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The European Union has halted its plans to blacklist higher-level executives of Turkey's state-owned Turkish Petroleum Corporation (TPAO), Reuters reported, citing four diplomats.

EU leaders in December proposed an asset freeze and travel ban in connection with Turkey's unauthorized drilling activities in the waters of the eastern Mediterranean, although they did not identify specific individuals. 

The EU also agreed to weigh in on tougher economic sanctions against Turkey at the March 25-26 summit. But Erdogan's more constructive tone this year, German Chancellor Angela Merkel's support for a more conciliatory approach, and the first direct talks between Turkey and Greece in five years have all helped to change the mood.

The new administration of US President Joe Biden has also called on Brussels not to impose sanctions at a time when Turkey, a NATO ally and an EU candidate country, appears to be more inclined to compromise, European and American diplomats said.

“Work has stopped on additional blacklistings of Turkish individuals, and we are not talking of economic sanctions anymore,” one EU diplomat said.

The second diplomat noted that the work did not start yet, and the third said that the diplomatic direction is a priority. The EU diplomatic service declined to comment.

Diplomats say a videoconference between Erdogan and the head of the European Commission on January 9, followed by personal talks between Turkish Foreign Minister Mevlut Cavusoglu and the EU foreign policy chief and NATO secretary-general, marked a change in Turkish rhetoric.

In February 2020, the EU blacklisted two TPAO executives, including its Vice President Mehmet Ferruh Akalin. Following the December decision by EU leaders, the EU was supposed to impose sanctions on more board members, including TPAO chairman Melih Han Bilgin.

Ankara denies any wrongdoing and considers the proposed sanctions biased and unfair. Greece and Cyprus, firmly supported by France, wanted to punish Turkey for oil and gas exploration by Turkish ships in disputed waters. The EU also accuses Erdogan of destroying democracy and independent courts and media. But Merkel, who is expected to step down later this year, supported an approach that prioritizes EU investments in Turkey, with Macron and Greece joining her, diplomats said.

The EU leaders' report on relations with Turkey, which was originally supposed to list differences over energy, human rights, and migration issues, will now be neutral in tone, they said. A Turkish prosecutor's request to ban the pro-Kurdish People's Democracy Party is unlikely to revive any talk of sanctions, although the EU could discuss it, one diplomat added.

Erdogan's foreign policy adviser Ibrahim Kalin met with French and German political advisers in Ankara last week. It is also expected that on Friday Erdogan will hold a videoconference with the heads of the EU Council and the EC.

Ankara wants progress on Turkey's visa-free travel rights to the EU, renewal of its trade agreement, and recognition of its hydrocarbon claims.

The EU is also expected to provide new funds from 2022 for the 4 million refugees that Turkey is hosting. The warmer sentiment, however, does not mean something has been decided, EU diplomats said, adding that Turkey must meet the required goals to make progress.

The EU’s top foreign affairs official for Turkey, Angelina Eichhorst, said the bloc needed to manage Ankara’s expectations.

“Some may think that because of a few actions, we can go high again,” she said last month. “We have to calibrate this, because there are processes that do take time.”

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