Freedom House Policy Brief

Freedom House policy brief

July 2019

Turkey’s Missile Diplomacy: Recommendations for US Sanctions after Delivery of the S-400

Nate Schenkkan Director for Special Research, Freedom House

Russian Ilyushin Il-76, carrying the first batch of equipment of S-400 missile defense system, arrives at Murted Air Base in Ankara, Turkey on July 12, 2019 as S-400 hardware deployment started. Photo by Turkeys National Defense Ministry / Handout/Anadolu Agency/Getty Images.

Introduction

A year after establishing a superpresidential system that strengthened his personal control at the expense of democratic checks and balances, Turkish president Recep Tayyip Erdoğan is floundering in crises of his own making. The economy is teetering on the brink of collapse. The opposition is emboldened after significant wins in local elections, including a decisive victory in a rerun of the Istanbul mayoral election in June. Relative moderates who have been driven from the president’s party by his consolidation of power are finally taking steps to form a new party on the center-right.

Turkish foreign policy is also a sea of troubles. The war in Syria has been a catastrophe, and Ankara’s involvement there has become a matter of salvaging some small leverage in the final settlement. Frustrated with US policy in Syria, and blaming the United States for the July 2016 coup attempt, Turkey’s leadership has taken delivery of an S-400 air defense system from Russia. As relations with the European Union also reach new lows, the country is engaging in increasingly heated competition over offshore gas reserves near Cyprus, an EU member state.

A year ago, Freedom House warned that the United States had to “prepare for the possibility that Turkey under Erdoğan is pursuing a durable strategic realignment.”1 There is still a long way to go before Turkey irreparably breaks with the North Atlantic Treaty Organization (NATO) or switches fully to backing Russian 2 policybrief in June.Thenew balloting was adisaster for theAKP. TheCHP’s candidate increased hisvictory margin from answer to thepresident’s appointees, invalidated themayoral electionona technicality, leading to a rerun the cityin1990s.Inanunprecedented decision,theSupreme Board ofElections (YSK), whosemembers bul by aslendermargin was apparently too much for Erdoğan, whohadlaunchedhiscareer asmayor of try’s largest cityby far, itseconomic engine, andacrucialsource ofpatronage for theAKP. ThelossofIstan mayoralties infive of Turkey’s sixlargest cities. Most importantly, theCHPnarrowly won Istanbul, the coun opposition inlocal electionsinMarch. Themainopposition Republican Peoples’ Party(CHP) won cease-fire between nationalists, anti-AKP Islamists, andthe left produced remarkable successes forthe The economic crisis,frustration withanincreasingly unaccountable andelitist AKP, anda tactical risen to 14.7percent, creasingly desperate emergency measures have barely staved offafull-blown collapse. Unemployment has international ordomestic investors. A US dollarbought 1.8 Turkishliras inmid-2013; it now buys 5.7.In minister oftreasury andfinance;Albayrak’s performance has failed to winthe confidence of deputy primeminister Mehmet Şimşekandappointing his own son-in-law, Berat Albayrak, as and expansionary fiscal policy. Thepresident exacerbated thecrisisearly inhisnew term by firingtrusted spite years ofwarning signsthat theeconomy was overheating, Erdoğan haspushed for lower interest rates encouraging lending—especiallyto theirfavored conglomerates, andespeciallyineuros andUSdollars. De of economic mismanagement, inwhichsuccessive AKPgovernments have stimulated growth at all costs by Paradoxically, though,Erdoğan hasnever looked weaker. reason Theprimary isthe billcoming duefor years self. Asexpected, thepresidency hasbecome thecenter oflawmaking andpolitical activity. Development Party (AKP).Strippedofmost ofitsauthority, theparliament isnow ashadow ofitsformer servants, andto chairtheNational SecurityCouncil,allwhile remaining theleaderofhisJustice and half themembers ofthecouncil overseeing judges andprosecutors, to hire andfire new categories ofcivil a government withoutany parliamentary confirmation, toissuedecrees withthe force of law, toappoint Mustafa Kemal Atatürk, Erdoğan gained extraordinary powers underthenew system: to form andhead superpresidential system in Turkey. Already themost powerful politicianinthe republicsinceits founder, Simultaneous parliamentary andpresidential electionsinJune2018marked theofficial transition toa Erdoğan’s Self-Made Conundrum acquisition ofthe S-400 airdefense system. This brief lays outrecommendations for theUnited States regarding initialsanctionspertaining to Turkey’s change ofheartinAnkara. stand against allies’securitycooperation withauthoritarian Russia.It cannot bet onachange inpower ora After two years of warnings, the S-400 delivery marks amoment whentheUnited States has to take aclear more thanenoughcards to stay inpower until thenext electionsin2023,andpotentially well beyond that. crises. Heisdamaged politically, buthisinstitutional positionas president remains ironclad,andheholds in Southeastern Europe doesnotallow for time to wait andseehow orwhether Erdoğan navigates these The dilemmafor theUnited States isthat significant competition withRussia(and tosome extent China) balance ofpower inTurkey could bringthecountry backtoward itstraditional alignment with Washington. further. the dust to settle on Turkey’s internal crisesbefore taking punitive steps that coulddegrade the relationship weaker thanithasinyears. Reasonable voices have called for theUnited States to slow down andwait for push backinresponse to Turkey’s realignment, at atimewhenErdoğan’s gripondomestic politicsislooking The delivery oftheS-400 inJulyisamilestone. TheUnited States must decidehow hard andhow fast to neutrally alignedforeign policy,” asAaron Stein hascalled itwithsomeunderstatement. to backingRussianinterests initsregion. Butthisyear’s events show that ithasalready embraced a“more foreign policy,” asAaron Stein hascalled itwithsomeunderstatement. interests initsregion. Butthisyear’s events show that ithasalready embraced a“more neutrally aligned 3 Few analysts still argue that Erdoğan himselfwillchange tack, but theimpliedhopeisthat a new 4 thehighest level inadecade. 2

