U.S. Considers Allowing Sales of Russian Handguns : Trade: Officials say letting Moscow export weapons to America could help end Kremlin's arms deals with Iran.

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Bowing to Russia's desperate need for export earnings, the Clinton Administration is moving toward a decision to let Moscow sell a famous Russian product in the United States: handguns.

As a result, the Makarov semiautomatic pistol, favorite side arm of KGB spies and Cold War bad guys, may soon come to a gun store near you.

A U.S. gun importer has filed an application to sell as many as 7 million Russian firearms in the United States, and the Administration is leaning toward approving at least part of the deal, officials said Tuesday.

The decision is still being debated between the Treasury Department's Bureau of Alcohol, Tobacco and Firearms, which is hesitant to open U.S. gates to more inexpensive gun imports, and the State Department, which wants to give visiting Russian President Boris N. Yeltsin a break.

The Administration has been putting major pressure on Yeltsin to stop selling submarines, tanks and high-tech weapons to Iran--and some U.S. officials see the low-tech handgun deal as a reasonable substitute.

"If we want them to listen to us on issues like Iran, we have to let them compete on the world market with products they can sell," a State Department official said.

But he acknowledged the irony of the Administration, which has argued for stricter gun control at home, now advocating bringing Russian guns into the country. "A lot of people think it's nutty to start importing Russian handguns," he said.

The likely outcome, he said, will be "a common-sense solution"--one that lets the Russians sell some weapons without flooding the American market.

An official at the Bureau of Alcohol, Tobacco and Firearms, which regulates arms imports, confirmed that the issue was under discussion but refused to provide details.

But other officials said the importer's initial application had been for a whopping 7 million guns--half of them handguns--and billions of rounds of ammunition.

That would be almost three times the number of firearms imported into the United States in 1992, the last year for which the ATF has statistics.

But the actual number of Russian guns imported would probably be much smaller, as importers routinely file applications for far more items than they really expect to sell.

The total number of guns in the United States in 1992 was about 212 million, including nearly 72 million handguns.

Russia's state-owned arms industry has found itself awash in surplus guns since the collapse of the Soviet Union and the shrinkage of Russia's armed forces from more than 5 million to fewer than 2 million troops.

Because of that oversupply, the Russian imports would almost surely sell for less than comparable U.S.-made guns. The 9-millimeter Makarov pistol, for example, already sells in limited numbers in the United States for about $150; large-scale imports would drive the price down.

Moreover, there may be a market opening for low-priced Russian handguns since the Administration restricted firearms imports from China earlier this year. China shipped hundreds of thousands of pistols, assault rifles and other guns to the United States beginning in the mid-1980s, but Clinton virtually stopped the trade earlier this year.

The United States also imports large numbers of guns from Austria, Belgium, Brazil, Canada, the Czech Republic, Germany and Italy.

During the Cold War, virtually all Russian guns were barred from the United States under import regulations that remain in effect. But importers can apply to the ATF and State Department for specific licenses.

Officials at both the ATF and State Department refused to identify the dealer who has applied for the license under consideration. But they did say that the application does not include the AK-47 assault rifle, whose import was banned by a law passed earlier this year.

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