New Administration, New Priorities; Sanctions Target: Turkey

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Executive Summary

The National Defense Authorization Act requires that Turkey be sanctioned in response to its purchase of the Russian S-400 air defense system, and we assess the Biden administration will expand the scope of existing designations against Turkey’s military procurement agency and its leaders. We further judge that President Biden will attempt to balance efforts to salvage the relationship with the NATO ally with possible punitive sanctions on Turkey’s Halkbank, infrastructure projects such as ITI transnational railroad, and government entities involved in restricting free speech and other human rights, which could adversely affect the reputation of firms engaging with these entities.

US Sanctions

On December 14, the United States imposed sanctions on Turkey’s Presidency of Defence Industries (SSB), its head Ismail Demir, and three other SSB officials for the purchase and testing of the Russian S-400 pursuant to the Countering America’s Adversaries Through Sanctions Act (CAATSA). The President can only lift the CAATSA restrictions if Ankara can verify it has abandoned the S-400, but despite these sanctions and Ankara’s ejection from the Joint Strike Fighter program in July 2019, Turkey has shown that it is committed to deploying and using S-400, which most likely will lead to long-term sanctions against the country.

  • The sanctions imposed against the SSB by the Trump administration include a ban on US export licenses to the procurement agency, impacting about 40 percent of Turkey’s military imports from the United States. Although Turkey makes domestic military industry development and independence from foreign suppliers a priority, the country in 2019 bought $1.4 billion in military equipment from the United States, accounting for 45 percent of the defense industry’s total imports.
  • Despite sanctions pressure, Turkish Foreign Minister Mevlut Cavusoglu in late December said that Ankara would not reverse its purchase of the S-400 system. In mid-October, Turkey test-fired the S-400, reviving concerns that the system could be used by Russia to collect intelligence on the NATO F-35 Joint Strike Fighter and demonstrating Turkey’s resolve to deploy the system.
  • The December sanctions will almost certainly impede cooperation between US and Turkish defense firms, hindering Turkish efforts to modernize the fleet of ageing aircraft currently in use by its air force. The air force last year provided air support for naval and oil exploration vessels in the eastern Mediterranean—a controversy that led some EU members to call for sanctions against Turkey—and regularly conducts operations against the Kurds on its border with Syria, leading now-President Biden to publicly criticize Turkish President Erdogan as an “autocrat.”

EU Sanctions

The Biden administration would probably support EU sanctions against Turkey, taking the opportunity to demonstrate its commitment to multilateral action after Ankara engaged in activities the EU views as provocative. In December, Turkey announced its intentions to continue gas exploration in disputed waters off the coast of Cyprus through June 2021, which almost certainly will reignite demands for EU sanctions. However, Ankara recently took conciliatory steps toward the EU by withdrawing its seismic research ships, making high-level visits to Brussels, and inviting Greece to hold exploratory talks, prompting the bloc to delay a decision about sanctions. In addition, many EU members have been hesitant to level measures against Turkey because of the country’s position as a key trading partner. The departure this year of German Chancellor Angela Merkel—a leading proponent of a diplomatic solution to the disputes with Ankara—and stronger support from the Biden administration will probably make EU sanctions against Turkey more likely.

  • France is leading the charge for sanctions against Turkey over its gas exploration activities, claiming that Ankara has not heeded the EU’s October warning to cease exploration in the disputed waters. However, France has yet to reveal specific measures against Turkey, and French diplomats have indicated the measures would target Turkey’s hydrocarbon exploration and associated shipping, banking, and energy companies.
  • Turkey’s involvement in the Nagorno-Karabakh conflict, which started in September, has intensified calls for sanctions. In September, France accused Turkey of exacerbating the conflict between Armenia and Azerbaijan by sending Syrian jihadists to fight in the clash, which left more than 5,000 soldiers and 143 civilians dead.
  • In late November, the European Parliament adopted an amendment calling for sanctions on Turkey for partially reopening the Cypriot coastal town of Varosha in violation of UN Security Council resolutions. Varosha was abandoned by Greek Cypriots fleeing Turkey’s 1974 invasion.
  • In November 2019, the EU adopted a sanctions framework that could target entities in Turkey’s gas exploration industry, and the European Council extended the legislation by another year in November 2020.

