On October 14, 2019, the Trump Administration issued an Executive Order (EO) "Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria," authorizing economic sanctions against any party determined by the Secretary of Treasury (in consultation with the Secretary of State) to 1) have engaged in actions threatening the security of Syria or engaged in human rights violations; 2) be a current or former member of the Government of Turkey; 3) be a subdivision, agency or instrumentality of the Government of Turkey; 4) operate in specified sectors of the Turkish economy; or 5) be owned, controlled or acting on behalf of any party so designated. In addition, the EO authorizes the Secretary of State to designate other individuals determined to be engaged in various other malign activities.

The EO also provides for "secondary sanctions" against persons not subject to U.S. jurisdiction that materially assist, provide financial, material or technological support, or goods or services to sanctioned parties. In addition, the EO authorizes sanctions against non-U.S. financial institutions determined to knowingly conduct or facilitate a significant transaction for, or on behalf of sanctioned parties.

Under the authority of this EO, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has designated as "specially designated nationals" (SDNs) two ministries (the Ministry of National Defense and the Ministry of Energy and Natural Resources) and three senior Turkish Government officials (the Minister of National Defense, Minister of Energy and Natural Resources, and the Minister of the Interior).

OFAC also issued three General Licenses authorizing U.S. persons to conduct transactions with respect to the official business of the United States Government, transactions with respect to the official activities of certain international organizations, and certain activities necessary for the wind-down of operations or existing contracts involving the Ministry of National Defense and the Ministry of Energy and Natural Resources.

Potential Impacts

Scope of Sanctions Restrictions

The new sanctions impose broad prohibitions on U.S. persons engaging with the designated Turkish SDNs, including U.S. citizens, permanent resident aliens, entities organized under the laws of the United States (including foreign branches), or any person in the United States.

Unless otherwise authorized by OFAC, U.S. persons are prohibited from engaging in most transactions or dealings (including the provision or receipt of goods or services) with SDNs, as well as entities that are 50% or more owned by one or more SDNs. As noted above, this EO also prohibits "material support" to the designated Turkish SDNs and authorizes sanctioning of non-US parties who engage in "significant transactions" involving a designated SDN. Notably, the terms "material" or "significant transactions" are not defined in the EO.

Scope of General Licenses (GLs)

GL 1 – Official Business of the United States Government

Authorizes activities by employees, grantees or contractors of the United States Government related to the official business of the United States Government. We believe this would include military cooperation and foreign military sales.

GL 2 – Wind-down of Activities With the Turkish Ministry of Defense or Ministry of Energy and Natural Resources

Authorizes activities necessary for the wind down of operations, contracts, or other agreements involving the Ministry of National Defense or Ministry of Energy and Natural Resources of the Government of Turkey, or any entity in which one or more of such ministries own, directly or indirectly, a 50 percent or greater interest, that were in effect prior to 12:01 eastern daylight time October 14, 2019, are authorized through 12:01 a.m. eastern standard time November 13, 2019. After this date, such transactions are prohibited unless an export license has been approved by OFAC (either an extension of this GL or an individual export license applied for and received).

GL 3 – Official Business of Certain International Organizations

Authorizes activities for the official business of the United Nations, including the following entities:

  • World Bank
  • IMF (International Monetary Fund)
  • FAO (UN Food and Agriculture Organization)
  • OCHA (UN Office for the Coordination of Humanitarian Affairs)
  • OHCHR (UN Office of the United Nations High Commissioner for Human Rights)
  • UN Habitat
  • UNDP (UN Development Program)
  • UNFP A (UN Population Fund)
  • UNHCR (Office of the UN High Commissioner for Refugees)
  • UNICEF (UN Children's Fund)
  • WFP (World Food Program)
  • The World Health Organization (WHO), including the Pan-American Health Organization (PAHO)

Recommendations

U.S. persons should assess their current and prospective activities (including any pending financial transactions) in and involving Turkey to determine whether any of the new sanctioned entities or individuals are involved.

To the extent any activities are identified as involving any of these sanctioned entities of individuals, you will need to determine if any of the GLs apply and remain valid, and if not, determine whether you are required to suspend activities and/or apply to OFAC for an export license prior to continuation of such activities.

We also note that both the Administration and Congress have indicated that additional sanctions and economic measures (such as increased tariffs) may be forthcoming.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.