Türkiye has been cozying up to Russia far more than the US would like. One suspects the reason the US has only started trying to lower the boom on Türkiye is that the US is overbusy on other sanctions fronts, such as restricting high-end chips and related technical know-how export to China, figuring out how to hurt Saudi Arabia for daring to defy the US by cutting oil production, planning to punish Iran over drones supposedly sold to Russia,1 and working out the details on its barmy Russian oil price cap.
Mind you, what the US might view as Türkiye economic provocations come as the US has been favoring Greece in long-festering Greece-Türkiye hostilities. From Turkey protests US, Greece over ‘violating non-military status’ of Aegean Greek islands in Al Monitor in September:
The US and Greek ambassadors to Turkey have been summoned to the Turkish Foreign Ministry in Ankara in a protest against the deployment of US-made armored military vehicles on two Aegean islands, in what Ankara describes as a violation of several international agreements.
In a protest note delivered to the Greek ambassador today, Ankara demanded Athens stop these violations, Turkey’s state-run Anadolu News Agency reported, citing the Turkish Foreign Ministry sources….
Ankara’s protest came after the Turkish military’s surveillance drones captured over the weekend Greece’s military landing ships carrying the armored vehicles en route to the Greek islands of Lesbos and Samos — both less than 5 nautical miles off the Turkish coast. Citing security sources, Anadolu said some of the deployed armored vehicles were donated to the Greek army by the United States. Ankara argues that military buildups on the islands are in violation of the non-military status of the islands under international treaties…
Ankara sees deepening defense cooperation between the United States, Greece and Cyprus as Washington’s departure from its traditional policy to stay neutral in the territorial dispute between the three countries in favor of the Greece-Cyprus bloc.
Washington, in turn, argues that its actions aim to counterbalance Russia in the region.
Türkiye recently entered into a wide-ranging economic pact with Russia, which included promoting tourism by having Türkiye banks accept Russia’s Mir card. Although the US put the kibosh on that particular element of cooperation, Türkiye and Russia are implementing alternate payment mechanisms that they expect to have ready to go by tourist season 2023.
The US escalation of threats against Türkiye is an evolving story but so far, Türkiye does not look very inclined to back down even after the Mir card incident. Despite the US view that a NATO member should not be consorting with an obvious yet undeclared NATO enemy, Türkiye continues to enter into more deals with Russia. The latest is agreeing to a Russian plan to locate a gas hub in Türkiye that would carry supplies from other gas producers and allow Türkiye to control the flows. It would also serve to disguise Russian origin gas, which would serve as a face saving device if Europe ever wakes up to the need to climb off its Russian energy sanctions cliff.
This week, the US got around to trying to put the screws on Türkiye. Bloomberg reported on Wednesday that:
US officials have held talks with their Turkish counterparts regarding compliance with financial sanctions imposed on Russia over its invasion of Ukraine, the latest move by the West to pressure Ankara into taking a harder line against Moscow.
A delegation led by Elizabeth Rosenberg, assistant secretary for terrorist financing and financial crimes at the US Treasury, met counterparts including officials from the Turkish Treasury and Finance Ministry and business groups during a trip to Ankara and Istanbul this week…
In a readout published after the visit, the US Treasury said “Rosenberg covered a range of topics, including the sanctions and export controls imposed on Russia by a broad coalition of over 30 countries, energy security, anti-money laundering policy, and countering the financing of terrorism.”
It said “these meetings affirmed the importance of close partnership between the United States and Turkey in addressing the risks caused by sanctions evasion and other illicit financial activities.”
Note that there is no evidence that Türkiye agreed to do anything different than what it is doing now. That doesn’t mean it won’t. My suspicion is that this is the sort of meeting where the US lectured Türkiye over its obligations per the US and Türkiye officials mainly listened, noncomityally.
Notice the timing. The Treasury visit happened early this week since the Treasury statement was issued Wednesday (as in at the very latest, the meetings concluded Wednesday so the statement could be issued on Wednesday US time). Erdogan, presumably knowing where these Treasury meetings were going, chose to eye-poke the US on Wednesday by re-iterating his interest in the gas hub scheme, leading to a quick hissy from State. Per Greek Reporter:
The U.S. expressed on Wednesday its opposition to the agreement announced by Turkey for the creation of a natural gas hub in cooperation with Russia.
