After repeated warnings over the 18 months of the war in Ukraine, the US finally followed through last week and sanctioned several Turkish entities for helping supply and support the Russian military.
The US Treasury designated Demirci IT Trade, which sent sensors and gauges to Russia, and Margiana Construction Foreign Trade, for sending hundreds of shipments of key items for Russian weapons systems like those used in drones and cruise missiles. It also sanctioned Denkar Ship Construction and ID Ship Agency and its owner, Ilker Dogruyol, for repairing ships linked to Russia’s military and shipping western-built electric components to Russia.
Fortunately, the designations did not target any government-linked entities or firms favoured by the governing Justice and Development Party’s (AKP) inner circle. With President Recep Tayyip Erdogan visiting New York this week for the UN General Assembly, that might have led to some awkward moments.
Still, the West’s autumn mood on Russia and Turkey is not exactly festive: Ankara continues to hold off on final approval for Sweden’s Nato bid, perhaps waiting for its parliament to reconvene next month; the UK recently sanctioned two Turkish firms for supplying microelectronics to the Russian military; Ukraine’s summer offensive has disappointed, despite growing US and Nato backing; and last week, a top western outlet reported that Russia has so successfully evaded sanctions that it’s now making twice as many shells and tanks as it did before the war.
Moscow is thought to be producing more ammunition than the US and EU combined, after reportedly cutting costs by sacrificing safety and quality. It’s now able to produce an artillery round for about one-tenth the cost of a US round. Of course, Russia has been getting help from its friends – and Turkey is not the only US ally among them.
Last year, Armenia imported five times more chips and processors from the US than in 2021, and twice as many from the EU, according to the US Bureau of Industry and Security. Nearly all of these products (97 per cent) were then shipped to Russia. Armenia is a longtime ally of Russia. Yet rather than sanction Armenian businesses, the US military held joint exercises with the Armenian military last week.
Soon after the start of the war in Ukraine, the number of Greek-owned oil tankers turning up in Russian ports increased sharply. Unable to sell in the West due to sanctions, the Greek vessels are instead taking the oil to Asia. It’s technically legal, as per the sanctions, but it seems to run counter to the EU and Nato stance of backing Ukraine, particularly as Russian oil sales have been crucial to boosting its economy and military production.
Many Greek-flagged ships, as well as some Turkish, are also thought to be part of a ghost fleet that hides its movements from western radars to sell Russian oil at higher prices on the dark market. The EU sought to crack down on this with its June sanctions package. Yet after Ukraine put five Greek shipping firms on the list, Athens blocked the move until its businesses were removed. Greek shipowners have also discovered an even more lucrative strategy: selling ageing tankers to shady buyers linked to Russia. Early this year, the industry publication Trade Winds described it as the Great Greek Tanker Sale.
Yet as with Armenia, the US seems to be rewarding rather than punishing Greece. A 2021 deal gave the US access to five additional military bases in Greece. The US has since significantly expanded its military presence in the Thracian port of Alexandroupoli. This has only increased since the start of the Ukraine war, with record totals of US military equipment passing through. British, French, Italian and Nato shipments have also been reported in this emerging anchor point for western militaries. Last month, the US Congress proposed the opening of a new military base in the Greek Aegean, in addition to its base on Crete.
Finally, Cyprus has long been a haven for wealthy Russians and several oligarchs are thought to have used the Eastern Mediterranean island’s banking system to circumvent sanctions. More than a dozen Cypriot businesses and nationals were part of an April round of US and UK sanctions. But Washington also kindly gave Cypriot authorities detailed guidelines for prosecuting domestic sanctions evaders and, last year, lifted a decades-old embargo on arms sales to Cyprus.
All of which seems to suggest a double standard, with the US treating one Nato ally – Turkey – harshly for possible evasions of Russian sanctions while handling its other allies with kid gloves for similar offences. Of course, it should be said that since the start of the Ukraine war, Turkey has marched to its own beat.
Ankara has largely succeeded in balancing Nato-member support for Ukraine with deepening economic ties to Russia. Turkey’s state banks last year suspended transactions through Russia’s Mir payment system, for instance, even as Turkish trade with Russia doubled and Ankara brokered a crucial deal for shipping grain.
The new US sanctions are probably meant to signal that Ankara has gone too far. Russian businesses have launched about 2,000 companies in Turkey since early 2022, according to analyst Michael Tanchum. Russian transport operator Fesco has added new ships and ports to a route transporting industrial goods and electronics to and from Turkey. Turkish firms are thought to be providing electronics to help maintain Russia’s ageing commercial airlines fleet.
Back in New York, the Turkish leader is set to meet Greek Prime Minister Kyriakos Mitsotakis on Wednesday, the first meeting between the two since Turkish Foreign Minister Hakan Fidan hailed a new era in Turkey-Greece ties early this month.
In June, Mr Erdogan expressed concerns that the growing US military presence in Greece is not aimed at Russia, but Turkey. He might now ask his counterpart how he has been able to transform apparent sanctions evasions into military carrots, rather than an economic stick.
