Zarrab Case Points to Reach of Corruption in Erdogan’s Close Circle

Turkish-Iranian gold trader Reza Zarrab has taken centre stage at US District Court in New York and made it clear that Turkish President Recep Tayyip Erdogan 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 Erdogan 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 Caglayan, a former economy minister; Muammer Guler, a former interior minister; Egemen Bagis, a former minister of EU affairs; and Suleyman Aslan, former director of the state-run Halkbank.
Zarrab also mentioned former treasury minister Ali Babacan and the then-prime minister, Erdogan.
“(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 one former minister, Caglayan, has 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 multibillion-dollar scheme may have severe repercussions on Turkish banks. In addition to Halkbank, there is Ziraat, A&T Bank, VakifBank and Aktifbank, which is part of Calik Holding, where energy minister and Erdogan’s son-in-law Berat Albayrak had a top executive position.
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 Erdogan’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. Erdogan is generally seen to win when he fights back. He is considered charismatic by the masses and has assumed near-complete control of the institutions of state and muzzles the media.
Unsurprisingly then, Erdogan 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 the Anadolu Agency, 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 Erdogan’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 Erdogan’s autocratic hold on power, and with no independent judiciary, there is little chance the president will be dislodged.
The pragmatist in Ergodan 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 Erdogan 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 Erdogan 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.


Yavuz Baydar
is a journalist based in Istanbul. A founding member of the Platform for Independent Journalism (P24) and a news analyst, he won the European Press Prize in 2014. He has been reporting on Turkey and journalism issues since 1980.
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