As Prepared for Delivery
Thank you for taking the time to speak with me today. While it may not have been immediately apparent to many maritime sectors the need to focus on sanctions compliance, I know many of your companies have unfortunately had to focus on this for a number of years. Türkiye has a central role in the international maritime sector, and I appreciate the opportunity to hear from you directly.
I understand compliance is a difficult business, particularly for Turkish maritime companies, given your geography and trade relationships. However, such efforts remain critical to protecting the international financial system from a host of illicit actors, including Russia.
I am joined by the Director of OFAC, Brad Smith, and we look forward to a productive dialogue. Feel free to ask questions as well.
Our cooperation is critical because we are concerned by Russia’s ongoing attempts to acquire and move the goods and funds it needs to supply its war against Ukraine.
We are concerned that U.S. sanctioned Russian vessels continue to dock and receive services at Turkish ports. We are making every effort to provide information to be effective but the commitment to share information and work together needs to go both ways.
I should be clear that U.S. policy has sought to balance the needs of everyday citizens and use sanctions in very clear targeted ways. We know that Russia still produces some exports that are critical for many countries, and our government has done everything possible to ensure continued flow of critical goods, while limiting dangerous or illicit Russian activity in certain areas.
The Russian vessels that are sanctioned have been singled out because of their connections to the Russian government and key parts of Russian state-owned enterprises. Specifically, in September and October, we yet again saw an uptick of sanctioned Russian vessels at Turkish ports.
These vessels were designated for their connections to transporting stolen grain, transporting weapons for the Russian Government, and performing services for Russia’s Ministry of Defense.
Servicing these vessels carries reputational risk to specific companies and the Turkish maritime sector writ large, as demonstrated by our September 14 designation of Denkar Ship Construction for providing ship repair to sanctioned Russian vessels. International press is already beginning to publish stories about the Turkish maritime sector.
I am here to advise you that in the coming weeks, Treasury will begin delivering notification letters to some Turkish service providers who continue to provide services to sanctioned vessels. Such notification can be a precursor action to a possible sanctions action.
Providing these services also carries serious safety and environmental risks. Servicers engaging sanctioned Russian vessels need to seriously ask themselves, “do you trust a Russian insurance company, backed only by the Russian government, will pay out to clean up an accident caused by a poorly maintained, old vessel?” I don’t.
Now let me say a few words on the price cap.
The price cap policy expressly allows G7 and EU firms to provide services related to the maritime transport of Russian oil when it is sold at or below a cap. These services firms face grave risks if they provide services related to oil that is sold above the cap.
Because the United States, the European Union, and our other Coalition partners have agreed to phase out Russian oil, the direct beneficiaries of the price cap are emerging markets and developing countries.
If Türkiye or companies in Türkiye want to deal with Russian oil while relying on Coalition service providers, they should exercise necessary due diligence to ensure they are doing so in compliance with the price cap.
We continue to focus on the enforcement of the price cap, as demonstrated by the U.S. sanctions on October 12 and November 16, and UK sanctions in early November. These targeted actors that are supporting evasion of our sanctions against Russian energy and deceiving our service providers. Specifically related to Turkiye, on October 12 we designated Ice Pearl Navigation, a Turkish company, which transported oil priced above $80 per barrel on its its vessel, the Yasa Golden Bosphorus. Treasury will not hesitate to continue to take actions to enforce the price cap.
For Türkiye, shipments of Russian oil do pass through your ports, and it is important that each servicer receive and retain relevant documentation to ensure oil was purchased at or below the cap if the transaction involves Price Cap Coalition service providers.
We have seen evidence that some shipping companies and vessels are establishing front companies in other countries in order to circumvent the price cap policy. It is important for your Free Trade Zone licensing authorities to remain vigilant, so they don’t become evasion fronts for Russia.
Across our jurisdictions, Price Cap Coalition authorities have been consistent in emphasizing that we will use all available tools to hold bad actors accountable when they deceive our businesses and service providers, including when they violate our rules or cause Price Cap Coalition service providers to do so unknowingly.
In sum, I urge your companies to vigilantly work to ensure sanctioned actors and sectors do not benefit from your services. Such vigilance will ensure the professional reputation of the Turkish maritime sector and that of your companies.
I am happy to open the floor for questions and conversation.
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