Last week Kalashnikov Concern claimed that US sanctions were not hurting them and production was up. This dubious claim could only be true if government purchases have been increased (as I predicted they would be back when the sanctions were first announced).

Yesterday Rostec, the giant Russian Government arms manufacturing conglomerate which owns a majority stake in Kalashnikov Concern, announced that Kalashnikov is selling the majority stake in Izhevsk Mechanical Plant, known as Baikal in the West, to businessman Andrei Bokarev.

Kalashnikov Concern was originally created as the result of a merger between the Izhmash and Izhevsk Mechanical Plants. Andrei Bokarev already owned 49% of Kalashnikov. He now also owns 74.9% of Izhevsk Mechanical Plant. The transfer of ownership essentially undoes the merger that originally led to the creation of Kalashnikov. Kalashnikov is now just Izhmash by another name.

Why would Rostec be doing this? I can only think the sanctions have something to do with it. The Baikal manufacturing plant and brand is no longer part of the Kalashnikov Concern and therefor no longer the target of US government and Canadian government sanctions. I am not convinced that the government will be happy with them maneuvering around the sanctions, but they are unlikely to target any new Russian business with sanctions while the Ukrainian situation continues to quieten down. If hostilities resume, expect to find Izhevsk/Baikal alongside Kalashnikov on the State Departments import ban list.

Thanks to Tyler for the tip.