The Corruption of Recep Tayyip Erdogan

While Americans were transfixed by General Flynn’s courtroom drama in Washington late last week, Turkish audiences were focusing on a courtroom drama of their own in New York. As Reuters reports:

A Turkish-Iranian gold trader on Thursday told jurors in a New York federal court that Turkish President Recep Tayyip Erdogan authorized a transaction in a scheme to help Iran evade U.S. sanctions.

Reza Zarrab is cooperating with U.S. prosecutors in the criminal trial of a Turkish bank executive accused of helping to launder money for Iran. At the time of the alleged conspiracy, Erdogan was Turkey’s prime minister.

Zarrab said he had learned from Zafer Caglayan, who was Turkey’s economy minister, that Erdogan and then-treasury minister Ali Babacan had authorized two Turkish banks, Ziraat Bank and VakifBank, to move funds for Iran. [….]

Over two days of testimony, Zarrab has told jurors that he helped Iran use funds deposited at Halkbank to buy gold, which was smuggled to Dubai and sold for cash. On Thursday, he said that he had to stop the gold trades and start moving money through fake food purchases instead in 2013, after U.S. sanctions changed. [….]

Zarrab has testified that in the course of his scheme, he bribed [Halkbank general manager Suleyman] Aslan and former Turkish economy minister Zafer Caglayan.

The scale of the money laundering and the bribery is enormous. Zarrab, who is cooperating as part of a plea deal, claims to have paid approximately $70 million in bribes to the Turkish economy minister. The bribes greased the wheels on a multi-billion dollar scheme to launder Iranian oil revenue into international markets in contravention of U.S. sanctions.

Unsurprisingly, the Turkish government has thrown a fit. They claim that seemingly everyone involved in the trial is a Gulenist—followers of Fethullah Gulen whom they accuse of plotting last year’s coup attempt. New York’s Senator Chuck Schumer and Preet Bharara, the former federal prosecutor who originally indicted Zarrab? Gulenist. The judge in the trial? Gulenist. The wiretaps that incriminated Zarrab? Gulenist. The Department of Justice and the current prosecution team? Gulenist. The entire American justice system? Gulenist. In Turkey today, rejecting your boyfriend’s marriage proposal can get you accused of being a Gulenist, but apparently the Turkish government has taken that same domestic witch hunt into the realm of foreign policy.

The Gulenist silliness aside, the trial has two major implications for U.S.-Turkish relations. The first is that it’s further evidence of Turkey’s move towards a more independent, more anti-American, more pro-Iranian foreign policy. Turkey’s help to Iran in evading sanctions—of which Zarrab and Halkbank were likely only a part—is one aspect of that but so are Erodgan’s claims that Turkey wasn’t bound by U.S. sanctions in the first place. At an AKP meeting on Thursday Erdogan claimed that:

“We have trade and energy ties with Iran. We did not breach the sanctions [on Iran]. Whatever the verdict is, we did the right thing. We have never made commitments to the U.S. [on our energy ties with Iran].”

He added: “We have not broken an embargo…The world does not consist of the U.S. alone.”

The breakup between Turkey and the United States is of course part of a long term trend. Aside from my own writing on the topic, Henri Barkey, Claire Berlinski, and other writers for The American Interest have catalogued Turkey’s divorce from the West, both in terms of its international relations and the growing illiberalism of its internal politics.

The ideological, political, and religious reasons for the political devolution of Turkey under Erdogan that we and others have cited remains critical to understanding what’s happening in Turkey. But the Zarrab trial suggests aside from whatever Erodgan’s neo-Ottomanist or Islamist ambitions might be, he’s also sitting on a veritable mountain of cash bribes.

Zarrab’s accusations include a $70 million dollar bribe to a former minister on a multi-billion dollar illegal fund. Last week, the opposition CHP published documents alleging that Erdogan’s associates received $15 million from the sale of an off-shore shell corporation.  Some of this has of course been known or suspected for years. The Zarrab trial itself stems in large part from a Turkish investigation into the same scheme in 2013 that was quashed when it threatened to implicate Erdogan’s sons. We now know about quite a lot of illegal money, but there’s every reason to believe that there’s an awful lot of money that we just don’t know about.

The collapse of anything resembling an independent Turkish judiciary in the wake of last year’s coup attempt and this year’s constitutional referendum means that we’re unlikely to get to the bottom of these allegations or discover the extent of Erdogan’s corruption any time soon. But on a range of issues from Turkey’s purchase of Russia’s S-400 missile system, their cooperation with Iran against Iraqi Kurdistan, or EU cuts to Turkey’s accession fund, the Zarrab trial makes clear that we should be just as focused on Erdogan’s pockets as his politics.

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