(Bloomberg) -- The Trump administration called for “an immediate cease-fire” in Syria on Monday as it announced sanctions in response to the military offensive launched by Turkey last week.
Vice President Mike Pence said he would lead a delegation to Turkey at President Donald Trump’s request in an effort to stop the advance. Pence said the U.S. wanted the two sides to negotiate a long-term peace, but he didn’t call for Turkey to pull out of Syria.
Pressure also intensified on Turkey with an announcement by Volkswagen AG on Tuesday that it would delay a decision on giving the go-ahead for a 1.3 billion-euro ($1.4 billion) car plant, which the German carmaker linked to the political upheaval wrought by developments in Syria.
“President Trump made it very clear that the United States is going to continue to take actions against Turkey’s economy until they bring the violence to an end,” Pence said. “We want an immediate ceasefire and we want to begin negotiations between Turkey and Syrian defense forces.”
The penalties imposed by the administration late Monday fell short of what was demanded by U.S. lawmakers of both parties, highlighting the restraint the president has shown to his Turkish counterpart, Recep Tayyip Erdogan.
The lira added 0.8% against the dollar to 5.8854 as of 9:36 a.m. in Istanbul on relief that sanctions were less onerous than many investors had feared. The currency weakened about 4% this month amid speculation Washington would announce penalties that could hit Turkey’s financial system.
Trump’s order to sanction three members of Turkey’s cabinet and raise tariffs on steel imports from the country -- already at a 19-year low -- make for a milder punishment than expected. The administration’s language on how best to cease hostilities with Kurdish forces also offers Erdogan a way out without withdrawing his troops from northeast Syria.
The two leaders spoke before Trump signed an executive order imposing the sanctions on Monday, Pence said.
The announcement is an effort to contain the damage from Trump’s decision to stand aside if Turkey entered northern Syria, which essentially gave Erdogan a green light to carry out the operation. Erdogan says the offensive is necessary to push back Kurdish militants and resettle refugees, but the rapid advance into Syria has drawn international condemnation and accusations of war crimes.
The penalties would raise steel tariffs on Turkey to 50%, the level they were at before a reduction in May, Trump said in a statement. The U.S. would also halt negotiations over a pact aimed at raising bilateral trade to an annual $100 billion. The administration also sanctioned the Turkish ministers of defense, energy and the interior, U.S. Treasury Secretary Steven Mnuchin said.
Experts on sanctions say the administration could have imposed restrictions last week if they had wanted to, and that Trump’s talk of future sanctions is more messaging to satisfy frustrated lawmakers who may have a veto-proof majority to pass legislation and force the president’s hand.
Kaylin Minton, a spokeswoman for Representative Michael McCaul, a Texas Republican and the ranking member of the House Foreign Affairs Committee, said in a statement: “We appreciate the administration’s planned sanctions, but it does not go far enough to punish Turkey for its egregious offenses in Syria.” The statement added that steeper penalties will be pursued.
House Speaker Nancy Pelosi has been working with Senator Lindsey Graham, a South Carolina Republican and Trump ally, to pass legislation that would put harsh restrictions on the country.
“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” Trump said in the statement.
“If they knew what they wanted to do, they would have done it already,” said Brian O’Toole, a senior fellow at the Atlantic Council who previously worked in the Treasury Department’s sanctions unit. He called Trump’s announcement “weak” and expects Congress to pass tougher legislation.
Last year, Trump increased steel tariffs on Turkish imports and then cut them in May to 25%. Despite that reduction, imports from Turkey to the U.S. haven’t recovered. U.S. imports of Turkish steel touched 12,749 metric tons in August, down 88% from the same month a year ago, according to Census Bureau data. Turkey accounted for 1.1% of all U.S. steel imports so far this year.
Turkish data show exports of steel and related products to the U.S. stood at just over $120 million during the first eight months of the year, the lowest level since 2000.
Volkswagen’s decision, however, may deal a severe blow. The world’s biggest carmaker had established a Turkish unit in the western city of Manisa early October, paving the way to start making cars in Turkey.
“The decision on building a new plant was postponed by the board of management,” VW said Tuesday. “We’re closely monitoring the situation and are concerned about the current developments.”
Trump also said he would halt trade negotiations with Turkey, which Commerce Secretary Wilbur Ross announced in a speech in Ankara last month. The deal was to include the furniture, marble, autos and civil aviation industries.
Trump’s decision on troop withdrawal exposed American-allied Kurdish militias to attack, risking a resurgence of Islamic State and a slaughter of the Kurds. Kurdish forces that previously fought alongside the U.S. have warned they may no longer be able to secure camps and prisons holding Islamic State jihadists, including Europeans whose home countries don’t want them back.
Before the Trump administration’s announcement, Graham sought help from Pelosi to impose sanctions on Turkey. The pair was concerned Trump wouldn’t impose strong enough penalties.
“As we find ourselves in a situation where the president gave a green light to the Turks to bomb and effectively unleashed ISIS, we must have a stronger sanctions package than what the White House is suggesting,” Pelosi tweeted Monday.
Trump said the U.S. won’t tolerate the “indiscriminate targeting of civilians, destruction of civilian infrastructure, and targeting of ethnic or religious minorities.”
The president said “a small footprint” of U.S. forces will remain at Al-Tanf Garrison in southern Syria to fight Islamic State.
(Updates with Volkswagen’s announcement, more context on expected sanctions, data on steel trade.)
--With assistance from Joe Deaux, Mark Niquette, Nick Wadhams, Shawn Donnan, Elisabeth Behrmann, Taylan Bilgic and Onur Ant.
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