U.S. sanctions on Russia do not bar use of Russian rocket engines: Pentagon

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By Andrea Shalal WASHINGTON (Reuters) - The Pentagon's chief arms buyer on Tuesday said U.S. sanctions against Russia do not at this time bar the use of Russian RD-180 engines to power the Atlas 5 rockets that carry U.S. military and intelligence satellites into space. Defense Undersecretary Frank Kendall said the Defense Department had reviewed the issue with the Treasury Department in response to questions raised by Senate Armed Services Committee Chairman John McCain after Russia revamped the way it manages its space businesses. Kendall told an event hosted by the Washington Space Business Roundtable the review was still being finalized, but it did not appear that the Russian reorganization would extend U.S. sanctions against Russian individuals to rocket engines built by NPO Energomash. McCain had asked the Pentagon and the U.S. Air Force to report back by Monday on the legality of doing business with the Russian firm given sanctions in place against Russian Deputy Prime Minister Dmitry Rogozin and others, who now oversee the company after a recent reorganization.Kendall told reporters the Treasury Department had reached a preliminary determination that required levels of ownership and control over Energomash had not been met that would justify extending the sanctions. "The requirement is more than 50 percent ownership, and there is also a possibility of control being a criteria, and it does not appear so far that either of that have been met," Kendall said after his speech. He said he expected the government to finalize its decision "fairly soon." U.S. lawmakers banned future use of the Russian engines for military use after Russia annexed Ukraine's Crimea region in 2014. But Congress weakened the ban late last year, worried that it could drive United Launch Alliance, a joint venture of Lockheed Martin Corp and Boeing Co out of business, leaving just privately held SpaceX, owned by billionaire Elon Musk, to lift satellites into space. McCain has introduced legislation that would again tighten the ban, arguing that the U.S. government should not do anything to enrich Russian leader "Vladimir Putin and his gang of corrupt cronies." Kendall reiterated the Defense Department's desire to end its reliance on the Russian engines as soon as possible but said the department did not favor congressional demands that it fund a specific replacement engine or rocket. The department's goal, he said, was to leverage private investment and buy "competitive, reliable and affordable launch services" in the future. (Reporting by Andrea Shalal; Editing by Jonathan Oatis and Cynthia Osterman)

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