Possible Biden Administration Actions

President Joe Biden is likely to take a tougher stance against Turkey than his predecessor, who has been called “Turkey’s last ally left in Washington.” However, the new administration will have to strike a fine balance between working to salvage relations with a vital NATO ally, coordinating action with European partners, and imposing additional US sanctions, which risk pushing Turkey further into the arms of Russia and China. Nonetheless, the purchase of the S-400 and Ankara’s stated intent to continue military collaboration with Russia, may mean that Turkey is approaching a point of no return in its relations with NATO.

  • Biden’s selection of Brett McGurk—an outspoken critic of Turkey—to the post of Middle East coordinator on the National Security Council, demonstrates, in part, the administration’s stricter approach to its relations with Ankara. McGurk has previously served in Republican and Democratic administrations and resigned from the Trump administration in late 2018 after then-president Trump agreed to a withdrawal of US troops from the Syrian border, allowing Turkey to stage an incursion into Syria.
  • The Biden administration is likely to pursue action against Halkbank—a major Turkish financial institution—for helping Iran evade sanctions, after the previous administration hesitated to prosecute the case. Federal prosecutors indicted Halkbank in late 2019, but the Trump Justice Department fired the prosecutor in the case for refusing to go easy on the bank. The Biden administration is unlikely to intervene in the prosecution of Halkbank, and if convicted, the bank faces fines in the billions of dollars.

Conclusion

With Turkey’s plans to modernize its air fleet hindered by its ejection from the F-35 program, Ankara will be looking to Russia and China for replacements. Military aircraft purchases from these countries could trigger sanctions under CAATSA on targets connected to Turkey’s air force. The United States and the EU also could coordinate messaging efforts to challenge Erdogan’s grip on power ahead of Turkey’s 2023 elections by emphasizing Turkey’s economic troubles that could be exacerbated by sanctions, which could lead Erdogan to pursue more infrastructure projects with Russia and China. The Biden administration’s focus on human rights could also lead to sanctions against entities involved in suppressing free speech and dissent in Turkey. Firms considering business engagements with these entities could face reputational backlash for supporting repression and human rights violations.

  • In June 2020, Russia offered to supply crucial parts for Turkey’s TF-X fighter jet, which is intended to replace the F-35. If Turkey decides to accept the offer, Turkish Aerospace Industries (TAI) that manufactures the TF-X, could be subject to US sanctions. The Turkish Defence Alliance (SSI), which promotes Turkish military exports, could also face designations for promoting military products made using Russian components.
  • This year, Erdogan plans to open his country’s section of the ITI transnational railroad, which provides a rail link between China and Turkey as part of China’s Belt and Road Initiative and could help Iran evade US sanctions. Erdogan will probably use the railroad, along with other infrastructure projects, to bolster his political standing, risking additional US and EU sanctions.
  • Turkey’s Information and Communications Technologies Authority (ICTA) and Ministry of Transport and Infrastructure are responsible for enforcing a new law that critics say will stifle free speech on social media. The two agencies could be designated under the Global Magnitsky (GLOMAG) Act for suppressing dissent, especially because at least 90 percent of Turkish media outlets fall under the control of Erdogan’s AKP party. In December, ICTA fined social media companies, including Twitter, Facebook, and Instagram, for failing to appoint local representatives to address government concerns about content on their platforms.
  • Legislation passed in December gives Turkey’s Interior Ministry broad authorities to investigate the financing of terrorism, which could be used against non-governmental organizations and other independent groups involved in human rights or rule of law issues, threatening its members’ right of association. Should the Interior Ministry use these authorities to target entities that oppose Erdogan, the Biden administration could impose sanctions for engaging in human rights abuses.

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