Sanctions could impact Turkey’s economic stability, U.S. Congress report says
Recent U.S. sanctions on Turkey could impact the country’s economic stability given the venerability of its currency, a new report published by the Congressional Research Service (CRS) said on Wednesday.
The report discusses the possible impact on Turkey if restrictions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) are used to disrupt the flow of foreign capital needed to cover the large dollar-denominated debt of the country’s financial sector.
On Monday, Washington used CAATSA to impose five sanctions on Ankara, including a prohibition on granting specific U.S. export licenses for certain military goods and technology, as well as full sanctions and visa restrictions on four officials from Turkey’s defence procurement agency, including chairman Ismail Demir.
The report, written by CRS analysts Jim Zanotti and Clayton Thomas, highlights that the outing administration under President Donald Trump “did not opt to impose sanctions that could have more directly targeted Turkey’s financial system,” and that the initial impact on the country’s currency has therefore been negligible.
The CRS cited several factors in determining the impact of the sanctions on Turkey. Turkish domestic developments, in which the sanctions are used by Turkish President Recep Tayyip Erdoğan “to increase his popularity by attributing Turkey’s domestic challenges to U.S. sanctions,” is cited as the first factor, while Turkish-Russia dynamic is the second of the five.
How Washington and Ankara address Turkey’s decision to purchase the Russian-made S-400 missile defence system, which initially triggered a U.S. response under CAATSA, may determine how long sanctions remain in force, and define Turkey’s relations with the United States and other countries for years to come, the report concluded.