Amid controversy over Ankara’s incursion into Syria, Halkbank is cited for allegedly skirting sanctions against Tehran
[ISTANBUL] – Prosecutors in the United States indicted a state-owned Turkish bank on Tuesday, the charges being the circumvention of sanctions against Iran.
The move came a day after Washington slapped sanctions on Ankara itself for its week-long – and continuing – incursion into Syria, potentially ramping up the political crisis between the two NATO allies.
An executive of Halkbank was found guilty in the US last year of helping Iran evade sanctions, and the Reuters news agency reports that prosecutors are now alleging that high-ranking Turkish officials also took part in the scheme.
Timothy Ash, a London-based economist focusing on Turkey, told The Media Line that the charges would be viewed by Ankara as “dirty tactics,” as well as a significant escalation in tensions between the two countries.
The sanctions imposed on Turkey for the incursion include an increase on tariffs for steel imports and the delay of a trade deal valued by US President Donald Trump at $100 billion. The deal was meant to motivate Ankara into dropping its plans to activate a Russian air-defense system it had bought.
Sanctions were also placed on three Turkish officials, including the defense and interior ministers, although they spared President Recep Tayyip Erdogan.
“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” President Trump stated, referring to the incursion.
Ash, however, said the sanctions were unlikely to have much of an impact.
“Markets have taken it quite well,” he stated. “Clearly, Trump doesn’t want to do sanctions…. He has a special relationship with Erdogan… so we’re not very surprised [that the sanctions have] been relatively modest.”
Ash further said that Turkey’s economy can better withstand sanctions now than it did last year, when the US imposed limited sanctions over Ankara’s detention of an American pastor. A currency meltdown eventually followed.
This year, he explained, the economy is not overheated, and since it is still the tourist season in Turkey, it can more easily bounce back.
He clarified, however, that two factors could change this. One would be if Turkey escalates its drive into Syria and provides greater motivation to be sanctioned. The other is if domestic politics put strong pressure on President Trump to impose harsher sanctions.
“The problem for Turkey at the moment [is] it doesn’t have any friends [in] DC,” Ash said, referring to Washington. “The Turkish economy is in a better position than it was a year ago, but it’s still not healthy.”
Turkey launched its incursion into northeastern Syria on October 9 on the premise of establishing a “safe zone” for displaced Syrians, but more immediately to push out US-backed Kurdish fighters who are seen by Ankara as a security threat. Its top fear is said to be an independent Kurdish state in Syria that could lead to a renewed drive for independence by the Kurdish minority in Turkey.
While Erdogan had been threatening for months to launch an incursion, President Trump’s decision to withdraw US troops from the area gave him a much easier path.
Can Selcuki, a pollster and general manger with Istanbul Economics Research, called the sanctions “inconsequential” and told The Media Line via email that while Turkey’s steel industry was significant, increased tariffs would not cause major damage to the economy.
He also said he expected the steel tariffs to be lowered once tensions decreased, and downplayed the value of the US-Turkey trade negotiations.
“The talks were at a very immature stage and were not likely to produce any substantial results in the near future,” Selcuki wrote.
He pointed out that the US could have imposed much harsher measures, such as those stipulated under CATSAA (Countering America’s Adversaries through Sanctions Act), which is being used in connection with Ankara’s purchase of the Russian air-defense system. There are 12 possible sanctions under CATSAA, including the denial of visas.
“My take is that he is upping his hand prior to meeting with Erdogan on November 13,” Selcuki stated, referring to President Trump and a summit noted in the transcript of a phone conversation between the two leaders when the incursion was announced.
“The markets did not react much to this. The already depreciated lira stood its ground. The future of the currency depends on the negotiations between Turkey and the US,” he stated – adding to the equation relations with the West in general.