Tougher measures against Turkey are looming after US sanctions more Turkish firms over links to Russia

Abdullah Bozkurt/Stockholm

The recent US sanctions on additional Turkish companies for their involvement in aiding and abetting the Russian war campaign in Ukraine mark the second warning shot aimed at the government of President Recep Tayyip Erdoğan. This action by the US could potentially signal the impending imposition of even more severe sanctions that may significantly impact the Turkish private sector and indirectly affect the already stressed Turkish economy, posing serious challenges for Erdoğan.

The initial round of sanctions was announced in April, just over a year after Russia launched its invasion of Ukrainian territory. These sanctions primarily targeted Russians who had established shell companies in Turkey to circumvent Western sanctions. The decision by the Erdoğan government to refrain from imposing sanctions on Russia and openly welcome Russian business and investment encouraged Russians to leverage the Turkish economy and financing to acquire essential materials for the Russian defense industry.

In the second round the US government targeted Turks who assisted Russians in evading sanctions. However, the business volume turnover, and past activities of the designated companies do not indicate significant involvement in trade and commercial activities. This implies that the US wanted to convey a message of seriousness to Turkey but nevertheless refrained from pursuing major players in Turkish industry, including some closely aligned with the Erdoğan government.

The September action followed repeated warnings from US officials, both in private and public, urging Turkey not to undermine Western sanctions against Russia and to cease aiding and abetting Russian military efforts. If the Erdoğan government does not heed these warnings, more severe and damaging sanctions on Turkish companies with a larger economic footprint could be in the pipeline. Such designations could have a significant and adverse ripple effect on the overall Turkish economy.

“Russia continues to rely on third-country entities to keep importing much-needed dual-use goods to sustain its unprovoked war of aggression on Ukraine. The US Department of the Treasury has repeatedly raised the issue of the shipment or transshipment of dual-use goods to Russia with the Government of Türkiye and the Turkish private sector,” the Treasury’s September 14, 2023 statement said.

Trade registry records for Turkish company Denkar:

One of the sanctioned companies is Denkar Gemi İnşa Anonim Şirketi, formerly known as Denkar Denizcilik, which provides ship repair and maintenance services. It can be considered a relatively new entrant in the maritime industry as it was established on January 19, 2018 by a young Turkish businessman named Fikri Taha Mete. He brought in two other Turks, his university friends, Halil İbrahim Çavuşoğlu and Yunus Çağatay Akça, as partners.

Interestingly, Denkar had close ties to Ukraine’s Istanbul consulate before the Russian invasion last year. In fact, Denkar board member Çavuşoğlu and the consulate jointly sponsored an art exhibition in April 2019.

The company’s establishment was facilitated by connections and experience provided by Rıza Tuptaş, a veteran in the maritime industry. The company owners appear to align with the Islamist/nationalist agenda, which is the prevailing ideology of the ruling Justice and Development Party (AKP). This may explain how a new startup quickly expanded with political connections.

Trade registry records for Turkish firm İD Gemi Acenteliği Ticaret Limited Şirketi:

Another Turkish company designated by the US is İD Gemi Acenteliği Ticaret Limited Şirketi, formerly known as Global Dunya Gemi İşletmeciliği ve Acenteliği Ticaret Limited Şirketi. It was founded by Turkish national İlker Doğruyol on August 8, 2012. Headquartered in Tuzla, Istanbul, the company primarily operates as a brokerage firm and offers a wide range of services to maritime companies. These services include piloting and towing ships through the Dardanelles and Bosporus straits, providing spare parts, waste disposal, accommodation and crew transfers.

Its clients included many Western companies operating in the maritime sector, particularly in Norway and Germany. The designation could significantly harm its business relationships with established Western clients as they would likely want to avoid any association with a company that has been sanctioned by the US.

In an interview he gave to a news platform on December 15, 2022 Doğruyol openly admitted that the Russia-Ukraine war had significantly boosted his business. “With this war, many things have indeed changed. The Russians have started shifting towards this side [Turkey]. Now, Russian ships that used to go elsewhere can’t do so anymore. Since their trade routes have also been restricted, they are coming to Turkey. Turkey is really fortunate in this regard,” he said.

