New US (and potential EU) sanctions on Turkey
Turkey's military offensive in north-east Syria has led to new US primary and secondary sanctions from the US and announcements of potential future sanctions from the EU.
In addition, the EU will draw up a framework to sanction Turkey for its illegal drilling activities in the eastern Mediterranean.
New US sanctions on Turkey
On 14 October 2019, President Trump issued the Executive Order "Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria" (the "EO") to target specific individuals and entities connected to the Government of Turkey. This in response to Turkey's ongoing military operations in Syria, which according to the US Department of the Treasury are "endangering innocent civilians, and destabilizing the region, including undermining the campaign to defeat ISIS".
Three Turkish senior government officials (the defence minister, energy minister and interior minister) as well as two Turkish ministries (Ministry of National Defence and Ministry of Energy and Natural Resources) have currently been sanctioned under the EO, by being designated as Specially Designated Nationals ("SDNs"). US persons are prohibited from dealing with these SDNs as well as with entities that are owned 50% or more by them. Further, non-US persons are in effect prohibited from materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of these SDNs, as such actions would expose non-US persons to SDN designation themselves.
Notably, the EO also authorizes secondary sanctions on foreign financial institutions. Pursuant to the EO, any foreign financial institution that knowingly facilitates any significant financial transactions for or on behalf of any person designated as an SDN under the EO could be subject to US correspondent or payable through account sanctions.
In practice, the EO means that both US and non-US companies involved in Turkey now need to more carefully screen their counterparties to avoid doing business with these SDNs.
Simultaneously to the EO, the US department of the Treasury's Office for Foreign Asset Control (OFAC) issued General Licence 1 "Official Business of the United States Government", General Licence 2 "Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts Involving the Ministry of National Defence or the Ministry of Energy and Natural Resources of the Government of Turkey" and General Licence 3 "Authorizing Official Activities of Certain International Organizations Involving the Ministry of National Defence or the Ministry of Energy and Natural Resources of the Government of Turkey" to authorize certain activities that would otherwise be prohibited the EO. Find OFAC's press release here.
Notably, on 17 October 2019, Vice President Pence announced that the US will impose no further sanctions on Turkey, after talks with Turkish President Erdogan resulted in what the parties are calling a 120 hour "pause" in military operations. According to Mr. Pence, the current sanctions described above will be withdrawn once the Turkish military operation is done and a permanent ceasefire is achieved.
Potential EU sanctions on Turkey
Meanwhile, on 14 October 2019, the Council of the EU condemned Turkey's unilateral military action and called Turkey to withdraw its forces. The Council did not announce any EU wide arms embargo on Turkey in this statement, but member states committed to "strong national positions regarding their arms export policy to Turkey". For example have Germany, France and the UK decided to halt all arms export to Turkey in response to the recent events. According to statements made by the UK's Foreign Secretary Dominic Raab to the House of Commons on 15 October 2019, the EU has decided to hold off on sanctioning Turkey for now but will keep the position under careful review.
However, the EU has initiated a process towards developing a framework of restrictive measures to sanction Turkey over what the Council of EU has deemed to be illegal drilling activities in the eastern Mediterranean.