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

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 Pentagon 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 finalised, but it did not appear that the Russian reorganization would extend U.S. sanctions to rocket engines built by NPO Energomash.

McCain had asked the Pentagon to report back by Monday on the legality of doing business with Energomash after the reorganization put Russian Deputy Prime Minister Dmitry Rogozin and others facing U.S. sanctions in charge of Energomash.

Kendall told reporters the Treasury Department had reached a preliminary determination that the sanctions did not apply since they required more than 50 percent ownership and control over Energomash. He said he expected the government to finalise its decision "fairly soon."

United Launch Alliance, a joint venture of Lockheed Martin Corp and Boeing Co, buys RD-180 engines for its Atlas 5 rockets from RD-AMROSS, which is a U.S.-based joint venture of Energomash and Pratt & Whitney, a unit of United Technologies Corp.

Pratt spokesman Bradley Akubuiro said the individuals in question were not members of the board of directors of either RD AMROSS or Energomash, and repeated reviews had shown they did not benefit financially from the sale of the engines.

Dustin Walker, a spokesman for the Senate Armed Services Committee, said McCain believed it was time to end the purchases, regardless of the determination on sanctions.

"American taxpayers should not be subsidizing the corrupt Russian military industrial complex with continued purchases of Russian rocket engines," he said.

U.S. lawmakers banned future military use of the Russian engines after Russia annexed Ukraine's Crimea region in 2014.

But Congress weakened the ban late last year, worried that it could drive ULA out of business, leaving only privately held SpaceX to lift satellites into space.

Kendall reiterated the Defense Department's desire to end its reliance on the Russian engines as soon as possible.