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6 SA will apply to the purchase. Turkish officials have received detailed explanations about the explanations detailed received have officials Turkish the purchase. will apply to SA very is States the United of delivery, completion With the system. on the taking delivery of implications sanctions. initiate to likely The United States now has to decide whether it will punish Turkey further, and if so, how severely. In 2017, severely. how and if so, further, it will punish Turkey decide whether has to now States The United through Adversaries America’s passed the Countering Congress presidency, early in the Trump worried were lawmakers at a time when hands president’s to tie the effort in an Sanctions Act (CAATSA) engage that entities against sanctions requires law sanctions on Russia. Section 231 of the lift he might that Turkey’s Federation. of the Russian sectors intelligence or defense with the transaction” significant in “a top and leaders congressional and both definition, that acquisition plainly meets S-400 CAAT that a year—the position over well for public and privately reiterated—in have officials administration have the opportunity to collect sensitive information about the jet that would be vulnerable to would be vulnerable jet that about the information sensitive collect the opportunity to have from the F-35 are being suspended pilots Turkey’s S-400. the technicians maintaining by Russian exfiltration and Turkish purchase, the 100 F-35s it had planned to acquire will be unable to Turkey program, training to blow This is a significant the jet. the supply chain for from will be removed manufacturers time. over compound and it will industry, and defense capabilities defense Turkey’s his decision to purchase the S-400 missile system from Russia. Turkish personnel began their training in their training began personnel Russia. Turkish from missile system S-400 the purchase his decision to in July. in Turkey on the ground arriving itself began Russia in the spring, and the system the from Turkey remove to steps taken has already Washington S-400 delivery, of the In anticipation for to serve intended technology piece of expensive jet, a massively the F-35 fighter producing consortium in the of the S-400 deployment that insisted have and NATO States The United militaries. in NATO decades would S-400 the security risk, because an unacceptable present would space as the F-35 same operational corrective action, the worse the damage will be. the damage worse action, the corrective His Missiles Sticking to on course change to has refused Erdoğan blowback, generated have As with the other policy choices that The economic and political setbacks certainly have not cowed Erdoğan. Two weeks after the second loss the second after weeks Two Erdoğan. cowed not have certainly setbacks political and The economic be must rates interest that his insistence repeated Bank and the head of the Central he fired in Istanbul, now pushing an is government The economic theory. basic contradicting inflation, down bring to reduced it in. than reining lending rather more encourage aims to bill that omnibus economic taking delays Erdoğan the longer that warnings strident issued increasingly have the government and its coalition partners control another 50. It would take unprecedented defections for the parliament to for the parliament defections unprecedented take would another 50. It control partners and its coalition count still would term shortened the so, because to do has no incentive himself Erdoğan early elections. call all the holds virtually by definition system in a superpresidential limit. The president his two-term against for sign it is a positive scene. While political Turkey’s of pluralism the defiant despite cards, to do time effective a more ranks, finally breaking and Şimşek are Babacan like AKP insiders that democracy was changed. the constitution been in 2017, before have so would silenced by Erdoğan’s consolidation of power, will join forces with Babacan. Former prime minister Ahmet Ahmet Former prime minister Babacan. with forces will join of power, consolidation Erdoğan’s silenced by agenda. political independent his own is pursuing meanwhile, Davutoğlu, remains Erdoğan dynamics. the underlying institutional alter challenges But none of these political for any early elections constitution, new Under the early elections. are 2023, unless there until president the by unilaterally ways: in two only be called and can be simultaneous must and president the parliament of 600 seats, holds 290 The AKP currently of parliament. members by vote or with a 60 percent president, manipulate the outcome of the election. the outcome manipulate prominent has emboldened election rerun the Istanbul to push the AKP’s behind miscalculation The clear deputy prime former Another away. finally break to Erdoğan by been sidelined who have party members early the AKP and is in the from resigned Ali Babacan, moderation, relative for reputation with a minister also was Abdullah Gül, who president and former Şimşek that likely It seems party. a new of forming stages 13,000 to nearly 800,000 votes, as residents decisively rebuked a blatant attempt to attempt a blatant rebuked decisively as residents votes, 800,000 nearly to 13,000 Choosing a Sanctions Strategy

