Turkey: U.S. Sanctions Under the Countering America’s Adversaries Through Sanctions Act (CAATSA)

Turkey: U.S. Sanctions Under the Countering America’s Adversaries Through Sanctions Act (CAATSA)

INSIGHTi

Turkey: U.S. Sanctions Under the Countering
America’s Adversaries Through Sanctions Act
(CAATSA)
December 16, 2020
Turkey’s July 2019 acquisition of an S-400 surface-to-air defense system from Russia sparked debate
about possible U.S. sanctions against Turkey—a longtime NATO ally—under the Countering America’s
Adversaries Through Sanctions Act (CAATSA, P.L. 115-44). CAATSA requires the President to impose
sanctions on those persons he determines have knowingly engaged in a “significant transaction” with
Russia’s security sector. On December 14, 2020, the Administration imposed the following sanctions on
Turkey’s defense procurement agency, commonly referred to by the Turkish acronym SSB:
 a prohibition on granting specific U.S. export licenses and authorizations for any goods
or technology;
 a prohibition on loans or credits by U.S. financial institutions totaling more than $10
million in any 12-month period;
 a ban on U.S. Export-Import Bank assistance;
 a requirement for the United States to oppose loans benefitting SSB by international
financial institutions; and
 full blocking sanctions and visa restrictions on four SSB officials.

In a factsheet, the State Department said that the sanctions “are not intended to undermine the military
capabilities or combat readiness of Turkey or any other U.S. ally or partner, but rather to impose costs on
Russia in response to its wide range of malign activities.” Additional State Department guidance indicates
that the sanctions do not apply to SSB subsidiaries or affiliates.
Turkish President Recep Tayyip Erdogan has condemned the sanctions as a “blatant attack” on Turkish
sovereign efforts to establish an independent defense industry. Additionally, political parties representing
a large majority of Turkey’s parliament have issued a joint declaration opposing the U.S. decision.
Turkey’s foreign ministry has said that Turkey “will retaliate in a manner and timing it deems
Congressional Research Service
https://crsreports.congress.gov
IN11557
CRS INSIGHT
Prepared for Members and
Committees of Congress

link to page 2
Congressional Research Service
2
appropriate,” while keeping diplomatic options open. A year ago, Erdogan threatened to close Turkish
bases to U.S. military personnel and assets in response to potential U.S. sanctions (see Figure 1).
Figure 1. Map of U.S. and NATO Military Presence in Turkey

Sources: Department of Defense, NATO, and various media outlets; adapted by CRS.
Notes: All locations are approximate.
After S-400 deliveries began in July 2019, the Trump Administration announced Turkey’s removal from
the F-35 Joint Strike Fighter program, given concerns that the S-400 could compromise the F-35’s stealth
capabilities. However, despite several difficulties in U.S.-Turkey relations, the Administration delayed
imposing CAATSA sanctions while unsuccessfully seeking to have Turkey replace the S-400 with U.S.-
origin Patriot surface-to-air defense systems. Sanctions have come after Turkey test-fired the S-400 in
October 2020, and shortly after both houses of Congress passed the FY2021 National Defense
Authorization Act (NDAA, H.R. 6395). Section 1241 of that bill, if enacted, would direct the President to
impose CAATSA sanctions on persons he determines have knowingly engaged in Turkey’s S-400
acquisition.
Possible Effect of Sanctions
At this early stage, forecasts vary regarding sanctions’ likely effect on Turkey’s defense industry, while
generally acknowledging some negative effects—at least in the short term—for Turkish exports that rely
on U.S. components. One source has said that sanctions would not cancel existing U.S.-Turkey defense
contracts, but may directly impact around $2 billion of potential business.

link to page 3
Congressional Research Service
3
According to a prominent Turkish analyst, Turkey’s military can directly transact some sales with the
United States, but the sanctions may handicap U.S.-Turkey—and possibly Europe-Turkey—partnerships
to develop advanced weapons platforms. Thus, Turkey may face a choice either to get sanctions removed
or turn to alternative suppliers, such as Russia or (perhaps) the United Kingdom for next-generation
fighter aircraft.
The sanctions could affect Turkey’s economic stability—given the vulnerability of its currency (see
Figure 2)—if they disrupt the flow of foreign capital that Turkey needs to cover its financial sector’s
large dollar-denominated debts. The early impact on Turkey’s currency has been negligible. The
Administration did not opt to impose sanctions that could have more directly targeted Turkey’s financial
system.
Figure 2. Status of the Turkish Lira

The S-400 Issue: Assessment and U.S. Options
How the United States and Turkey address the S-400 issue may determine how long CAATSA sanctions
remain in force, and define Turkey’s relations with the United States and other countries for years to
come. One analyst has proposed that the United States might shelve sanctions if Turkey publicly commits
not to activate the S-400. Turkey has regularly called for a U.S.-Turkey working group to evaluate
whether the S-400 might operate in Turkey without compromising U.S./NATO assets, but U.S. officials
have consistently rejected any notion of S-400 coexistence with NATO systems. Under CAATSA (as
amended by Section 1294 of the FY2019 NDAA, P.L. 115-232), the President may waive or terminate
sanctions on certain enumerated grounds related to U.S. national security, or impose more sanctions.
The following factors may affect U.S.-Turkey deliberations on this issue, including under a new
Administration and Congress:
 Turkish domestic developments. What effect might sanctions have on Turkey’s economy,
defense industry, President Erdogan’s domestic standing, and the breadth of support among
Turkey’s leadership class and public for the S-400? Erdogan suffered some setbacks in 2019
municipal elections and has struggled in recent polling, but governs in an authoritarian manner

Congressional Research Service
4
 and could seek to increase his popularity by attributing Turkey’s domestic challenges to U.S.
sanctions.
 Turkey-Russia dynamic. Turkey and Russia each appear to have some form of leverage over the
other, based on their support for different sides in regional crises in Syria, Libya, and
Armenia/Azerbaijan; their bilateral defense and energy cooperation; and Turkey’s growing
partnership with Ukraine. Given this dynamic, what might Turkey demand as part of a face-
saving compromise on the S-400? More generally, does this situation present opportunities for
U.S./NATO common cause with Turkey to counter Russia, or signal greater Turkish distancing
from NATO on how it deals with Russia?
 General U.S. leverage on Turkish foreign policy. How might sanctions, the Halkbank case
pending in U.S. federal court, and S-400 deliberations influence or be influenced by Turkey’s
regional adventurism, including its confrontational approach with other U.S. partners in the
Eastern Mediterranean and Middle East?
 F-35s and Congress. In the event of a U.S.-Turkey compromise on the S-400, would Congress
consider amending an existing provision (Section 1245 of the FY2020 NDAA, P.L. 116-92) that
currently precludes the transfer of F-35s to Turkey unless it no longer possesses the S-400?
 Arms sales to other countries. How might U.S. actions regarding the S-400 issue affect U.S.
relations with other key partners that have agreed to purchase or may purchase advanced weapons
from Russia—including India, Egypt, and Qatar? In a December 14 press briefing, Assistant
Secretary of State for International Security and Nonproliferation Christopher Ford said, “We
hope that other countries around the world will also take note that the United States will fully
implement CAATSA Section 231 sanctions, and that they should avoid further acquisitions of
Russian equipment, especially those that could trigger sanctions.”

Author Information

Jim Zanotti
Clayton Thomas
Specialist in Middle Eastern Affairs
Analyst in Middle Eastern Affairs

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.

IN11557 · VERSION 1 · NEW