Zarrab case points to reach of corruption in Erdoğan’s inner circle

Turkish-Iranian gold trader Reza Zarrab has taken centre stage at the U.S. District Court in New York and made it clear that Turkish President Recep Tayyip Erdoğan personally approved his sanction-breaking deals with Iran. Zarrab testified in detail how the billion-dollar “gold-for-oil” scam worked.

Zarrab’s account implicating Erdoğan in an international money laundering scheme is significant and raises the question: how extensive was the network of ac­complices in the top echelons of Turkish politics and bureaucracy?

Zarrab named Zafer Çağlayan, a former economy minister; Mua­mmer Güler, a former interior minister; Egemen Bağış, a former minister of EU affairs; and Süley­man Aslan, former director of the state-run Halkbank.

Zarrab also mentioned former treasury minister Ali Babacan and the then-prime minister, Erdoğan.

“(They) had given an order for (the banks) to start doing this trade,’’ Zarrab said, referring to the banks’ move to disguise money transfers so they would appear to be legitimate gold trades.

As the trial continues, it seems likely to shed light on alleged corruption around Erdogan, his inner circle and the ruling Justice and Development Party (AKP). Turkey is agog with speculation about the political and economic consequences of the trial.

There is talk of what will happen to “all the president’s men” now that former ministers have been named by Zarrab. Perhaps arrest warrants will be issued for some Turkish politicians and bureaucrats. Certainly, they may never again feel safe setting foot on Western soil.

Revelations about the multi-­billion-dollar scheme may have severe repercussions on Turkish banks. In addition to Halkbank, there is Ziraat, A&T Bank, Vakıf­Bank and Aktifbank, which is part of Çalik Holding, where energy minister and Erdoğan’s son-in-law Berat Albayrak held a top executive position at the time.

If the banks are found guilty of organised crime, they may face draconian fines.

The biggest question is the effect of Zarrab’s testimony on Erdoğan’s power. Unfortunately, this is a guessing game. Turkey’s embat­tled president has proven himself a survivor, almost a Teflon-coated figure, who remains unscathed by controversy. Erdoğan is generally seen to win when he fights back. He is considered charismatic by the masses, has assumed near-complete control of the institutions of state and muzzld the media.

Unsurprisingly then, Erdoğan responded to news from the New York court with pugnaciousness. The Zarrab case, he said, showed that Turkey as a whole was under international attack. He accused the Kemalist main-opposition Republican People’s Party (CHP) of treason for bringing up corruption allegations.

In Turkey, the Zarrab trial has been either ignored or barely men­tioned in the media. After years of being attacked, the Turkish media is in a pitiful state and often resorts to self-censorship to stay out of trouble. Pro-government media, including the state broadcaster TRT and state news agency Anadolu, painted the case as a conspiracy and outright fabrication.

Almost every TV channel, gener­ally the best source of news in Turkey, has imposed a blackout on the story. If it is mentioned, the report has cunning twists that sow confusion.

In such an Orwellian atmos­phere, the odds are in Erdoğan’s favour. The people are being pushed to perceive the Zarrab case as one of nationalist peril. This can be summed up as: “Our man, the man of people, and consequently we, the Turkish people, are under attack.”

Given Erdoğan’s autocratic hold on power, and with no independ­ent judiciary, there is little chance the president will be dislodged.

The pragmatist in Erdoğan may, at some time, sacrifice some of his former ministers and dispatch them to face international justice but this would be about survival negotiations for the Erdoğan ad­ministration and it is too far into the future to be a serious possibil­ity yet.

Onward then to the next big question: Has the Turkish state become hostage to a mafia out­fit? Ryan Gingeras, an expert on Turkish history, argued the Zarrab case indicated the resurgence of organised crime in Turkey. “Over the last ten years, there has been a dramatic expansion in illicit trading and smuggling across the country,” he wrote.

Gingeras provided statistics: Stings related to the illicit oil trade jumped from 800 to nearly 5,000 from 2009-14. More people were taken into custody for alleged heroin smuggling. He diagnosed the “surge in Turkey’s illicit indus­tries” as at least partly because of Erdoğan and his administration.

“They have generally failed to show resolve or urgency in the face of these challenges,” he wrote. “In addition to its negligence, the Turkish government appears directly involved in criminal activ­ity.”

That is damning stuff.

And then there is the rest of the Zarrab trial.


Article reprinted with permission from Arab Weekly.