The administration has essentially four options for the sanctions package: delay, soft pedal, middle of the road, or “nuclear.” This broad range stems from the unusual “buffet” of 12 sanctions categories that Section brief 235 of CAATSA presents. Out of those 12, the president is required to select five.

Delay

The official “delay” option would be to use the procedure under CAATSA Section 231(c) that allows the policy president to postpone sanctions by 180 days if he can certify that Turkey is “substantially reducing the number of significant transactions” that are targeted by the law. In other words, this would require a false certification. Given its tough positions on Turkey, Congress would most certainly challenge such a certification, even if the foreign policy bureaucracy, which still holds itself to high standards, could be persuaded to produce one.

The president also has the ability to impose and then waive the sanctions based on a national security determination; there is also always bureaucratic wiggle room that could allow for a procedural delay, although the main bureaucratic obstacles for this sanctions application have already been addressed.7 The delay or waiver options seem highly unlikely given the administration’s consistent public stance on the S-400, although there can be no guarantees given the chaotic decision-making in the Trump White House.

Soft pedal

By choosing the five least damaging measures from the buffet, the administration could roll out sanctions that would affect Turkey’s defense industry but not obliterate it. For instance, the administration could select the following:

1. Opposing loans from international financial institutions (IFIs) that would benefit the sanctioned persons 2. Ordering the US Export-Import Bank not to support credit to sanctioned persons 3. Prohibiting US financial institutions from making loans to sanctioned persons 4. Prohibiting the US government from procuring goods or services from the sanctioned persons 5. Banning visas for corporate officers of sanctioned persons

Even this list of relatively soft measures could have significant consequences down the road. For instance, Turkey’s financial crisis could force it to turn to the International Monetary Fund (IMF) for a bailout. While Erdoğan has insisted that the IMF is not an option, many economists believe the scale of the problem could make the IMF the only institution with enough resources to take it on. Thus US opposition to loans from IFIs may be relatively meaningless at the moment, but it could become extremely important within a few short months. Other steps like prohibiting US procurement could have spillover effects, if for instance other countries (either unilaterally or under US or NATO diplomatic pressure) choose not to purchase Turkish goods or services.

