Turkey Prepares to Hit Back at U.S. Sanctions

6 MINS READOct 21, 2019 | 09:30 GMT
U.S. Secretary of State Mike Pompeo, left, and U.S. Vice President Mike Pence hold a news conference at the U.S. Embassy in Ankara, Turkey, on Oct. 17, 2019.

U.S. Secretary of State Mike Pompeo, left, and U.S. Vice President Mike Pence hold a news conference at the U.S. Embassy in Ankara, Turkey, on Oct. 17, 2019. Any U.S. sanctions on Ankara will incite a Turkish response that could spell trouble for American companies.

(STRINGER/Getty Images)
  • The fragile cease-fire that the United States brokered between Turkey and the Syrian Democratic Forces will not reduce the U.S. political drive to punish Turkey through sanctions.
  • Turkey will have strong domestic reasons to retaliate against these sanctions, most immediately through grassroots activism, boycotts and local government initiatives against U.S. and Western interests inside Turkey.
  • Ankara will also have a strong incentive to retaliate, but it won't be able to change American behavior toward Turkey given that it is the smaller of the two powers.

The White House is eager to lift sanctions against Turkey, but that doesn't mean the U.S. Congress is keen on ceasing its pressure on Ankara over its offensive against the Syrian Democratic Forces (SDF) anytime soon. Indeed, some members of Congress have described the Oct. 17 U.S.-Turkish cease-fire deal as a "capitulation" to Ankara, raising the prospect of continued American sanctions pressure against Turkish President Recep Tayyip Erdogan's government over its incursion. That, unsurprisingly, will seriously impact Turkey, raising the prospect that the country will retaliate against the United States and its interests in Turkey — even if it will seek to walk a fine line between exacting some retribution against the United States and not retaliating so much that it results in even greater economic pain for Ankara. Whatever the case, Turkey's likely response will have a seriously detrimental effect on American-linked businesses and individuals in Turkey in the short term, as well as Western defense partners in the longer term.

The Big Picture

Turkey's relationship with the United States is under strain, most recently because of its incursion into northeast Syria, where it is attempting to reduce the influence of Syrian Kurds. In response, the United States could ramp up sanctions pressure to punish Turkey, but that is likely to prompt Turkish countermoves.

An Indirect, Nationalist Backlash

As part of its effort to punish Turkey for its operation against the Syrian Kurds, the U.S. Treasury Department announced sanctions on Oct. 14 against the Turkish energy and defense ministries — in addition to the energy, defense and interior ministers — alongside a 30-day wind-down period for foreign companies engaged in activities with either ministry. But what the White House and Treasury Department have introduced so far is just a starting point. Congress is preparing legislation for sanctions, especially as the cease-fire — which was designed in part to defuse sanctions pressure — remains fragile.

If sanctions pressure increases, souring ties between Ankara and Washington, Turkish private companies, local Turkish officials and grassroots individuals will likely target U.S. and Western interests in retaliation. Turkish individuals and entities, accordingly, could heed nationalist pressure from Ankara to limit their connections to U.S. businesses. Local politicians, for instance, could cease issuing licenses to American companies (as a municipality in greater Ankara did in 2018) or boycott American goods and services. In August 2018, Erdogan called for an informal boycott of U.S.-made electronics over U.S. sanctions in connection to Turkey's detention of American pastor Andrew Brunson. And while Erdogan's call was not legally binding, it could have affected U.S. exports to Turkey had Washington not lifted its sanctions against Ankara sooner. Such informal Turkish retaliation would probably not precipitate a U.S. retaliation, but it would worry foreign investors and companies with business operations in Turkey, as it means they could face unpredictable barriers and challenges to doing business smoothly and continuously.

Unofficial retaliation precipitated by Erdogan's nationalist fervor — rather than a direct, state-organized campaign — might go further than mere boycotts to include harassment, hacking or even violence.

But unofficial retaliation precipitated by Erdogan's nationalist fervor — rather than a direct, state-organized campaign — might go further than mere boycotts to include harassment, hacking or even violence. In the midst of a diplomatic dispute between the Netherlands and Turkey in 2017, members of the ultranationalist Gray Wolf group illegally hacked Dutch public and private websites, temporarily disrupting business operations. Two years earlier, the group also attacked what it thought were Chinese tourists (they were actually Korean) in Istanbul over China's treatment of the Uighurs. There's also the risk that Western expats and nongovernmental organizations operating in Turkey — particularly those who oppose the ongoing Turkish operations in Syria or general Turkish policy toward Kurdish militants — could face a harsh blowback. And though the chances are remote, even direct attacks on U.S. government or commercial targets are possible, such as when assailants fired gunshots at the U.S. Embassy in Turkey in August 2018.

The State Leads the Way

At the same time, Turkey's government will have little choice but to initiate an official response to U.S. actions, even if the impact is limited. For example, Turkey quickly mirrored U.S. sanctions on two Turkish officials in August 2018 with measures on two U.S. officials, and it would likely do so again if the United States imposes similar, longer-lasting sanctions on individual Turkish authorities. The White House has, for instance, put delayed penalties against Turkey over its purchase of the Russian S-400 missile defense system, but if sanctions linked to the Countering America's Adversaries Through Sanctions Act (CAATSA) do emerge, Turkey would likely respond in kind, taking at least symbolic action against U.S. defense companies.

Given the economic mismatch between the two countries, direct Turkish retaliation would not hurt the U.S. economy (unlike vice versa) but it would harm U.S. and Western companies that have exposure to Turkish markets over time. It could also invite more U.S. retaliation, spurring a tit-for-tat escalation. If such measures remained in place over the long term, it would damage any Turkish or American business' ability to conduct normal business in the other country.

Ankara will have little reason to retaliate against their defense industry partners, since Turkey remains heavily reliant on such goods.

The Search for Defense Alternatives

Western sanctions are likely to further interrupt Western-Turkish defense ties, but unlike other aspects of Turkey's relationship with the West, Ankara will have little reason to retaliate against their defense industry partners, since Turkey remains heavily reliant on such goods: Turkey imports 60 percent of its weapons from the United States, followed by Spain's Navantia (for the construction of amphibious warships) and Italy's Leonardo (for radars and electronic equipment). Even beyond these countries, other major companies are key partners, like the United Kingdom's BAE Systems and Rolls-Royce (for aircraft development) and South Korea's Hyundai Rotem and Hanwha Techwin (for the Altay tank and the T-155 Firtina self-propelled howitzer). Germany, too, is a massive supplier, with MTU Friedrichshafen GmbH and Rheinmetall supplying new Turkish tanks and self-propelled guns, Mercedes-Benz and MAN SE providing military truck sales and support, and HDW helping construct submarines.

Turkey will hope these defense companies pressure their governments to limit the fallout of sanctions and steer clear of measures that further interrupt Ankara's defense ties. Nevertheless, the uncertainty will reinforce Turkish notions of the need for independence from the West: In the aftermath of the sanctions campaign, Turkey will work to improve its own defense industry and further diversify its arms partners to lessen its exposure to future Western influence. That, ultimately, represents a slow-moving threat to arms companies with ties to Turkey, as Ankara seeks ways to replace some of its business with domestic companies at home and new partners abroad. Long before that, however, American and Western firms active in Turkey are likely to face a bumpy ride if the U.S. Congress chooses to turn the screws on Ankara over its activities in northeastern Syria.

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