According to public statements of high-ranking representatives, the EU is considering whether to impose new economic sanctions against Turkey. The measures discussed include targeting certain Turkish industry sectors, such as the energy industry.

On November 11, 2019 the Council of the EU adopted a sanctions framework set forth in Council Regulation 2019/1890 and Council Decision 2019/1894, and subsequently designated two executives of the Turkish oil company TPAO on February 27, 2020, in response to Turkish hydrocarbon drilling activities in what the EU views as Cypriot territorial waters. The sanctions that are currently in place consist of a travel ban to the EU, an asset freeze for persons and entities, as well as a prohibition to satisfy claims for their benefit. In addition, EU persons and entities are forbidden from making funds and economic resources available to those listed.

EU Heads of State and Government will debate the EU’s relations with Turkey during the upcoming summit meeting of September 24 and 25, 2020. They will likely discuss the conflict between Cyprus and Turkey, the tensions between Greece and Turkey, as well as Turkey’s alleged involvement in the civil war in Libya, where Turkey is alleged to supply arms and other support to one of the warring factions. Relations between the EU and Turkey have been fraught for some time, especially since Erdogan took over. The negotiations on Turkish accession to the EU have been stalled since they were launched in 2004 due to stumbling blocks such as Cyprus-related tensions, as well as certain domestic actions taken by the Erdogan government. Additional complexity has been added by Turkish foreign policy in the Middle East, as well as Turkey’s role in helping to manage refugee flows, which has been both a source of rapprochement and tension.

Following the latest military maneuvers which have heightened tensions between Ankara and Athens, it is likely that the EU will designate additional Turkish persons or entities. Moreover, EU representatives are discussing possible economic sanctions that could be targeted against certain Turkish industry sectors, such as the energy industry. Sanctions could hit in particular the sale, purchase and export of materials related to energy exploration, the transfer of technology and products. Any restrictions adopted by the EU against Turkey could give rise to complex political and legal issues, given the mutual dependence of the two trading partners in multiple areas including migration, defense and energy, the existence of the EU-Turkey Free Trade Agreement, Turkey’s membership in NATO as well as Turkey’s special status as an EU membership candidate. Many in the EU view Turkey’s actions in the Eastern Mediterranean as highly provocative. More recent maritime and drilling disputes have increased existing tensions with Greece and Cyprus, whose position is supported by France. Germany, which has a sizeable Turkish diaspora, has made efforts to ease tensions, but the outcome remains uncertain due to continued points of conflict.

We will continue to monitor these developments closely, as they could have an impact not only on EU and Turkish persons and entities, but also on other non-EU companies wishing to carry out business activities with the involvement of EU and Turkish business partners. In particular, sanctions targeting specific industries have the potential to result in further interruptions to international business activities during already difficult times.