Turkish President Tayyip Erdogan said on Wednesday that he had agreed with his Russian counterpart Vladimir Putin to form a natural gas hub in Turkey…
The U.S. State Department fired back.
“We have worked closely with our allies and partners to impose severe and unprecedented costs on Russia, including through sanctions, export controls, visa restrictions. We have urged Turkey and all of our allies and partners that no one should have become a safe haven for illicit Russian assets or transactions, and we will continue to make that case,” Vedant Patel, State Department’s principal deputy spokesperson said.
“And as it relates to the energy conversation, we have continued to urge our allies to take steps to diversify their energy sources, to reduce energy reliance on Russia”…..
Last month, on the sidelines of the Conference on Interaction and Confidence Building Measures in Asia summit in the Kazakh capital Astana, Erdogan held a closed-door meeting with Putin, who had proposed building a natural gas hub in Turkey.
Putin has floated the idea of exporting more gas via the TurkStream gas pipeline running beneath the Black Sea to Turkey, touting the country as the best route for redirecting gas supplies to the European Union after the Nord Stream pipeline leaks.
Erdogan previously said Russian and Turkish energy authorities would work together to designate the best location for the potential gas distribution center, adding that Turkey’s Thrace region, bordering Greece and Bulgaria, appeared to be the best spot.
And after the two-pronged US effort to get Türkiye back into line, more news came out of Türkiye’s defiance. First was a Bloomberg report that Türkiye has asked Russia to help Türkiye construct a new nuclear power plant, when the US, as the remarks from State show, the US is strong-arming its purported allies to buy less energy from Russia. From ekathimerini:
Turkey has asked Russia to construct a second nuclear plant on its territory, Bloomberg reported Thursday quoting anonymous sources.
Bloomberg said Turkish President Recep Tayyip Erdogan made the request during talks with his Russian counterpart Vladimir Putin last week in Kazakhstan.
Russian state-owned nuclear energy company Rosatom said Wednesday that talks are underway on a possible deal to build a new, four-reactor plant in the Black Sea town of Sinop. The company is already building Turkey’s first nuclear plant at Akkuyu, in southern Turkey.
And recall as Lambert pointed out in Links yesterday, the EU is in the process of planning to impose much stronger oil price cap sanctions than the US intended. Early ideas were to sanction tankers and prohibit insurance. But insures and tanker operators complained they weren’t in a position to police the shipments. So the outline from Treasury had the buyers (who could be readily punished by being kicked off dollar payment services) being responsible for not buying Russian oil at prices higher than the cap, and the shippers and insurers being able to rely on representations from the buyers. But then:
ICYMI. Europe’s latest sanctions on Russia have a WILD provision. If ANY tanker moves a Russian cargo outside of the price cap (assuming Europe adopts it), that ship will be barred from ALL future access to EU services (including insurance). https://t.co/dynLf2qXSu via @markets
— Oil Trading Europe (@AlaricN) October 19, 2022
Needless to say, Greek shipowners, who are the big kahunas in this business, are mighty upset so this provision may not survive.
But in the meantime, Türkiye looks to be ready to help Russia defy sanctions:
‼️🛢️🇹🇷💰🇷🇺Turkey can buy and transport Russian oil without the need for Western financing or insurance-Turkish Finance Minister Nureddin Nebati‼️
— AZ 🛰🌏🌍🌎 (@AZgeopolitics) October 21, 2022
And we had anticipated that Türkiye would support the Saudis (as in OPEC+) on the production cut dustup, although it’s not clear how forthcoming they have been about this view:
⚡️🇹🇷: Turkey disagrees with the US approach of threatening Saudi Arabia. The Turkish view is that global oil prices should be lowered through the removal of sanctions regimes.
— Baron of the Taiga (@baronitaigas) October 21, 2022
Türkiye’s location makes it the most important member of NATO, yet NATO and Europe regularly ignore legitimate Türkiye issues, and the EU has dissed Türkiye by rejecting its membership application (the Türkiye belief that it has to do with Türkiye being Muslim has merit).
Türkiye can also pressure Europe by dropping the ball on checking migrant movements. But on the other side of the ledger, the Türkiye economy is in an utter mess. But the US has been overplaying its hand on a lot of fronts. Assuming it can successfully browbeat Türkiye may prove to be a miscalculation.
1 Andrei Martyanov claims the Russian drones were made by a company in the Kalashnikov Concern; other contend the drones were developed independently and are similar due to having similar functional requirements.