A long-standing discussion on Turkey's S-400 surface to air missile system ('S-400') procurement from the Russia is again a topical issue in Turkish-US relations while parties are continuing to negotiate. Several NATO Allies, notably the United States, have been nudging Turkey many times through hectoring speeches although the arguments were not entirely based on legal perspective. Considering spoken countermeasures against the Turkey, such as sanctions, it is easy to say that the effect on the ongoing F-35 Joint Strike Fighter Program ('the F-35 Program') would be somehow legally complicated. In our article we highlight some issues from legal perspective apart from political discussions.
Public Procurement Policy of NATO
NATO Support and Procurement Agency ('NSPA') is in charge of obtaining required goods and services for NATO. In order to become a contractor, one must be located in one of the NSPO nations1. However, this obligation only applies to the procurement of the Organization and no NATO policy binds any member state to procure its defense goods and services for they requirements. Supporting to this legal fact, NATO Secretary-General Jen Stoltenberg, addressing the political discussion between Turkey and the U.S has recently expressed that acquiring equipment is a national decision2.
Defense-related goods and services are becoming more complex day by day. Integration of a defense product to the defense system is one of the issues that must be dealt properly and in long estimated perspective. Additionally, the protection of intellectual property rights regarding involved technology and the ownership rights seem to be a potential problem as well. Therefore, the lack of a similar NATO level policy on the procurement of defense-related goods and services paves the way for the possibility of conflicting interests between allies.
Discussions Through Countering America's Adversaries Through Sanctions Act
On 2 August 2017, the President of the United States has signed a federal law, Countering America's Adversaries Through Sanctions Act ('the CAATSA') which imposes sanctions on Iran, North Korea, and Russia. Pursuant to 231st Section of the CAATSA, the President shall impose certain sanctions to a person (individual or entity) knowingly engages in a significant 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. President Trump also issued the Executive Order no. 13849 which authorizes the Secretary of State in consultation with the Secretary of the Treasury on the implementation of certain sanctions set forth in the CAATSA.
The President may choose more than five of possible sanctions from a menu of twelve sanctions regulated under 235th Section of the CAATSA. The menu of sanctions is broad in scope and appropriate ones shall be decided by the United States in proportion to the situation. These sanctions include but not limited to prohibitions concerning property transactions, export license restrictions, export-import bank assistance restrictions, debt and equity restrictions, visa ramifications for corporate officers, and United States government procurement prohibitions.
A major transfer of funds to the Russian defense sector is regarded as a significant transaction. Members of Congress have publicly said that any transfer of an S-400 to anybody would constitute a significant transaction3 that may lead to questions of where Turkey would stand against possible sanctions for procurement of S-400 missile system.
The first date of imposing sanctions by the United States was January 29, 2018. The United States has already imposed several sanctions on the Chinese entity Equipment Development Department ('EDD') and its director, Li Shangfu, following their transaction of Su-35 combat aircraft and S-400 missile system related equipment4. The implied sanctions were the denial of export licenses, prohibitions on foreign exchange transactions under United States jurisdiction, prohibitions on transactions with the United States financial system, designation on the List of Specially Designated Nationals and Blocked Persons, denial of a visa for EDD's director, Li Shangfu.
According to the US Department of Defense, Turkey's acquisition of S-400 may have a negative impact on Turkish participation in the F-35 Program5. To date, the United States only postponed delivery of F-35s to Turkey. However, Turkey is not only a purchaser of F-35s. Turkey is one of the fourteen consortium partners of the F-35 Program for more than a decade6. Turkish defense industry contributes to the project with 8 different entities, including some of whom are the sole source7. Cutting of Turkey from the program may have troubling consequences for both parties and much more to the future of the F-35 Program
Although the CAATSA enables the US Government to impose sanctions on countries that engage in a significant transaction with the Russian defense sector, its implication shall not be regarded retrospective. According to Section 1-c of the Executive Order no. 13849 'prohibitions apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order.' Implying sanctions on Turkey and Turkish companies that effects their long-standing business would impair legal certainty. The rights and items granted by Turkish companies before any possible sanction decision date may further result with the claims of ownership rights and further from the legal perspective.
1 NSPO nations are counted as: Albania, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Turkey, United Kingdom, and the United States of America, https://www.nspa.nato.int/en/organization/procurement/procurement.htm , (accessed: 13.3.2019)
2 Jen Stoltenberg's remarks on the topic may be reached by following links: https://www.nato.int/cps/en/natohq/opinions_152629.htm?selectedLocale=en, https://www.nato.int/cps/en/natohq/opinions_158078.htm?selectedLocale=en , https://www.nato.int/cps/en/natohq/opinions_163394.htm?selectedLocale=en (accessed: 13.3.2019)
3 U.S. Department of State, Press Release on Previewing Sanctions Under Section 231 of the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA), 20 September 2018, https://www.state.gov/r/pa/prs/ps/2018/09/286083.htm
4 U.S. Department of State, Fact Sheet on CAATSA Section 231: Addition of 33 Entities and Individuals to the List of Specified Persons and Imposition of Sanctions on the Equipment Development Department, 20 September 2018, https://www.state.gov/r/pa/prs/ps/2018/09/286077.htm
5 Department of Defense Office of Prepublication and Security Review, FY19 NDAA Sec 1282 Report: Status of the U.S. Relationship with the Republic of Turkey, 26 November 2018
6 Related information can be accessed via: https://f35.com/global/participation/turkey
7 For a more detailed information please visit: https://f35.com/global/participation/turkey-industrial-participation
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.