While not explicitly talking about the late 19th century nursery rhyme or Ella Fitzgerald’s 1938 recording, the idea certainly rolls into what export compliance professionals need to deal with to ensure their specific business units are complying with the ever-changing DDTC /EAR regulations.
Effective December 14, 2020, after almost a year and half of failed discussions with the Turkish government concerning the acquisition of Russian manufactured aircraft, Section 231 of the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA 231”) was imposed upon the Turkish Presidency of Defense Industries (SSB) and the following individuals:
- Savunma Sanayii Baskanligi (“SSB”),
- Ismail Demir (President),
- Faruk Yigit (Vice President),
- Serhat Genecoglu (Head of Air Defense and Space Dept.),
- Mustafa Alper Deniz (Program Manager of Aire Defense Systems).
Based on the background of the Turkey’s actions, we find that on July 12, 2019, the government of Turkey decided to take delivery of the Russian manufactured S-400 surface-to-missile system under a contract that the government committed to with the Russian defense sectors during the summer of 2017. The government of Turkey is believed to have knowingly completed a transaction with a person that is part of or operates for or on behalf of the defense or intelligence sectors of the Government of the Russian Federation.
The implementations of the sanctions should not be a big surprise to the compliance community as they have been percolating since the contract was signed in 2017, particularly since Turkey has been viewed as a NATO ally. The Russian S-400 Defense system is believed to be able to bring down F-35 jets, which are used by many of our NATO allies. With the implementation of the contract, the U.S. government believes the Turkish government knowingly crossed the line. It should also be noted the Department of State affirmed the sanctions are not intended to “undermine the military capabilities or combat readiness of Turkey or any other U.S. ally or partners, but rather to impose costs on Russia in response to its wide range of malign activities.”
As a result, the U.S. Government has issued the following sanctions from the CAASTA Section 235 under Executive Order (EO) 13849 against SSB:
- A prohibition on granting specific U. S. export licenses or authorizations for any goods or technology transferred to SSB (Section 235(a)(2));
- A prohibition on loans or credits by U.S. financial institutions to SSB totaling more than $10 million in any 12-month period (Section 235(a)(3);
- A ban on U.S. Export-Import Bank assistance for exports to SSB (Section 235(a)(1);
- A requirement for the United States to oppose loans benefitting SSB by international financial institutions (Sections 235(a)(4); and
- Imposition of full blocking sanctions and visa restrictions (Sections 235(a)(7), (8), (9), (11), and (12) for all the persons listed above.
Effective immediately the Directorate of Defense Trade Controls (DDTC) will not approve any license or authorization to export or re-export defense articles, which includes technical data or defense services, where SSB is listed as a party to the transaction. The denial further extends to amendments of previously approved licenses and agreements, as well as licenses in furtherance of previously approved agreements.
However, the prohibition of license authorizations does not affect subsidiaries of SSB but rather the agency will take the position of a case-by-case review, which includes foreign policy and national security, where they are named as a party to a transaction.
As with all things in compliance, it pays to understand who your customer is, what the scope of the entire transaction is, who else could be involved, how your product will be used, and where it is destined.
If you need assistance in navigating export regulations regarding Turkey or any other country, please contact Export Solutions for a free consultation.
Beverly Demma is a Sr. Consultant for Export Solutions -- a full-service consulting firm specializing in U.S. import and export regulations.