Middle of the road

A middle-of-the-road option could package smaller and more symbolic measures, like visa bans or Export-Import Bank credit bans, with harsher measures. These might include:

1. Financial sanctions on principal executive officers 2. Bans on property transactions subject to US jurisdiction 3. Prohibitions on sanctioned financial institutions dealing in US debt 4. Denial of export licenses for goods or technology 5. Prohibiting loans from US financial institutions to sanctioned persons (which could have a knock- on effect for other countries’ financial institutions)

4 policybrief 5 - - - - 8 https:// Nate Nate . . https://www.defense https://www.foreignaf https://www.bloomberg.com/ ...... https://www.reuters.com/article/us-turkey-econo http://www.gmfus.org/publications/turkeys-s400-vs-f35-conundrum-and-its-deepening-strate ; and Nicholas Danforth, “Containing the US-Turkish Crisis after the S-400s,” German Marshall Fund of the United States, States, Fund of the United German Marshall S-400s,” the Crisis after the US-Turkish “Containing ; and Nicholas Danforth, https://www.tepav.org.tr/upload/files/1558620660-7.LOGBOOK_of_the_TURKISH_ECONOMY___Fourth_Log.pdf http://www.gmfus.org/publications/containing-us-turkish-crisis-after-s-400s Schenkkan, “Dealing with the New Turkey: Recommendations for US Policy after the Elections,” Freedom House policy brief, July 2018, Freedom House policy brief, the Elections,” after Policy for US Recommendations Turkey: the New “Dealing with Schenkkan, freedomhouse.org/report/special-reports/dealing-new-turkey-recommendations-us-policy-after-elections . (TEPAV), May 2019, May (TEPAV), 12, 2019, July Institute, Research Policy Foreign System,” S-400 Air Defense of Russia’s Purchase Turkey’s Sanctions and “U.S. Taylor, 7. Jarod https://www.fpri.org/article/2019/07/u-s-sanctions-and-turkeys-purchase-of-russias-s-400-air-defense-system/#.XSiMZfA32kc.twitter April 11, 2019, News, Defense S-400 Deal with Russia,” the from Could Suffer Industry Turkey’s “How Bekdil, Ege 8. Burak news.com/industry/2019/04/11/how-turkeys-industry-could-suffer-from-the-s-400-deal-with-russia/ 12, 2019, July Institute, Research Policy Foreign System,” S-400 Air Defense of Russia’s Purchase Turkey’s Sanctions and “U.S. Taylor, 9. Jarod https://www.fpri.org/article/2019/07/u-s-sanctions-and-turkeys-purchase-of-russias-s-400-air-defense-system/#.XSiMZfA32kc.twitter Fund of the United States, May 28, 2019, May States, Fund of the United gic-partnership-russia June 13, 2019, April 15, 2019, Reuters, in Nearly a Decade,” Highest to Jumps Unemployment 4. “Turkish my-unemployment/turkish-unemployment-jumps-to-highest-in-nearly-a-decade-idUSKCN1RR0K0 July 11, 2019, Bloomberg, Rules,” in Reserve Back On with Tweak Switch Credit Turn to “Turkey Koc, 5. Cagan news/articles/2019-07-11/turkey-weighs-new-reserve-rules-for-banks-to-boost-credit-growth Turkey of Foundation Research Policy How?” But Economic TARP, Turkish Economy: “Logbook of the Turkish Sak, Dalgin and Güven 6. Burak Endnotes 1. July 9, 2019, Affairs, Foreign Russia,” and Embraced States Its Back on the United Turned Turkey “Why Stein, 2. Aaron fairs.com/articles/turkey/2019-07-09/why-turkey-turned-its-back-united-states-and-embraced-russia German Marshall with Russia,” Partnership F35 Conundrum and Its Deepening Strategic S400 vs. “Turkey’s Şaban Kardaş, example, 3. See, for Turkey’s defense industry. Turkey relies on US export licenses for some of its defense articles, and denial of and articles, its defense some of for licenses export on US relies Turkey industry. defense Turkey’s the in April that News told Defense source A US diplomatic its projects. cripple rapidly licenses could export effects. indirect before could be $10 billion, sanctions from industry defense Turkish the to cost direct Inclusion of a few of these measures could greatly magnify the sanctions package into a major blow for for measures of these blow a major into of a few Inclusion magnify package the sanctions greatly could 1850 M Street NW, 11th Floor www.freedomhouse.org Freedom House is a nonprofit, nonpartisan Washington, DC 20036 facebook.com/FreedomHouseDC organization that supports democratic @freedomhouse change, monitors freedom, and advocates 111 John Street, Suite 810 for democracy and human rights. New York, NY 10038 202.296.5101 | [email protected]