Gold trader’s trial sparks anger and concern in Turkey

ANKARA: A court case in the United States against a leading gold trader and a top Turkish banking executive has sparked anger and anxiety in Ankara, with both USTurkey ties and the economy at risk of damage. Turkish officials have condemned as a “plot” the charges against Turkish-Iranian gold mogul Reza Zarrab and Mehmet Hakan Atilla, the deputy chief executive of Turkish lender Halkbank, of violating US sanctions against Iran. President Recep Tayyip Erdogan has raised the issue repeatedly in official talks, according to a former American official, and called for their release.

US media reports have suggested in recent days that Zarrab may be seeking a plea bargain in the case and shown willingness to testify against Turkey. Turkish officials are now denouncing the case as a another conspiracy by the US-based preacher Fethullah Gulen, the alleged mastermind of the 2016 failed coup targeting Erdogan. According to Atilla Yesilada, Turkey specialist at Global Source Partners, the Erdogan-led ruling Justice and Development Party (AKP) is “extremely worried”. That explains the pro-AKP media campaign to portray the case as “orchestrated by the American Deep State and Gulenists,” he added.

Embarrassing revelations?

Zarrab was one of the main figures of a 2013 corruption scandal in Turkey that Erdogan also sees as a bid by Gulen to bring him down. Caught up in the scandal too were four ministers accused of accepting bribes from Zarrab, 34, to facilitate sanctions-busting trade and other deals. One allegation at the time was that ex-economy minister Mehmet Zafer Caglayan received a $300,000 (255,000 euro) watch as a bribe. He is also charged in this case in absentia. Erdogan, who has dismissed the claims as a fabrication, has raised Zarrab’s case “multiple times” at the highest level under former president Barack Obama and his successor Donald Trump, former US State Department official Amanda Sloat said.

“Although he (Erdogan) is not charged with any crime, corruption revelations would be embarrassing to him, his family and his inner circle,” Sloat, now a senior fellow at the US-based Brookings Institution, told AFP. Former New York mayor Rudy Giuliani, who is part of Zarrab’s legal team, met Erdogan in Turkey in April, joined by Michael Mukasey, a former attorney general during president George W. Bush’s administration.

‘Defendants held like hostages’

The trial is now set to kick off on December 4. Deputy Prime Minister Bekir Bozdag said this week that the defendants were being “held like hostages” and subjected to pressure. Meanwhile, Turkish prosecutors even opened a criminal case against their US counterparts on charges of fabricating the case. But analysts warned that the sheer intensity of Turkey’s reaction risked further damaging already brittle relations with the US, a key NATO ally. “Turkish reaction to the trial-especially accusations it is an American conspiracy to bring down the government could be toxic to Washington’s perception of Ankara,” Sloat said. Heather Nauert, State Department spokeswoman, dismissed the accusations that the case was an American conspiracy, saying Washington had heard “that old same song and dance from Turkey before”.

Negative impact

There are also fears over possible fines on Halkbankand possibly other Turkish banks-in the event of a guilty verdict. The Turkish lira has hit record lows against the US dollar in the last days, partly due to the uncertainty generated by the case.William Jackson, senior emerging markets economist at Capital Economics in London, said that if fines were issued, there could be an effect on credit conditions and GDP.