Good morning. Thank you for joining us. Im the director of National Security here at the bipartisan policy center. Im please to some people are still hungry for turkey. That was my only thanksgiving joke. I am sorry. I will leave it at that. Case,here to discuss the todayin the world is was supposed to be the start of the trial in new york in the , who has businessman seemingly disappeared. Why in thistion of case which in bobs allegations he helped iran evade u. S. Sanctions against iran. Why is that a Sticking Point for u. S. Turkish relations . Im pleased to have an expert panel to discuss that. I wanted to announce a couple of products the bpc is putting out today. We have an explainer to explain what the case is and we are launching a Broad Initiative looking at power and corruption in erdogans turkey. We are launching an interactive feature on our website which is focused on the case and allows you to explain the links between his review people. Libby go to our panel. New panel, r a the Central Asia Caucasus Institute and member of the turkey task force. ,pcs very own Nick Danforth expert on all things turkish. You that, let me start with. Can you give us a summary of what the case is about . Sure. Thank you. Thank you for the invitation. He got arrested in 2016. He became very famous in turkey. I think he stayed in jail in turkey a couple of months. Was forgotten in turkey married to ais popstar in turkey. More or less he has been on the turkish an agenda since 2013. He got arrested. It was a shock to everyone. Then. Been in jail since we do not know if he is still in jail but we know for sure he is under u. S. Federal custody now. There are lots of speculations they are using a hotel or somewhere else. That has been 4 indictments. The first came after reza zarrab was arrested. The second one came a year ago before the u. S. Elections expanded included his brother. Third, when the second person got arrested. He is also in jail. And the fourth just came up early september, the most expanded one, and included a finance minister, plus the general manager of a bank, a turkish public bank. Deputy international general manager who was taking care of the international banking. A total of nine people. It really hit turkey. What is he charged with . Counts ande six charges. It is one of them, conspiracy against the United States. Basically the United States. He second is banking defrauding u. S. Banking. The other is moneylaundering. The fourth is it will come back to me. Experts say if the transaction,every it could be really long. Which is how these things go. We are looking at more than a century of jail sentence. All of this are allegations of course. The police and prosecutors launched those investigations also dismissed them. Here, 20 months later we have trials,ens of conferences and hearings but we have not so far had a committed person. These are allegations. To the back story of this and reza zarrabs arrest in turkey. Can you talk about the concept of that . Isthe case of reza zarrab systematic of u. S. Turkish relations now. Or theare in turkey United States you are living on different planets in many ways. What you interpret when you see the case, the details, they are different. At then issue of trust end of the day and the complete lack of trust, and deep suspicion that exists mainly from turkey. That you cant understand the case without understanding the movement and conflict between president erdogan and the movement in turkey. From the superficial American Perspective this is an issue of corruption and sanctions. Legal casethis is a that has its judicial process. Im not saying anyone is purely out of politics but it is mainly a legal case. This is not only manipulating political things but we have to remember the way the whole case came out was by the december 2013 raid targeted at president. Rdogan and his proxies family members and close associates. The interest thing thing about the raid is they were not just any kind of corruption. An economyre is built up in turkey but, the allegations focus particularly on those issues that were the most damaging from an American Perspective. Of al qaedaases linked saudi financiers. We also had the issues of the iran sanctions. The fact that these raids target those things, not just ordinary corruption, but things that would be damaging internationally for erdogan are important. The prosecutors involved were affiliated with the movement. Understood by was supporters as a judicial coup. This is the background to how they see it. Obviously following this we have weve had elections. We had a coup last year that erdogan was strong evidence the movement he says it was all about the golan movement. It was much broader than that and complicated than that but, in any case, from the perspective of him and his supporters when reza zarrab gets arrested in the United States justndicted, this is not an ordinary legal procedure. This is about a continuation of the coup against him. But we have to understand, and may most people may not need formally internalizing, from erdogan and his supporters perspective he is not an economist actor. Autonomous actor. How Conspiracy Theory pervades thinking. The interesting part about his book, the arab and iranian world , there was an appendix about turkey that said its not relevant for turkey now but it may be in the future. Everything in the book is about conspiracy theories. Whether we agree or disagree we have to understand for erdogan and his supporters, it is an american controlled operation and it is an american coup against him. From that perspective what were seeing happening in new york is part and parcel of an american effort to overthrow him. Saying i agree, but we have to understand that this is not just propaganda thing for erdogan and his media. They use poppa granda phase pop they use propaganda effectively. How thisyou talk about turkish view of what the case is about has played out . Sort of where it might go from here . I will followup on what he was saying. Right now were in a situation turkey, not