Trade registry records for Turkish company Margiana:

The third sanctioned Turkish company is a trading firm named Margiana İnşaat Dış Ticaret Limited Şirketi, which was established on October 10, 2019, by Turkish national Murat Türkmen and Turkmenistan national Kerim Durdyyev. In May 2023 Durdyyev sold his shares to Türkmen, making him the sole owner of the company. Türkmen expressed surprise to the sanction designation. He admitted to brokering a deal for Russians to obtain engine parts but claimed that the deal fell apart due to non-payment.

However, the US accused Margiana of making numerous shipments to Russian-based entities, namely Limited Liability Company SMT-iLogic and Saturn EK OOO, both of which were sanctioned on May 19, 2023 and July 20, 2023, respectively. According to the US Treasury, SMT-iLogic is known to be part of the supply chain for producing Russian military UAVs used in Russia’s war on Ukraine.

“Margiana’s shipments to SMT-iLogic and Saturn EK have included High Priority Items of the kind recovered in multiple Russian weapons systems used against Ukraine, including the Kalibr cruise missile, the Kh-101 cruise missile, and the Orlan-10 UAV,” the US Treasury said.

The two remaining Turkish firms appear to resemble shell companies and were likely established for specific purposes following the Russian invasion of Ukraine in February 2022. One of them is the Turkish foreign trade company CTL Diş Ticaret Limited Şirketi, which was founded by Pavel Pertsov, a Russian national, in Istanbul’s Beşiktaş district on March 30, 2022. This company has connections to Limited Liability Company Logistic International Servis, which has also been designated by the US Treasury.

Trade registry records for Turkish firm CTL Diş Ticaret Limited Şirketi:

The other company is Demirci Bilişim Ticaret Sanayi Limited Şirketi, a trading firm established by Turkish national Asam Demirci on March 17, 2022 in the city of Alanya, located in the Mediterranean resort province of Antalya. This company has exported sensors and tools used for measurement to Russia.

In the first round of sanctions announced by the US Treasury on April 12, 2023, the focus was primarily on Russians operating in Turkey rather than Turkish individuals or entities. One of these entities is Artvin Denizcilik ve Ticaret Limited Şirketi, a maritime firm established in Istanbul on June 3, 2022 by Belgian national Vladimir Viktorovitsj Kasyanenko, who listed his address as Monaco.

A month later, Russian national Vadimir Sobolev and Bulgarian national Dimo Mladenov Marinov joined the company as managers. On April 26, 2023 another Russian national, Nikolai Liubeznov, was brought in as a new shareholder and appointed as the sole representative of the company.

Marinov was also the sole owner of a separate Turkish company called Salda Management Denizcilik ve Ticaret Limited Şirketi, another maritime firm established in Istanbul on September 8, 2022. He subsequently sold the company to Liubeznov on April 26, 2023. Salda Management Denizcilik ve Ticaret Limited Şirketi was also included in the US sanctions under Russian sanctions.

Trade registry records for Turkish company Artvin Denizcilik ve Ticaret Limited Şirketi:

Trade registry records for Turkish company Salda Management Denizcilik ve Ticaret Limited Şirketi:

Another trade and transportation firm, Smart Trading Taşımacılık Sanayi ve Ticaret Limited Şirketi, also found itself under sanctions. It was established in Istanbul on March 17, 2022 by Russian national Grigory Grigoryev. In November 2022 the company increased its capital and expanded its operations.

Trade registry records for Turkish company Smart Trading Taşımacılık Sanayi ve Ticaret Limited Şirketi:

On March 30, 2022 a Turkish trading company specializing in IT products, Azu International Bilgi Teknolojileri ve Dış Ticaret Limited Şirketi, was established by two Turkish nationals, Hüma Gülüm Ulucan and Gökturk Ağvaz. However, on December 2, 2022 Ağvaz sold his shares to the other partner, making Ulucan the sole owner. Subsequently, on February 8, 2023, the company initiated dissolution procedures and finalized its dissolution in June 2023.

