Conspiracy or Not, Turkey’s Ties to West Are at Risk

(Bloomberg) -- From his fish shop in Istanbul's Kasimpasa district, Mustafa Bir is gripped by a U.S. courtroom drama that he says just proves what he suspected all along: the Americans are out to get Turkey.

Bir has been following the New York trial that last week implicated Recep Tayyip Erdogan in an alleged multi-billion dollar conspiracy to undermine U.S. sanctions on Iran. For people in the gritty streets where the Turkish president grew up, it's further proof of a plot by the U.S. to overthrow a NATO ally's democratically elected leader and bring a weakened Turkey to heel.

“Until him, all Turkish prime ministers did as they were told,” said Bir, 65, who remembers a young Erdogan making his first political speeches at his uncle’s coffee shop. “It's obvious that the U.S. and Germany don't want Erdogan.”

The testimony from Reza Zarrab -- the Turkish-Iranian gold trader who has turned state’s evidence in the sanctions busting case -- has fed the ever-expanding narrative of western conspiracy against Turkey that has folded the government's wilder claims into a long history of genuine foreign hostility and meddling.

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For many Turks, that version of events has now become truth, making conceivable what until recently seemed impossible: A full Turkish rupture with the West.

Across the square in Kasimpasa, barber Gungor, 48, repeated an all-too-familiar refrain from 2017. He said the trial was based on “fake evidence, a fake defendant and a fake witness.”

To him, it proved only that the U.S. was indeed behind the failed military coup against Erdogan in July 2016, as Turkey’s pro-government media have relentlessly claimed -- recently, with support from Russia. Alexander Dugin, a Russian ultra-nationalist close to the Kremlin, told Turkish television on Friday that Russia had passed “concrete evidence” to Turkey showing that the CIA was behind the coup attempt.

“We wouldn't choose to walk away” from the North Atlantic Treaty Organization or the European Union, said Gungor. He declined to give his last name, not uncommon in a country with emergency rule and mass arrests. “But if they push us we're strong enough now to stand on our own feet.”

Claims of western malfeasance have long been a staple of Turkish politics, but the fervor has grown dramatically as Erdogan, 63, strives to tighten his grip on power amid growing western criticism of his crackdown on opponents and democratic institutions.

“Our nation should know that these attacks, defamations and games are not independent of each other,” Erdogan told the provincial congress of his ruling Justice and Development Party, or AKP, in the eastern province of Agri on Sunday. “All are aimed at the same thing: To make Turkey kneel down and to pit us against each other.”

Opponents say Erdogan is just showing his true colors. Ozgur Ozel, deputy chairman of the CHP party's group in parliament, said Turkey is quickly becoming the kind of ally the West can no longer trust.

“Our belligerent foreign policy and the deepening emergency-rule measures could turn this distancing to a break,” said Ozel. “We're worried about that.”

It's not just in Erdogan's strongholds where the concept of a rupture with the West is gaining traction among ordinary Turks.

According to an October survey by Istanbul Economics, a consultancy, more than two thirds of Turks think the alliance with the U.S. and Europe is already breaking, that Turkey could manage its own security if it left NATO, and that their country should enter a new alliance with its historic foe, Russia.

A hard break with the West “is still unlikely, but no longer out of the realm of the possible,” said Sinan Ulgen, a former Turkish diplomat and co-founder of Istanbul Economics. “We may be passing a point of no return.”

Like many investors, diplomats and analysts concerned with Turkey, Ulgen long assumed that both sides simply had too much to lose for a genuine break.

Turkey joined NATO in 1952 as the Cold War took hold. The Incirlik airbase in eastern Turkey has been central to U.S. air operations against Islamic State in Syria and Iraq.

A break with NATO would deprive the alliance of its second largest military, and leave Turkey to deal with Russia, Iran and other regional rivals alone. Most recently, NATO's collective defense clause provided deterrence against any potential military retaliation when Turkey shot down a Russian Sukhoi fighter jet on the Syrian border in November 2015. 

On the economic side, Turkey is still more deeply integrated into the West. The U.S. and Europe account for more than half of Turkey's exports, compared with about a tenth for the Middle East and Russia. Of $131 billion in foreign direct investment in Turkey, more than 75 percent is from Europe and the U.S.; China accounts for just $571 million.

