Zarrab’s oil-for-gold case further strains US-Turkish relations

November 26, 2017

Until about a year ago, only a few Turkey observers were aware of the explosive nature of an oil-for-gold case in a far-off US federal court in New York. Very few paid attention to what was really at play and its possible ramifications for Turkish-Ameri­can relations.

Now, everyone is taking notice of the trial of Turkish-Iranian gold trader Reza Zarrab on charges of evading US sanctions on Iran.

Zarrab’s trial is due to start but his whereabouts are a mystery, leading to speculation he has cut a deal and agreed to become a US government witness. What effect might any of this have on Turkish President Recep Tayyip Erdogan and on the country’s relationship with the United States?

There is almost no analysis worth the name, simply because the chain of events is so unprec­edented and many of Turkey’s most acute political commenta­tors have appeared unaware of the seismic change in the country’s approach to the world.

They remain oblivious to the global disorder caused by Turkish foreign policy and to the fact that Turkish diplomacy has become hostage to a new form of feudal­ism.

It has brought forth institution­alised disrespect or, at the very least, disregard for the rule of law, judicial independence and Turkey’s traditional alliances. The new order, which includes trans­actional partnerships, appears to allow for the intimidation and imprisonment of dissidents, both domestic and foreign, and the swap of political or other foreign-national prisoners.

Much of this has to do with the culture of impunity now creep­ing into Turkey and many other democracies. This is the context of the Zarrab case, which is due to begin December 4 in New York.

The magnitude and impact of this case for the Turkish govern­ment is hard to overstate.

Zarrab, a gold trader, is charged with running a complex scheme to evade US sanctions imposed on Iran over its nuclear programme. He is accused of selling gold to the Islamic Republic in return for oil. Another top suspect, bank manager Mehmet Hakan Atilla, is accused of helping to launder the proceeds through the state-owned Halkbank. Seven other suspects now in US custody are also charged with involvement in the plot. They include Turkey’s former economy minister, Zafer Caglayan.

The case has further strained relations between Turkey and the United States. Ruling Justice and Development (AKP) party circles, backed by a loud chorus of pro-government Turkish media, accuse Washington of trying to dislodge Erdogan. It would be, they say, “a second coup” after the failed one in July 2016.

Indeed the politics of the Zarrab case appears to be taking centre stage, at least in Turkey. The rage that grips Ankara has already been apparent in Turkish ministers’ tense visits to Washington. The Zarrab case apparently topped the agenda of most meetings.

There was also a bloody brawl outside the Turkish Embassy in Washington when Erdogan’s secu­rity detail allegedly beat peaceful Kurdish protesters. More recently, there have been the arrests of Turkish staff members of US mis­sions in Turkey.

All of these constitute an escala­tion, one that disrupts the calm basis of Turkish-American part­nership, which has lasted more than 70 years.

Unsurprisingly, the US Congress is shocked and angry and its reac­tion is mirrored by legislators in Ankara.

And yet, Erdogan’s ruling AKP continues to play on anti-Ameri­canism.

Erdogan’s strategy is to turn national sentiment against the US, even as he tries to obscure the reality and implications of the Zarrab case.

Among the Turkish govern­ment’s potential concerns about the case is that Zarrab’s testimony might point a finger at high-level officials involved in sanctions-busting. There is some suggestion the finger-pointing could reach as far as Erdogan.

It is all gossip, until it’s not.