The European Investment Bank (EIB) has frozen any new lending in Turkey linked to the government until at least the end of the year while it carries out a strategy review.
The move is part of a European Union decision earlier this month to symbolically punish Turkey over what it calls “illegal” drilling for oil and gas off Cyprus in the eastern Mediterranean.
The EIB, which is Turkey’s biggest single lender, has spent between Euros 0.4 billion and Euros 2.2 billion a year in the country over the last three years. Nothing has yet been invested so far in 2019.
The freeze is not currently expected to affect private sector projects and the bank could still sign around Euros 350 million worth of deals before the end of the year if it gets the green light from EU finance ministers on the EIB board.
A review of the Bank’s strategic orientations of its lending activities in Turkey is scheduled for later this year.
Turkey has said in response that any EU funding cuts will not affect its drilling off Cyprus.