just people reading the papers, but people in the note states are living in different realities in regards to this case in the context of the u. S. Turkish relationship. This case is worth looking at both how this helps perpetuate those different realities and exacerbate many of the deep divides in u. S. Turkish relations. But also to show be on this incipient the divergent opinions about turkeys role in the world, going back to 2012, 2013 when this case came into being, how this case and the crisis we find ourselves in now was the result of a growing divergence that predates it. In that regard i would say from the knighted states perspective people look at this as a simple legal matter. They violated u. S. Law, now they are being tried in u. S. Court. Beenurkish response has what right does america have two make it against the law for us to do business with iran . This was a bilateral trade between two sovereign countries. Why is this in violation of u. S. Law . I think it is worth acknowledging where this argument is coming from. Certainly the United States does have the unique ability to make our National Interests into a matter of universally enforceable law. Ronhis was paraguay and i iran, he would not be facing trial now. That only goes so far. The point is also worth mentioning, a problem goes back to how they approach this issue in 2012. They may not have agreed with United States laws, at the time they made it clear they did have concerns about u. S. Sanctions. At the point when the sanctions were put in place where people in the turkish government and Banking Sector new the laws were in place, they were aware of the consequences of breaking them. At that point the decision to go ahead with this scheme, to support reza zarrab, was taken with the knowledge that this was against u. S. Laws. That is why they try to hide these actions. There is in this context something problematic about presenting the consequences turkey not just individual citizens but the entire turkish economy is now facing as result of these actions as a conspiracy against turkey. Im sure they genuinely believe they were doing it for turkish National Interests. Whether or not they agree with them some of they should realize were going to have consequences. I would make a similar point about the broader geopolitical context in which this has happened. Turkey has had a complicated relationship with iran. They have been rivals for centuries. The scheme was taking place turkey was in considerable tension with iran visavis their divergent positions in the syrian civil war. Turkey solve the geopolitical benefits of maintaining a functional relationship and helping iran evade u. S. Sanctions. This has been a matter of considerable outrage for many in the United States to which people in turkey pointed out they are not the worst or only country to maintain relationships with a nasty regime. Turkey is not the first country withintain good relations oppressive states with a long history of promoting islamic extremism. In the, this happened context of turkey being a nato ally. In the context of turkey being irans neighbor, turkey, had it not been for their membership, they would have had every reason to be terrified. No country would be excited about a neighbor developing a nuclear weapon. The reason they were not as concerned, it was a nato member. It had nato protecting it from nuclear weapons. The fact that it had a time when they were relying on turkey takection, for it to action than that undermined nato country efforts to stop irans like a program, it seems deep file asian of the spirit of the alliance. I think that is an interesting issue. Maybe we can look at this shifted. And how that it also gets us to events of the last couple of days. Chan. N going to so the phone call friday, what that might be about. We can bracket those issues and talk about the case itself and what it means. Lets start with this. You mentioned one issue. For much of the last year, when turkey has talked about concerns, it has been talking the extradition. It hasnt talked about the reza zarrab issue until recently. Why is that . Is there a greater emphasis, and ncern about google then . Reza zarrab there is an exception and up session. Whogan was the person movement. E goal line what turned out was that there was a power struggle between these two elements. That struggle has almost destroyed the turkish state. That is damaging because everybody understands he was the person who enabled. The rise of Gulen Movement 1980s. In the it suited his interests at the time. Toot of people, i talked every good friend last week. Secularist to said we need erdogan because hes the only person who can get rid of Gulen Movement. It is very strange. The assumption is that he hasnt done that yet . Yes. Groups have been purged. What im trying to get to is that maintaining the pressure on for the regime stability a necessity but also something that unites him with his new coalition partners. His earlier coalition was based on conservatives, liberals and kurds. Into anow been turned Tactical Alliance with neonationalist forces. Nationalists. They are highly skeptical if not hostile to the United States and the west. This focus unites them. I would say tensions with United States and the suspicion this case generates strengthens the power of these neonationalist forces in the turkish government. If you want to speculate, do you think, erdogan really wants them back . Is it just this technical political ploy . I do believe you once and back. That, the i believe latest revelations on how he if you areim to believe the claims, they have not been confirmed yet but, i think the government has been wanting him back but at the same time, rather he wants more is the question. Inin, we now know that september of 2016 when the president spoke to President Biden after the coup, 65 days the trauma was still being felt very much in turkey. In this meeting he talked about reza zarrab the reza zarrab case. I think he wants him back but more than [inaudible] happy to hear about this for you, but