Halkbank's Cooperation with the U.S. Following Accusations of Violating Iran Sanctions

The Deputy Prime Minister of Turkey states that Halkbank (People's Bank) is closely negotiating and cooperating with the U.S. Treasury and Justice Departments after one of its senior officials was found guilty of violating Iran sanctions. Mehmet Simsek, Turkey's Deputy Prime Minister for Economic Affairs, said on Wednesday, January 24, at the World Economic Forum in Davos, Switzerland, to Bloomberg: "If this issue remains within a technical and economic framework, there is no problem, but if it escalates to other areas, Turkey's response will be different." A U.S. court recently found Mehmet Hakan Atilla, the executive director of Halkbank, guilty on five counts, including fraud and banking conspiracy, as well as violating U.S. sanctions against Iran. This has sparked a new wave of tensions between the U.S. and Turkey. Bloomberg also reported in another interview with Osman Arslan, the director of Halkbank, that he stated, "The U.S. government has not yet filed any complaint regarding violations of Iran sanctions against this bank." He added, "Halkbank has not violated Iran's sanctions in its multi-year transactions with the Islamic Republic and has adhered to international regulations." However, Reza Zarrab, a Turkish businessman of Iranian descent accused of illegally transferring billions of dollars in currency and gold for the Islamic Republic through various means, including using Halkbank's financial system, has confessed to his crimes in a U.S. court and provided information to U.S. authorities. Osman’s remarks about the lack of a U.S. complaint against Halkbank come as Erdal Aksunger, the deputy of the opposition 'Republican People's Party', announced last month that there is evidence indicating Halkbank's conviction in a New York court. According to Cumhuriyet newspaper, he said there are reports that this bank might face a $10 billion fine. Hurriyet newspaper also reported two weeks ago, quoting Mehmet Simsek, that if Halkbank faces a U.S. fine, neither the bank nor the Turkish government will pay it. In another part of the conversation, the Deputy Prime Minister of Turkey referred to the military operation in the Afrin region of Syria and its potential impact on Turkey's economy, stating that "the economic impact of this operation on Turkey will be limited." He noted the improvement in the country's economic situation, asserting that Turkey will maintain its strong economy and is determined to strengthen it. He continued that the main problem currently facing Turkey is inflation, which has increased beyond initial forecasts and is a central focus for the government. According to him, tax increases have affected the prices of goods, especially food items, but the government is determined to curb price growth and bring inflation back to single digits. Mr. Simsek further stated that the Turkish lira lost some of its value last year due to various domestic and external shocks, but this issue has been resolved, and there is currently no risk of another collapse in the lira's value. According to the World Bank's assessment, Turkey's economic growth rate fell from 6.1% in 2015 to 2.9% the following year, but the situation has improved over the past year, and this year, the country's economic growth is expected to rise again to 3.9%. Turkey's inflation rate reached around 12% at the end of 2017, the highest figure in the past 14 years.