Washington: The US will take the unprecedented step of imposing sanctions on a Nato ally when Turkey receives a Russian missile defence system, according to a State Department official testifying before Congress.

The delivery of the S-400s will impair military cooperation between the US and Turkey and will damage relations between the countries more generally, Wess Mitchell, US Assistant Secretary of State for European and Eurasian Affairs, said Monday in testimony to the Senate.

The US has been clear that the “acquisition of S-400 will inevitably affect prospects for Turkish military-industrial cooperation with the US, including F-35,” Mitchell said, referring to fighter jets that Turkey has ordered from the US. “A decision on S-400 will qualitatively change the US-Turkish relationship in a way that would be very difficult to repair.”

The US Senate passed a bill last week calling for a freeze of arms sales to Turkey until assessment is made of military and diplomatic ties in light of its potential purchase of the Russian system. The bill also called for assessment of impacts on other US weapon systems and platforms operated and developed jointly with Turkey, including the F-35 Lightning II Joint Strike aircraft.

Technology transfer

Turkey has argued that the S-400s aren’t a threat to allies and it would prefer to meet its needs within the Nato network. President Recep Tayyip Erdogan has complained repeatedly that he was forced to seek alternatives after facing hurdles in obtaining weapons systems from the US and Europe under the conditions Turkey wanted, which included some local production and transfer of technology.

“It won’t be possible for that defence system to categorise allies as foes,” Foreign Minister Mevlut Cavusoglu said June 22, arguing that Nato-member Greece also bought a similar missile defence system from Russia in the past.

The purchase has added to a long list of issues that are straining ties between Turkey and the US, which claim the two largest armies in Nato. Since a failed coup attempt against Erdogan in 2016, Turkey has been pleading with the US to extradite Fethullah Gulen, an elderly cleric living in Pennsylvania who Turkey says was the putsch mastermind. The US, in turn, has been threatening consequences should Turkey not release Americans imprisoned in the aftermath of the coup, including a pastor and a Nasa scientist.

In Syria, the US has backed Syrian Kurds that the Turkish government considers an extension of a terrorist group. Investors in Turkey are also bracing for the possibility of a fine or sanctions against Turkiye Halk Bankasi AS, a state-run lender whose former deputy chief executive officer was convicted in a New York court of participating in a scheme to help evade sanctions on Iran.

Halkbank trades at 0.35 times its book value, the lowest ever. The average for the Turkish banking system is about twice that. In 2007, it traded at a valuation of 10 times its book value.