Europe

Russia's Kalashnikov gun-maker struggles with Western ban

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Media captionFind out more about the rifle invented by Soviet Lt-Gen Mikhail Kalashnikov

It is probably the best-known weapon in the world, brandished by everyone from Che Guevara to Osama bin Laden. But the Kalashnikov assault rifle has failed to produce a profit for its makers for years.

Things were just starting to improve when the firm was hit by Western sanctions.

With Russian military stores full of the famously durable Kalashnikovs, and dwindling orders from abroad, the company had turned its attention to civilian firearms markets.

In January it finally secured a foothold in the biggest of them, sealing a lucrative deal to supply up to 200,000 rifles a year in the US.

But in July, Kalashnikov was placed on a US list of eight arms manufacturers sanctioned for Russia's role in fomenting the crisis in Ukraine. The deal was halted with under half the initial order delivered. It was added to an EU list in September.

Image caption Most of the weapons produced at the factory in Izhevsk are civilian firearms

"Of course I was upset, because I didn't understand why we'd been sanctioned," Kalashnikov director Alexei Krivoruchko told the BBC, arguing that the firm was no longer wholly state-owned since he and another Russian businessman had invested in a 49% stake.

Also, he points out, it primarily produces firearms for the civilian market.

"The US was a key market for us, one that we planned to develop," Mr Krivoruchko says. "It's a big loss, there's no point saying otherwise."

There are now some 200 models of Kalashnikov, still produced at the original factory in Izhevsk, two hours' flight east of Moscow.

In Soviet times, the sprawling plant manufactured around 600,000 rifles a year for the military. Last year it turned out one tenth of that number and 80% were civilian firearms.

With a new crisis management team on board, the firm is now on a major efficiency drive. Production has already been streamlined, putting the plant on course to double its output this year.

The next goal is to upgrade the ancient, chunky equipment that fills the shop floor: one machine was discovered from the 19th Century.

But sanctions are complicating life there, too, as Kalashnikov now has to seek suppliers in Asia, instead of Europe.

Image caption The company is keeping quiet about who will buy the weapons originally produced for the American market

"I remember all sorts of times here, including the 1990s, when wages weren't paid, or only in part. And when the firm declared bankruptcy," Nikolai Svintsov reminisces as he assembles a hunting rifle on an old, rutted wooden worktop.

As part of its comeback effort, the weapons firm was recently re-launched as the oddly-named Kalashnikov Concern, with a red-carpet event in Moscow complete with high-heeled hostesses handing out replicas of the rifle's distinctive, banana-shaped magazine.

A glitzy video promoted the AK as a "weapon of peace", wielded historically by liberation movements in their "search for justice" and, more recently, by Russia's own anti-terrorist Special Forces.

The fact that the Kalashnikov is currently used by both sides fighting in eastern Ukraine - the conflict that led to sanctions - was glossed over.

Image caption Production worker Nikolai Svintsov remembers worse times in the 1990s when wages were not paid

"We're trying to hear customers' needs," explains another of the young team of managers, Dmitry Tarasov, of his firm's attempts to win a share of the civilian firearms market.

"Of course we can compete," he insists. "The Kalashnikov is the most famous assault gun."

But first the weapon has to compete against itself.

In Cold War times, Moscow allowed its allies to produce Kalashnikovs locally and some continued to do that long after the Iron Curtain fell. Those copies ate deeply into post-Soviet profits in Izhevsk.

As the right to any legal challenge has long since passed, the firm is preparing to launch a fully updated rifle in the hope that Kalashnikov users will upgrade too. A civilian version will follow.

The AK-12, as it is known, is one of two assault rifles currently being tested by the Russian military as part of President Vladimir Putin's military modernisation programme.

Final word on which firm gets the big state order is due early next year - a decision the Kalashnikov boss calls "extremely important".

Image caption The company is keen for the sanctions imposed by the West on Russia to end soon

But he also insists his firm is coping under sanctions.

Senior managers say they have found new buyers for the extra rifles originally intended for the US. Mr Krivoruchko admits it was not easy but will not be drawn on details.

While US weapons enthusiasts will probably manage without a Kalashnikov, for the company itself, hitting the lucrative American market was a clear route to recovery.

If the bosses are lobbying Mr Putin to push for an end to sanctions, Alexei Krivoruchko is not admitting it.

"There's nothing we can do," he says. "But we hope the sanctions will be lifted soon."

He has a multi-million dollar investment riding on that.

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