US sanctions on Turkish defence agency may have wider global impact, says Janes

Key Points

• US sanctions against Turkey’s SSB over the acquisition of the Russian S-400 ground-based air defence system may limit Turkey’s ability to upgrade, modernise, and develop its equipment.
• Countries and companies may have to take into account the broad-reaching consequences of CAATSA for their own procurement and market strategies.

The US government announced the imposition of sanctions on Turkey’s defence acquisition organisation on 14 December under the Countering America’s Adversaries Through Sanctions Act (CAATSA) over the Turkish acquisition of the Russian-made S-400 air-defence system in a move that could have wider implications for the international defence market.

Under the sanctions, Washington is targeting Turkey’s defence procurement organisation: the Presidency of Defence Industries (SSB), as well as issuing blocking sanctions and visa restrictions against senior members of the SSB. The US has also launched a prohibition on granting export licences for all goods or technology transfer to the SSB; prohibiting loans to the SSB greater than USD10 million from a US financial institution in a 12-month period; a requirement for the US to oppose loans benefitting the SSB by international financial institutions; and a ban on support from the US Export-Import Bank for exports to the SSB.

“The imposition of sanctions and withdrawal of export approvals against the SSB are likely to cause some difficulties for the Turkish military and defence industrial base in the near-term despite the country’s significant push towards self-sufficiency in the defence sector. Acting as the country’s lead agency for defence procurement, research and development, and offset discharge, sanctioning the SSB will have wide-ranging effects for the Turkish military,” Charles Forrester, Principal analyst at Janes said.

The US Department of State approved USD581.6 million in export licences to Turkey in 2019[1]