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New York Trial Verdict Adds to U.S.-Turkey Tensions

On Wednesday afternoon a jury in the Southern District of New York found Turkish banker Hakan Atilla guilty on five out of six counts connected to illegal financial transactions that enabled Iran to evade sanctions aimed at curbing its nuclear program. The trial has long created tension between the United States and Turkey, the verdict will certainly not alleviate it. As Atilla’s lawyers promise to appeal, it remains to be seen how Turkey will respond and, crucially, whether this verdict will be followed by additional indictments of Turkish officials or, more likely, fines against Turkish banks.

Already, Turkey’s Minister of Justice has announced that he views the case “as an attack on Turkey’s sovereignty.”

Already, Turkey’s Minister of Justice has announced that he views the case “as an attack on Turkey’s sovereignty.” But such rhetoric has become standard for Turkish officials by now, along with claims that the entire trial was part of a political plot orchestrated by the Fetullah Gulen movement, whose influence extended to the judge and prosecutors in the case. Other critics noted an irony that has been echoed by many U.S. observers as well: among the many people involved in the sanctions-busting scheme, Atilla came off as a hapless bureaucrat who had profited far less for his crime than higher-level officials who remain free in Turkey. That Atilla faces serious jail time (the sentencing is in April) while Reza Zarrab, following a plea deal that enabled him to become the prosecution’s star witness, presumably does not, represents another irony that has drawn sympathy from an emotional if not strictly legal perspective. 

From a diplomatic perspective, the most positive development following the trial is that Ankara appears open to negotiating the fine that Halkbank, where Atilla worked, agrees to pay. This would avoid a worst-case scenario that some analysts had speculated about, where Turkey simply refused to pay, thereby creating an unprecedented crisis where it would potentially be cut off from the global financial system. 

Whether U.S. prosecutors take any further steps, beyond the expected fines against Halkbank, and whether Ankara decides to escalate its rhetoric or engage in any retaliatory measures will determine whether the tensions surrounding the trail continue to grow. The recent resolution of the U.S.-Turkish visa crisis, alongside some of Turkish President Recep Tayyip Erdogan’s more conciliatory gestures toward Europe, suggest that for the moment at least Ankara is not eager to escalate. 

Yet viewed in a broader context, the case itself serves as a reminder of the deep and structural challenges that will continue to bedevil the U.S.-Turkish relationship. Ankara’s initial willingness to prioritize its trade relations with Iran over the security interests of NATO as a whole, coupled with the deep conviction Atilla’s trial itself was part of a politically motivated attempt to bring down the Turkish government, suggest that whatever happens in the case at hand, the tensions United States and Turkey will continue to grow further apart in the coming year.

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