Sanctions against Turkey for drilling activities in the Mediterranean and military action in Syria –
Sanctions against Turkey for its drilling activities
On the 11 November 2019 the EU Council adopted Council Decision (CFSP) 2019/1894 (‘the Decision’) and Council Regulation (EU) 2019/1890 (‘the Regulation’) establishing a framework for adopting restrictive measures in view of Turkey's drilling activities in the Eastern Mediterranean.
On 15 July 2019, the Council condemned what it considers as Turkey’s unauthorised drilling activities within Cyprus’ territorial waters. Despite the EU’s repeated calls to cease the activities, Turkey has continued its drilling activities. The Council has therefore formally adopted a framework for imposing restrictive measures targeted at individuals and entities responsible or involved in the drilling activities.
The framework allows the Council to impose targeted sanctions against individuals and entities responsible for unauthorised drilling activities related to hydrocarbon exploration and production within Cyprus’ territorial sea, exclusive economic zone (EEZ) or continental shelf. This also includes drilling activities where the EEZ or continental shelf has not been delimited in accordance with international law, and which may jeopardize or hamper reaching such a delimitation agreement. Sanctions may also be imposed against persons and entities that provide financial, technical or material support in relation to these activities, or are associated with such persons and entities.
The restrictive measures consists of an asset freeze and entry ban to the EU. In addition, EU persons and entities will be prohibited from satisfying contractual claims and making economic funds and resources available to listed persons and entities, or otherwise knowingly participating in activities that circumvent these measures.
The EU has not yet listed any individuals or entities under the newly adopted framework. However, with Turkey’s response that it will continue the drilling activities, EU companies directly or indirectly engaged with Turkish nationals and entities should assess their risk profile and closely follow the developments.
Sanctions against Turkey for military actions in North East Syria
There has not yet been adopted a formal framework for restrictive measures in relation to Turkey’s recent military activities in Syria. However, on 14 October 2019, the EU Council adopted a common position condemning Turkey’s military actions and affirming their commitment to the EU’s common rules on arms export. As a result, several Member States have restricted or prohibited arms exports to Turkey, including the U.K, Germany, France, Sweden, and the Netherlands.
In the U.S., sanctions were briefly imposed on the Turkish Government. On 14 October 2019, The U.S. government issued Executive Order No. 13894 (‘E.O.’) blocking property and suspending entry of certain persons contributing to the situation in Syria. Under this E.O, the Department of Treasury’s Office of Foreign Asset Control (‘OFAC’) designated the Ministry of National Defence, the Ministry of Energy and Natural Resources, as well 3 Ministers. These sanctions were however lifted on 23October 2019 after Turkey suspended their military operations in Syria.
In addition, on the 29 October 2019 the U.S. House of Representatives passed the Protect Against Conflict by Turkey Act (‘PACT Act’). Although the bill passed by 403-16 votes in the House, it is not yet certain whether it will also gain a majority vote in the Republican-led Senate.
The PACT Act provides for a series of measures, including targeted sanctions against Turkey, such as:
- Asset freeze and entry ban against senior government officials, including the Minister of National Defence and Minister of Treasury and Finance.
- Prohibition on the transfer of arms that could be used by Turkey in Syria, including secondary sanctions against foreign persons providing arms to Turkey, if such arms could be used in Syria.
- Targeted sanctions against Turkish financial institutions facilitating transactions for the Turkish military’s operations in Syria, including the state-owned bank Halbank, which was recently charged with evading U.S. sanctions against Iran.
- Sanctions against the Turkish government under the Countering America’s Adversaries Through Sanctions Act (CAATSA) for the acquisition of the Russian S-400 air and missile defence system.
What do these developments mean for EU companies
There have been rapid changes in the sanctions landscape concerning Turkey in the recent period. EU companies should assess their risk exposure, closely follow developments in the EU, but certainly also in the U.S., due to the extra-territorial effects of U.S. sanctions. The PACT Act, if passed into law, really has teeth! EU companies that are involved or engaged in activities that may directly or indirectly be affected, should carefully consider and follow these developments, and adapt their compliance procedures accordingly.