U.S. warns Turkey on exports seen to boost Russia's war effort

[February 04, 2023]  By Jonathan Spicer

ISTANBUL (Reuters) -The United States warned Turkey in recent days about the export to Russia of chemicals, microchips and other products that can be used in Moscow's war effort in Ukraine, and it could move to punish Turkish companies or banks contravening sanctions.

Brian Nelson, the U.S. Treasury Department's top sanctions official, visited Turkish government and private sector officials on Thursday and Friday to urge more cooperation in disrupting the flow of such goods.

In a speech to bankers, Nelson said a marked year-long rise in exports to Russia leaves Turkish entities "particularly vulnerable to reputational and sanctions risks", or lost access to G7 markets.

They should "take extra precaution to avoid transactions related to potential dual-use technology transfers that could be used by the Russian military-industrial complex," he said in a copy of the speech issued by the Treasury.

In the meetings in Ankara and Istanbul, Nelson and a delegation highlighted tens of millions of dollars of exports to Russia that raised concerns, according to a senior U.S. official who requested anonymity.

"There is no surprise...that Russia is actively looking to leverage the historic economic ties it has in Turkey," the official said. "The question is what is the Turkish response going to be."

NATO member Ankara opposes the sweeping sanctions on Russia on principle but says they will not be circumvented in Turkey, urging the West to provide any evidence.

Western nations applied the export controls and sanctions after Moscow's invasion nearly a year ago. Yet supply channels have remained open from Hong Kong, Turkey and other trading hubs.

Citing Russian customs records, Reuters reported in December that at least $2.6 billion of computer and other electronic components flowed into Russia in the seven months to Oct. 31. At least $777 million of these products were made by Western firms whose chips have been found in Russian weapons systems.

PRESSURE

Ankara has balanced its good ties with both Moscow and Kyiv throughout the war, held early talks between the sides and also helped broker a deal for grain shipments from Ukraine.

The trip by Nelson, the Treasury's undersecretary for terrorism and financial intelligence, is the latest to Turkey by senior U.S. officials aiming to ramp up pressure on Ankara to ensure enforcement of U.S. curbs on Russia.

The pressure has brought some changes.

Turkey's largest ground-service provider, Havas, told Russian and Belarusian airlines it may stop providing parts, fuel and other services to their U.S.-origin aircraft, in line with Western bans, Reuters reported on Friday citing a Jan. 31 letter from the company.

In September, five Turkish banks suspended use of the Russian Mir payment system after the U.S. Treasury targeted the head of the system's operator with new sanctions and warned those helping Moscow against skirting them.

Nelson urged the Turkish bankers to conduct enhanced due diligence on Russian-related transactions, and noted in the speech that Russian oligarchs continue to buy property and dock yachts in Turkey.

In separate talks with Turkish firms, Nelson "urgently" flagged the way Russia is believed to be dodging Western controls to re-supply plastics, rubber and semi-conductors found in exported goods and used by the military, the official said.
 

The person added that after taking steps last year to press Russia to end the war, the U.S. focus is now "on evasion and particularly evasion in third countries that we are seeing".

Nelson delivered similar messages in the United Arab Emirates and Oman this week, the Treasury said.

(Reporting by Jonathan SpicerEditing by Frances Kerry)

[© 2023 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.