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On October 14, 2019, President Trump announced via Twitter his intention to authorize sanctions against Turkey and “any persons contributing to Turkey’s destabilizing actions in northeast Syria.” The announcement followed Turkey’s recent military operation against predominately Kurdish forces in northern Syria, which began following the withdrawal of U.S. troops from the region. Later in the day, President Trump issued an Executive Order (the “Syria-Turkey EO”) to formally implement those sanctions. Under the Syria-Turkey EO:

  • The U.S. Secretary of the Treasury is now authorized to impose blocking sanctions on any person that it determines to be: (i) responsible for or complicit in actions that threaten Syrian stability or abuse human rights, (ii) an official or agency of the Government of Turkey, or (iii) operating in sectors of the Turkish economy that the Secretary of Treasury might later decide to target with sanctions. The Syria-Turkey EO also authorizes the Treasury Secretary to impose blocking sanctions on any person (including non-U.S. persons) who provides material assistance, goods or services to or in support of any person sanctioned under the Syria-Turkey EO.
  • The U.S. Secretary of the Treasury is authorized to restrict or prohibit foreign financial institutions from opening or maintaining correspondent or payable through accounts in the U.S. if the Treasury Department determines that those foreign financial institutions have knowingly conducted or facilitated any significant financial transaction for or on behalf of any person who becomes subject to the above-described blocking sanctions.
  • The U.S. Secretary of State is now authorized to impose menu-based sanctions on any person the Secretary determines to have interfered with peacekeeping and restorative efforts in northern Syria. These authorized menu-based sanctions include (but are not limited to): blocking sanctions, denial of U.S. entry visas and financing-based sanctions.

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) immediately used its authority under the Syria-Turkey EO to add Turkey’s Ministry of National Defence and Ministry of Energy and Natural Resources to its list of Specially Designated Nationals and Blocked Persons (the “SDN List’). OFAC also added Hulusi Akar (Turkey’s Minister of National Defence), Suleyman Soylu (Turkey’s Minister of Interior) and Fatih Donmez (Turkey’s Minister of Energy) to the SDN List.  As a result of these SDN designations, U.S. persons are now generally prohibited from transacting with these sanctioned agencies and officials as well as any business entities in which they hold an ownership interest of fifty percent (50%) or more.

OFAC also issued three (3) related General Licenses in connection with these SDN designations: (i) General License 1, which authorizes employees, grantees and contractors of the U.S. Government to continue any transactions or activities that would otherwise be prohibited under the Syria-Turkey EO; (ii) General License 2, which authorizes a thirty day wind-down period for all transactions and activities that are ordinarily incident and necessary to wind down pre-existing operations, contracts or other agreements with Turkey’s Ministry of National Defense, Turkey’s Ministry of Energy and Natural Resources or their 50 percent-or-greater-owned subsidiaries; and (iii) General License 3, which authorizes transactions and activities with Turkey’s Ministry of National Defense, Turkey’s Ministry of Energy and Natural Resources or their 50 percent-or-greater-owned subsidiaries that are conducted for the official business of the United Nations.  In a Press Release, OFAC stated that it “ is prepared to issue authorizations, such as general or specific licenses, as appropriate, to ensure that [the SDN designation applied to Turkey’s Ministry of Energy and Natural Resources] does not disrupt Turkey’s ability to meet its energy needs.”

The Trump Administration has threatened to escalate sanctions against Turkey under the Syria-Turkey EO if Turkey continues its military activities in Syria. In a Press Statement, U.S. Secretary of State Mike Pompeo noted the initial sanctions imposed against Turkey and said, “To avoid suffering further sanctions imposed under [the Syria-Turkey EO] Turkey must immediately cease its unilateral offensive in northeast Syria and return to a dialogue with the United States on security in northeast Syria.”  Additionally, one day prior to President Trump’s issuance of the Syria-Turkey EO, U.S. Secretary of Treasury Steven T. Mnuchin discussed the forthcoming sanctions with ABC News and stated that “[W]e’ve put them on warning, the President has authorized me to effectively shut down the entire Turkey economy and we can do that at a moment’s notice, on his command.”

President Trump’s tweeted announcement stated that he is “fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path.” In addition, in that statement, President Trump separately ordered the Department of Commerce to cease negotiations over a potential bilateral trade agreement with Turkey and also ordered that tariffs on steel imported from Turkey be increased back to fifty percent (which was the applicable tariff rate prior to May of 2019, when President Trump reduced the tariff rate to twenty-five percent).

Husch Blackwell’s Export Controls & Economic Sanctions Team is monitoring this situation closely and will provide additional updates as information becomes available.  Please contact Cortney Morgan or Grant Leach should you have any questions concerning the recent actions against Turkey.