The rapid closure of the company followed a Reuters report that identified the company and Ağvaz as having exported millions of dollars’ worth of electronic components to Russia, including chips manufactured by US companies. Ağvaz, based in Germany, utilized Smart Impex GmbH, his wholesale IT business firm in Germany, to step in and fulfill the demand left by Western suppliers who had suspended their business dealings with Moscow.

Trade registry records for Turkish company Azu International Bilgi Teknolojileri ve Dış Ticaret Limited Şirketi: 

A similar pattern of behavior was observed in another Turkish company established after the Russian invasion of Ukraine, which was quickly abandoned following an exposé. The company, Dexias Endüstriyel Ürünler ve Ticaret Limited Şirketi, operated as a trading firm and was established by Russian national Alim Firov on July 20, 2022. Nearly a year later, the company suspended its operations and officially dissolved, according to trade registry records. This closure followed its sanctioning by the US government in April 2023.

Trade registry records for Turkish company Dexias Endüstriyel Ürünler ve Ticaret Limited Şirketi: 

Perhaps the most significant action taken by the US in Turkey occurred on August 2, 2022, when the US Treasury sanctioned MMK Metalurji Sanayi Ve Liman Işletmeciliği A.Ş., a Turkish steel manufacturer that operates and owns two steel plants in Turkey along with a seaport located in the Turkish province of Hatay. The company is owned by Russians and managed by Russians, some of whom have acquired Turkish citizenship. Despite the sanctions, the company continues to operate as a substantial enterprise.

While the US has, for now, imposed sanctions on approximately a dozen Turkish firms, a larger list of Turkish companies compiled by Ukraine, aimed at naming and shaming those entities that support the Russian economy and subsidize the war campaign, suggests that more Turkish companies could be targeted by the US and its European allies in the future.

According to the War and Sanctions website project, which is supported by Ukraine’s Foreign Ministry and the National Agency on Corruption Prevention, a major Turkish industrial firm, Şişecam Group, known as a global leader in glass production, is listed among the International Sponsors of War. This designation implies that Şişecam indirectly contributes to or assists in Russia’s war efforts. The company operates in 13 countries, including Russia, and has a presence in over 150 countries. It is worth noting that Şişecam has not yet faced sanctions from the US or the EU.

Turkey, a country that chose not to participate in Western sanctions on Russia, is a key partner Moscow relies on to mitigate the impact of these sanctions. In September 2022 Sergey Cheremin, minister of the Moscow government and head of the Department for Foreign Economic Activity and International Relations, visited Turkey and participated in a business forum organized by the Homeland Party (Vatan Partisi), a neo-nationalist fringe party that has been in alliance with the Erdoğan government for the past decade.

The meeting, themed “Golden Opportunities,” was financially supported by Astaş Holding, a construction and property development company led by Vedat Aşcı, a German national of Turkish origin. The event took place at the luxurious Mandarin Hotel, which is owned by the holding.

Notable companies in attendance included Mazhar Zorlu Holding, the Kalyon Group, the Ciner Group, Onur Air, Roketsan, Uçak Kardeşler, Bozankaya, Göksel Paslanmaz, Özdilek Holding, Altınbaş Holding along with many others. These companies represented a diverse range of industries, including automation, railway, food, textiles, pharmaceuticals, finance, precious metals, construction, energy, media, tourism, defense, IT, aviation and iron and steel.

Some of those who attended the event may find themselves subject to sanctions in the future if their trade ties are found to have contributed to funding the Russian war machinery. While Turkish businesspeople are seeking opportunities to profit by filling the void left by Western companies, they run the risk of losing more money if they end up being red-flagged in potential future sanctions imposed by the US and its allies.

List of Turks who attended a September 2022 business forum in Istanbul at which Sergey Cheremin, minister of the Moscow government and head of the Department for Foreign Economic Activity and International Relations, was a key guest: