In response to Turkish military operations in Syria, President Trump issued an Executive Order on October 14, 2019, authorizing sanctions targeting the Government of Turkey and persons undermining human rights or prospects for peace in Syria. The Executive Order ("EO") also authorizes extraterritorial (or "secondary") sanctions for dealings with such sanctioned persons.
The introduction of sanctions targeting a NATO ally, and their use against two government ministries—in conjunction with the threat to cease negotiations on a U.S.–Turkey trade deal and implement a 50% increase in duties on Turkish steel imports—presents compliance concerns for companies doing business in Turkey and the region. Although the President subsequently announced that the United States would not impose certain sanctions and tariffs in light of a ceasefire, the situation in Syria remains fluid, and as of this writing, the EO remains in force.
Provisions of the Executive Order
First, the EO provides the Secretary of the Treasury with broad authority to block the property and interests in property of:
- Any subdivision, agency, or instrumentality—as well as any current or former official—of the Government of Turkey;
- Any person responsible for, complicit in, or that has directly or indirectly engaged in "any actions or policies that further threaten the peace, security, stability, or territorial integrity of Syria" or in the commission of related serious human rights abuses;
- Any person that operates in as yet unspecified sectors of the Turkish economy; and
- Any person that has materially assisted, sponsored, or provided procurement, financial, material, or technological support for any designated person.
The U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") imposed EO-based sanctions on the Turkish Ministries of Energy and Natural Resources and National Defence as well as Turkey's Ministers of the Interior, Energy and Natural Resources, and National Defence. Further sanctions loom if the ceasefire does not hold and could conceivably target persons operating in any sector of the Turkish economy to be determined by the Treasury Secretary—a broad authority used recently in the Venezuela sanctions context.
Second, the EO authorizes the Secretary of State to impose sanctions on foreign persons determined to be:
- Responsible for, complicit in, engaged in, or financing activities including obstructing, disrupting, or preventing a ceasefire in northern Syria or a political solution to the conflict in Syria; participating in forcible repatriation of displaced persons to Syria; or intimidating or preventing displaced persons from returning to their homes in Syria;
- An adult family member of any such designated person; or
- Responsible for, complicit in, or directly or indirectly engaged in the expropriation of property for personal gain or political purposes in Syria.
Such persons may be subject to the imposition of one or more of the following sanctions:
- A prohibition on contracting with the U.S. government;
- Denial of visas to any corporate officers, principals, or controlling shareholders of designated entities;
- A prohibition on obtaining loans or financing over specified thresholds from U.S. financial institutions;
- A prohibition on engaging in certain transactions in foreign exchange within the U.S. financial system;
- A prohibition on processing certain credit transfers or payments within the U.S. financial system;
- A prohibition on U.S. persons "investing in or purchasing significant amounts of equity or debt instruments in" the designated person;
- Blocking of property and interests in property subject to U.S. jurisdiction;
- Restrictions or a prohibition on importing goods, technology, or services into the United States; and/or
- The imposition of certain of the above-listed penalties on any principal executive officers or persons performing similar roles.
Finally, all financial institutions that knowingly conduct or facilitate any significant financial transaction for or on behalf of a person designated under the first section of the EO may be subject to a prohibition, or the imposition of strict conditions, on opening or maintaining a correspondent account or a payable-through account in the United States.
OFAC issued three general licenses mitigating the immediate impact of these new sanctions, including a general license 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."
A number of EU Member States have so far suspended weapons exports to Turkey in response to Turkish actions in northern Syria. All EU Member States have committed to strong national positions regarding their arms export policy to Turkey, and there are calls for a formal EU-wide arms embargo. The EU Member States have also now agreed that a framework regime for sanctions against Turkey be put in place in connection with Turkey's oil and gas drilling program off the coast of Cyprus, and have tasked the European Commission to prepare proposals to this end. The European Union will also continue monitoring the situation in Syria to assess if further EU sanctions are required.