Turkish national testifies that President Erdogan directed a state-owned bank to facilitate a multibillion-dollar fraud that funneled money to Tehran
A real-life courtroom drama is playing out in New York, as Turkish-Iranian Reza Zarrab continues to provide bombshell testimony in the trial against Mehmet Hakan Atilla, a former deputy chief of Turkey’s state-owned Halkbank. The two men are accused of running a sanctions-busting scheme from 2010-2015 that allowed Iran access to global markets. Tehran was the subject of a comprehensive sanctions regime before signing in July 2015 a nuclear accord with world powers stipulating that most of the financial restrictions be lifted.
Zarrab, who was arrested by American authorities in March 2016 following an FBI investigation, last month decided to plead guilty and cooperate with prosecutors against his former co-defendant. He has claimed that Turkish authorities, including President Recep Tayyip Erdogan, directed Halkbank to facilitate the laundering of billions of dollars on behalf of the Iranian regime. Zarrab told the court he paid then-Turkish economy minister Zafer Caglayan bribes amounting to over $50 million euros to expedite deals with the Islamic Republic.
Nine people have been charged in connection with the alleged conspiracy, with Atilla maintaining his innocence.
In response, the Turkish government ordered the seizure of Zarrab’s assets, while Erdogan described the affair as a “plot against Turkey.”
“Currently, there is quite a strong political reaction against the trial,” Dr. Vehbi Baysan, an Assistant Professor of History and Middle Eastern Studies at Istanbul’s Yeditepe University, told The Media Line. “Sources close to Ankara are portraying it as a deliberate set up to further damage U.S.-Turkey relations. Some within the government, as well as a large section of the Turkish public, strongly believe that Washington was somehow behind the failed military coup in the summer of 2016.”
In this respect, a Turkish court this week issued an arrest warrant for former CIA agent Graham Fuller, who previously was stationed in Turkey, over purported evidence linking him to the attempted overthrow, which Erdogan blames on U.S.-based cleric Fethullah Gulen.
Visa services for nationals of both countries were recently suspended over the arrest of American consulate personnel in Turkey accused of having links to Gulen. Relations between Washington and Ankara were thus already strained, exacerbated further by the former’s support of Kurdish forces in Syria which Erdogan considers an extension of the banned PKK.
The heightened tensions come amid Ankara’s perceived eastward shift, with its ascension to the European looking progressively tenuous and as its role in NATO is increasingly examined. Ankara’s ties to the western military alliance last month hit rock bottom, after Turkey’s founding leader, Mustafa Kemal Ataturk, along with Erdogan were featured on a poster as “enemies.” Turkey subsequently withdrew 40 soldiers participating in the joint drills in Stavanger, Norway.
In parallel, the Turkish government has raised the ire of western capitals by deepening its crackdown on civil society, while courting Russia, the emerging power in Syria.
According to Dr. Gallia Lindenstrauss, a Research Fellow at Israel’s Institute for National Security Studies and a Visiting Fellow at the Washington-based Bipartisan Policy Center, “while the trial has revealed certain technical issues, the fact that Turkey assisted Iran in evading sanctions was known for quite a long time. Thus,” she continued, “the basic problem is the ongoing mistrust between Turkey and its allies—and when you add to that the paranoid mindset in Ankara regarding the threats it is facing from the West, even if these relationships formally remain, there is a limit to how far they can proceed.”
Lindenstrauss contended that Erdogan’s foreign policy is less about turning East, but rather a function of whether Ankara is becoming a so-called rogue state. “Analysts have started using this term,” she explained, “because of what is being construed as Turkish hostage diplomacy, [with authorities having imprisoned multiple western citizens, including an American pastor and a German journalist]. This term might stick if Erdogan instructs Turkish banks not to pay fines that are likely to be demanded because of the charges that have been raised in the Atilla trial.”
Such a development, coupled with the possibility of further revelations regarding Ankara’s past illicit cooperation with Tehran, is liable to raise the heat on the Turkish president, perhaps compelling him to completely exit the West’s orbit.