i guess would you agree with that assessment . Thanould he want him more gulen . Turkey was involved in undermining ally interest with iran, or is there something greater . This is one of the strange things that i think people in washington have wondered about. There has been in private meetings, he has been very focused on this. He is one of the case to go to way. Yet, why is not immediately understandable to people outside of turkey. This case could confirm the allegations. One of the consequences is this could give a newfound legitimacy where has previously he has been able to dismiss them. My something has been any revelations that would come out of this would be easy for erdogan, given his effective use. F rhetoric to dismiss it on seems like he is more concerned about the potential revelations than people from the outside think he needs to be. People trying to understand why this might be the a case proves that turkish banks are involved in sanction busting there could be heavy fines levied against turkish banks. ,t is still not clear to me even worth the case to result in fines, it seems odd he would deal with that case making the case try to go way. Any fines that would come out of this would be ones that the state department could mitigate. So, i dont actually have a great answer for why this has been as sensitive as it seems to be. I think the reason he has he might be is talking to prosecutors. Hech now every indication is is talking to prosecutors. We dont know the deal. If he is talking to prosecutors he has to give up everything. Everything . Names, people who work with so thathe scheme, to implicate ang officials, key allies people like amandas loss. Indicate implicate erdogans soninlaw. I think that is why he is sensitive to possible things he might be talking. Allies will have a lot of limitations inside or outside turkey. I think i agree. Concerned. To be very i think it is because he sees this as a gateway to something that will hit closer to home. Family members, something else. I dont know. I dont know what reza zarrab knows, but it is important to look at this in context. He should not need to be this concerned. He is weaker than he looks. He looks like an especially after the coup. If you scratch the surface a little, the dirty secret i keep talking about, he never had enough people to run the turkish state. He always had to rely on others. That was rationale for bringing in the Gulen Movement. Speaks of them he did not have enough have enough filled. He had to lean on the nationalists to run various state agencies. That is one thing. Is, in spite of the referendum, turkey is still not a president ial republic. It will only be after the next residential election. Verything he does is illegal every decision he takes him every time he calls up and illegal. Etary, that is that is the Prime Minister prerogative. Which is why he is worried about legal matters. We also know he almost lost power. He said his sons to live out of the country. Hehink his behavior suggests actually has more reason to be concerned about these kind of things than what would appear to be the case. Bewe have heard there might some sort of deal brewing. I feel at we have been talking about this for a while. Come to the zarrab United States in the first place . He gets arrested for breaking u. S. Laws. He is released. Three years later he comes to miami to take his kids to disney world. We have been talking about a potential deal for a wild. Why do you think that might be happening now . Yes. There have been a lot of speculation when he came here knowingly. I do not believe that scenario. Not because i dont believe that scenario. I have seen messages published by the court that he was having fun talking until the last minute and we he was told about different ideas. That it has been months. Deal,came here to get a expanding that much time in the jail. He would not be spending that much time in jail. He is on trial today. Yes. His lawyers have been battling fiercely. Against him that would weaken his defense because hes going to confirm much of the allegations against him. You raise the question of why he came to the u. S. Do you have an answer . 33, he gothe was away with everything in turkey. Hes been rich all his life. He did not give good it get good advice from his lawyers. He came and told them these u. S. Ations and he told the according to some sources, he status. Cked his he got his visa and got on a plane. Was no he thought that danger for him. , assuming there is a deal what do you see as the legal consequences . Lots of unknowns. Quite aeen talking to few experts on that including financial crimes. ,t looks like if he got a deal he would have to give up names and information. He needs to convince prosecutors he has good information. He needs to be qualified as substantial assistance that is either going to help u. S. Authorities, plus hes going to give intel information. Money. S of not only turkey, but people ,alking about malaysia, germany the u. K. , dominica. There is a lot of players around the world now worried that reza zarrab might talk. He has been in jail for 20 months. If he gives good information, according to people who know these cases, he might get out soon. Maybe a couple of years. About theask you potential political consequences of the deal. You talked about how it might be seen from the turkish side. Ut also the u. S. Side will it matter for u. S. Turkish relations if there is a revelation of turkeys complicity in sanctions busting . Turkey would not be the first country to do business with a corrupt state. The u. S. Has done so plenty of times. Does this really matter for the United States . I would give two answers to that. Company at this country was iran will matter. Even before the most recent election in the United States, and afterwards certainly, one of the approaches turkey has used is to present itself as a potential ally in confronting iran the and regional influence. From the outset that might have been a tough sell. It didnt necessarily convince anyone turkey was