On 14 October 2019, pursuant to the conflict along the SyrianTurkish border and Turkey’s recent military operation in northern Syria, the President of the United States issued an Executive Order authorizing the US Treasury’s Office of Foreign Assets Control (OFAC) to impose sanctions on Turkey’s Ministry of National Defense and Minister Hulusi Akar, the Ministry of Energy and Natural Resources and Minister Fatih Dönmez, and the Minister of the Interior Süleyman Soylu. However, as a result of a meeting held on 17 October 2019 between Turkish and US Delegates, the countries have agreed to declare a temporary ceasefire for five days, and once the ceasefire has become permanent, for the US to lift the Executive Order imposing sanctions.
With regards to the Executive Order, OFAC limited the sanctions to the aforesaid ministries, but the Executive Order affords broad powers to OFAC by allowing the instantaneous addition of individuals, government agencies, and companies to the list that OFAC may consider part of the perceived security risk based on the criteria listed under Section 1. Section 1 authorized the US Government to add additional individuals or entities to the list who:
- is a current or former official of Turkey;
- is a subdivision, agency, or instrumentality of the government of Turkey;
- operates in certain sectors of the Turkish economy to be specified by the Secretary of the Treasury;
- has assisted or supported a blocked individual; or is owned or controlled by or acts on behalf of a blocked individual.
is owned or controlled by or acts on behalf of a blocked individual.
Section 2 of the Executive Order provided the US Government the authority to impose a range of “menu-based” sanctions on any agencies or individuals who have engaged in or financed:
- the obstruction, disruption, or prevention of a ceasefire in northern Syria;
- the intimidation or prevention of displaced persons from voluntarily returning to their places of residence in Syria;
- the forcible repatriation of persons or refugees to Syria; or
- the obstruction, disruption, or prevention of efforts to promote a political solution to the conflict in Syria.
These sanctions included a prohibition on engaging in transactions, making loans or credits more than USD 10 million within a 12 month period, transferring credit or payments between banks, importing goods, or providing services. This extended to transactions conducted with persons or entities located within the United States, US citizens and US entities located outside of the United States, and transactions conducted in US dollars that touch the US financial system. The Executive Order also imposed secondary sanctions on any foreign international financial institution that knowingly conducts or facilitates significant transactions for or on behalf of any person or entity blocked by the US Government, including secondary sanctions to restrict correspondent and payable-through accounts.
Along with the Executive Order, three licenses were issued which: (1) authorized the official business of the United States government and its employees pursuant to Sections 1, 2, and 3 of the Order; (2) offer a 30-day wind down period (which expires on 13 November 2019) for operations, contracts, and other agreements; and (3) authorize the official activity of the United Nations and its related agencies. Essentially, these licenses offer exceptions to United States and United Nations officials and allow them to continue their business transactions related to official governmental business with the sanctioned entities and individuals that are otherwise restricted under Sections 1, 2, and 3 of the Executive Order. License 2 also allows for a 30-day grace period for companies who will be affected by these sanctions to terminate contracts and close business operations.
While the Executive Order may potentially be lifted, the US Congress has indicated that they are still keen to pass a bill that would once again impose sanctions on Turkey. On 11 October 2019, House Democrat Eliot Engel proposed bill HR 4695 titled the “Protect Against Conflict by Turkey Act” (“PACT Act”) that would sanction Turkish officials involved in the decision to move forces into Syria and related persons committing what the US considers human rights abuses; sanction Turkish financial institutions that finance or engage with the defense industry; prevent the sale of weapons to Turkey; and impose sanctions stemming from the Countering America’s Adversaries Through Sanctions Act (“CAATSA”), which puts further prohibitions on purchasing weapons and hardware used to create weapons.
In order for this bill to pass, it must undergo a vote in the US House of Representatives where it needs to receive a simple majority of votes (218 of 435). The bill will then pass to the US Senate, and should the Senate decide to move the bill forward, it will once again pass if it receives a majority votes (51 of 100). If the bill passes in both the House and the Senate, the President will have 10 days to veto the bill if he would like to withhold the sanctions. However, if the President vetoes the bill, the bill will be returned to Congress, and the President’s veto can be overturned by a two-thirds vote in both the House and the Senate.