U.S. and European credit is especially important to a nation that has to finance a persistently wide current account deficit, and whose private companies owe well over half of their $214 billion foreign debt to western banks. Should the supply of credit dry up, the shock to the Turkish economy could be harsh.

“There is no change in our goal of joining the European Union,” Prime Minister Binaldi Yildirim told reporters in London on his way back from Washington last week. Turkish leaders have also repeatedly ruled out abandoning NATO.

Yildirim, however, awarned the West shouldn’t “fall into the trap” of allowing the trial in New York “to harm long term relations between Turkey and the U.S.”

‘New Reality’

The government and even its opponents believe Turkey has genuine cause for its sense of betrayal by the West.

The climate is changing on the other side of the Atlantic, too, where a traditionally pro-Turkey Congress has turned hostile toward a country whose behavior seems less and less that of an ally.

Prominent U.S. senators have called on President Donald Trump to enforce a Russian sanctions bill passed in August, should Turkey follow through with plans to buy non-NATO compliant S-400 anti-aircraft systems from Russia, creating a potential break point for the U.S.-Turkish alliance.

Turkey’s government risks being trapped by its own rhetoric, according to Henri Barkey, a Turkey specialist at Lehigh University in Pennsylvania.

“If for years you have been saying the U.S. is involved in a plot against you, you can’t just walk away from it,” said Barkey, himself a central figure in Turkish allegations about U.S. involvement in the 2016 coup attempt. “You have created a new reality.” 

Media Campaign

In the weeks since it became clear Zarrab had turned state's witness, Turkish officials and pro-government media have been in overdrive, preparing the country for allegations of large-scale corruption against some of Erdogan's closest aides.

Zarrab testified last week that he gave former Economy Minister Mehmet Zafer Caglayan more than 50 million euros ($59 million) in bribes. Zarrab also said that then-Prime Minister Erdogan had approved a plan to involve two Turkish banks in a scheme to skirt U.S sanctions on Iran.

The same corruption claims were treated as a “judicial coup” attempt when Turkish prosecutors raised them in Turkey in 2013.

Erdogan at the time accused his former ally, Fetullah Gulen, of having followers in the Turkish judiciary concoct the charges to destroy him. A purge of alleged Gulenists from the courts followed.

Gulen today lives in self-imposed exile in Pennsylvania, adding fuel to allegations of U.S. involvement. Turkey has requested Gulen's extradition; the U.S. says Ankara has provided insufficient evidence.

“What it was not able to achieve here, it is trying to achieve there,” government spokesman Bekir Bozdag said of the Gulen movement last week. 

Turkish skepticism regarding the U.S. trial received a boost on Monday when Zarrab's lawyers revealed he had been recorded in jail saying that “In America in order to make it out of prison you need to admit to something you haven’t committed.”

A senior government official, who declined to be named because he was not authorized to speak publicly, said the perception is now that wherever Turkey has a problem, it's with the West. He traced the current tensions to Cyprus and the year 1964. 

That was when U.S. President Lyndon Johnson wrote a letter to the Turkish government, forbidding it from using its U.S.-supplied weaponry to protect ethnic Turkish Cypriots from what Ankara saw as a campaign of violence.

When Turkey did finally invade the island, in 1974, the U.S. imposed an arms embargo.

Since then, Turks have watched as a series of anti-Turkish terrorist organizations receive support or tacit safe haven in the West, the official said. Those groups include Armenian exiles who killed 32 Turkish diplomats in the 1970s, the Kurdish Workers's Party, or PKK, which has been fighting Turkish security forces since 1984, and the Gulenist movement and U.S.-armed Kurds in Syria today.

“It was always a relationship of tension and at times there was outright warfare” with western powers, said Caroline Finkel, an Istanbul-based historian and author of “Osman’s Dream: The History of the Ottoman Empire.” Turkey may believe it is strong enough to stand in isolation today, but that would be a big change from several centuries of Ottoman and Turkish history. “Back then,” she said, “the Ottomans knew when they were weak.”

©2017 Bloomberg L.P.

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