhance production performance amounts to RUR 100 million.
Izhmash revenues increased due to expanded distribution markets. In 2011, the company reached a 50% growth in supply to the US market which accounts for 65% of the global sports and hunting weapons market. Izhmash products are supplied to 27 countries, including the USA, Canada, Australia, Germany, Great Britain, Norway, Kazakhstan, Thailand, and South Africa.
Within 9 months from 2011, export to Germany increased 77%, export to the USA – 62% and export to Italy – 84%. The company cooperates with new partners in New Zealand and Ukraine.
Izhmash is a multipurpose company focused on production of
• combat small arms
• sports and hunting arms
• aircraft cannons
• improved conventional munition projectiles
• checkout equipment for operated weapon systems
• new motorcycle models
• compact cars
• industrial machines
• high-quality tools and point billets
Izhmash produces 90% of the total domestic automatic weapons, 95% of sniper shotguns and dozen types of other arms. The company continuously upgrades its production.
Izhmash developed a cooperation program with Kalashnikov Izhevsk State Technical University. This university is the major source of engineering personnel for Izhmash.
WEAPONS OF THE LEGENDS
The Kalashnikov automatic assault rifle is the single most famous product of IZHMASH NPO. Its ingeniously streamlined design, unrivalled combination of capabilities and specifications has made the Kalashnikov assault rifle (AK) the best small arm of the 20th century. The legendary AK has been in active service with the military and law enforcement agencies of this and 106 other nations around the world.
IZHMASH today is producing fourth-generation Kalashnikov assault rifles – the 100-series AKs: AK-101, AK-102, AK-103, AK-104, AK-105. The company is also working on upgrades for the most ubiquitous assault rifle of the Russian Army: the Kalashnikov AK-74.
IZHMASH sniper rifles are also well-known. The Dragunov rifles have been widely considered the weapon of choice for army snipers for nearly half a century. SVDS, SV-98, SV-99, SV-338 rifles fill the needs of crack units world-wide. Work is under way to develop new types of sniper weapons.
IZHMASH has been a leading Russian manufacturer of sporting and competition firearms for many years, as well as the only Russian manufacturer of biathlon rifles. Many well-known Russian athletes have competed with Biathlon-branded rifles, including Alexander Tikhonov, Alexander Privalov, Vladimir Melanin, Ekaterina Glazyrina and many others.
Work has been under way since 2011 to create a fifth-generation Kalashnikov assault rifle, led by Senior Designer Vladimir Zlobin. While developing the Kalashnikov AK-12, designers have been able to achieve a significant improvement in the rifle’s ergonomics and operating features, adapting it for the modern battlefield conditions while keeping its time-tested unique characteristics. Preliminary testing of AK-12 is now in progress, and the new rifle could be accepted for active service with the Russian military and law enforcers in 2014, at which point series (mass) production will begin. AK-12 will be platform for developing as many as 20 different versions of civilian and military rifles.
In April 2012, at the request of the Russian Practical Shooting Federation and working in close contact with competitive shooters, the IZHMASH R&D Technology Center designed the Saiga-12 Ver. 340 sporting shotgun. The Rostec team used the new shotgun to win the Russian practical shooting championship, also winning the silver medal at the most prestigious sporting shooting event in the world – the World Shotgun Championship.
Latest civilian sporting and hunting firearms include new versions of Los-10 and Los-11 (“Moose”) hunting shotguns, Saiga-9 carbine (the civilian version of the Vityaz-SN submachine gun), Saiga-12 Ver. 340 for practical shooting, airsoft-modified Kalashnikov AK-74M for practice shooting and airsoft competition, and many other models.