Sophisticated rifles supplied to Iran by an Austrian arms company in 2006 are finding their way into the hands of Iraqi insurgents, a British newspaper reported on Tuesday.

American troops have recovered more than 100 "Steyr .50 HS" rifles in Iraq, part of an Austrian consignment of 800 such weapons delivered to Iran over American protests that they could be given to insurgents, the Daily Telegraph reported.

The Austrian government approved the sale of the rifles, made by precision weapons maker Steyr Mannlicher GmbH, after it concluded in 2004 that they would be used to fight narcotics smugglers.

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In comments to the AP that year, Steyr head Wolfgang Fuehrlinger said U.S. Embassy officials had expressed concerns that the rifles could be used against American troops in Iraq, adding that he had rebuffed a request to stop such sales.

Fuehrlinger described the 12.7 x 99 mm "Steyr .50 HS" as a high-power weapon able to penetrate metal as thick as a man's thumb.

The gun is about 4 feet long, weighs more than 20 pounds and counts as an anti-armor weapon among experts because of the high punch of its projectile, Fuehrlinger said.

The U.S. imposed sanctions on Steyr in December 2005, forbidding it from obtaining U.S. export licenses to do business in America. The Austrian government condemned the decision at the time, saying it made no sense to punish the company after the fact.

Britain's Ministry of Defense said it had also raised the issue with the Austrian government shortly after the sale.

"We discussed it privately with the Austrian government shortly after the sale," a Ministry of Defense spokesman said, on condition of anonymity in line with government policy. "Now the potential that these weapons could fall into the wrong hands appears to have happened."

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