Bombardier says ‘relationships remain intact’ despite Russian sanctions

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Bombardier Inc. remains firmly committed to doing business in Russia and the latest round of economic sanctions imposed by Canada is not expected to damage relations with decision makers there, a company official says.

"The relationships remain intact," Bombardier spokeswoman Marianella Delabarrera said, adding that "it's the prerogative of the Canadian government and we are complying with the sanctions."

The list of individuals and companies sanctioned Tuesday over actions by Russian-backed militants in Ukraine includes Sergey Chemezov, chief executive of state-owned industrial and defence giant Rostec, and state-run energy firm NK Rosneft OAO.

Bombardier was in talks with Rostec for a partnership to assemble Bombardier Q400 turboprops in Russia, but those discussions were iced several months ago as the situation in Ukraine worsened.

Montreal-based plane and train maker Bombardier retains an office in Moscow as part of its presence in Russia, and it continues to provide service to customers even if talks for a turboprop partnership are stalled, Ms. Delabarrera said in an interview Wednesday.

"Russia remains a market that is key to our growth," she said.

Prime Minister Stephen Harper said on Tuesday that further steps will be taken if necessary as the government monitors the implementation of a ceasefire agreement struck last week between Russia and Ukraine officials.

A total of 37 Russian and Ukrainian individuals as well as 17 Russian and Ukrainian entities are on the new sanctions list.

Besides the partnership talks with Rostec, Bombardier was also in discussions for the possible $3.4-billion (U.S.) sale of 100 Q400s to Rostec and leasing firm Ilyushin Finance Co.

Ms. Delabarrera said the Q400 sales negotiations have also been halted.

"It's all on hold right now until the situation improves," she said.

State-run Rosneft, meanwhile, owns a 30-per-cent stake in an Alberta oil-development project called Cardium.

Rosneft spokesman Ignat Pavlov said in an e-mail message Wednesday that comments made by colleague Mikhail Leontiev in a Russian News Service story are accurate.

Mr. Leontiev is quoted as saying that Canada's oil industry is "in a near-death condition" and that Canadian foreign policy is beholden to Ukrainian nationalists.

The Russian Foreign Ministry said in a statement Wednesday: "We all hope that Ottawa will think about the consequences of its actions, which in reality further fuel an armed confrontation in Ukraine, and that it will realize the futility of pressuring Russia through sanctions."

Jeff Sahadeo, an expert on Russia and Central Asia who teaches at Carleton University in Ottawa, said the immediate effect of the sanctions will be "to chill the business climate even more.

"I suspect that low oil prices have made some of these projects less important, and therefore able to be placed in a sanction regime," he said in an e-mail message Wednesday.

Another likely effect is increased pressure on Bombardier and other Canadian companies to use informal channels and relationships in the Russian government and with companies "so as to preserve projects and/or create new investment opportunities."