Turkey Risks U.S. Sanctions for Jailed American Priest

(Bloomberg) -- U.S. patience is wearing thin over Turkey’s nearly two-year-long imprisonment of an American priest.

With a judge ordering Presbyterian Pastor Andrew Brunson back to jail on Monday, U.S. officials are considering retaliation against what they see as a policy of “hostage diplomacy" by Turkish President Recep Tayyip Erdogan’s government. The case is one of a trio of issues that could trigger unprecedented U.S. sanctions against a NATO ally, likely to be modeled on those imposed on Russia.

Turkey Risks U.S. Sanctions for Jailed American Priest

The “sham trial involving Dr. Andrew Brunson, filled with secret witnesses and conspiracy theories, is further proof of the deterioration of the relationship between the U.S. and Turkey," Senator James Lankford of Oklahoma said in a tweet after the hearing. “Congress stands ready to take action, including sanctions, if Brunson is not released."

Brunson, 50, a native of North Carolina and resident of Turkey for 23 years, has been imprisoned in a remote town on Turkey’s Aegean coast since October 2016, when he was among tens of thousands swept up in the aftermath of a July coup attempt. The charges aired against him in court are numerous, ranging from working to establish a Kurdish-Christian state to supporting Islamic and Kurdish terrorist groups, to espionage and attempting to create chaos.

‘Targeted Sanctions’

The proceedings “were dominated by wild conspiracies, tortured logic, and secret witnesses, but no real evidence to speak of," said Sandra Jolley, vice chair of the U.S. federal Commission on International Religious Freedom, who attended the hearing outside of Izmir and recommended “targeted sanctions” on Turkey after it concluded. “From the people at the very highest level of the American government to the very bottom, people are outraged that you can just snatch somebody up and there is no recourse.”

U.S. sanctions against Turkey would be a remarkable turn for a relationship that’s been one of the bedrocks of the post-World War II U.S. security stance in the Middle East. And even if the Brunson trial doesn’t bring them, Turkey faces the possibility of getting them for other issues: its participation in a massive scheme to evade Iranian sanctions, which resulted in the conviction of an executive at state-run Turkiye Halk Bankasi AS; and its purchase of S-400 missiles from Russia, which U.S. government lawyers have decided will trigger automatic sanctions the moment they hit Turkish soil.

Three Tracks

Of the three possible tracks for U.S. sanctions, “pastor Brunson’s case is of course more imminent," said Sinan Ulgen, a former Turkish diplomat who’s now a visiting scholar at Carnegie Europe. “The case of the pastor is going to weigh heavily on the tonality of this relationship."

While Turkish assets are underperforming, with the lira dropping 10 percent so far this year and the stock exchange down 25 percent, the market isn’t pricing in the possibility of sanctions impacting the economy in any major way, according to Paul McNamara, who oversees about $11 billion in developing-world assets at GAM UK Ltd. That’ll change if the U.S. takes action against the financial system following sentencing next month of Mehmet Hakan Atilla, the former Halkbank deputy CEO.

Trump Intervention

“Turkey is vulnerable right now, and the market will react badly to any bad news," McNamara said. “I think a Halkbank sanction is the one that matters. The market doesn’t care about the other two."

Any possible U.S. sanctions against Turkey over Halkbank or political issues “could have a major impact on Turkish markets and create a big upheaval,” Atilla Yesilada, an economist at New York-based consultancy GlobalSource Partners, said by phone from Istanbul.

Defending himself in fluent Turkish, Brunson called the allegations against him “disgusting" and pleaded for a return to his family. Such appeals have also been made to Erdogan directly and repeatedly at the highest levels of the U.S. government -- including by President Donald Trump, Vice President Mike Pence and former Secretary of State Rex Tillerson -- to no avail.

Even though Turkish officials say the Brunson case is a judicial rather than political matter, Erdogan seemed to confirm U.S. suspicions that the Turkish government was holding him as leverage for political purposes last September, when he suggested that Turkey could release Brunson if the U.S. agreed to extradite Fethullah Gulen, the Islamic preacher Turkey says was the mastermind of the coup attempt. “Give a pastor, take a pastor," Erdogan said.

Brunson’s first hearing took place on April 16, after a year and a half in prison. Prosecutors have asked for him to be sentenced to 35 years.

“I want to go back home,” Brunson said at his trial on Monday. He and his wife burst into tears as the court adjourned the case and called a new hearing for July 18, three weeks after Turkey holds elections.

©2018 Bloomberg L.P.