This Pastor’s Plight Made Turkey’s Economic Woes Worse

(Bloomberg) -- Turkey and the U.S., longtime allies and fellow members of the North Atlantic Treaty Organization, have seen relations fray over an array of security and economic issues in recent years. The flare-up that sent Turkish financial markets plunging centers around the fate of an American pastor imprisoned in Turkey since 2016. U.S. President Donald Trump, saying the pastor is being unjustly detained, ordered sanctions against two Turkish government officials that, while limited in their direct effect, sent markets into a spin that hasn’t yet stopped.

1. Who is this pastor?

Andrew Brunson is an evangelical preacher from North Carolina who has lived in Turkey for more than 20 years and led a small evangelical Presbyterian church in the city of Izmir. He was taken into custody by the local police department in October 2016, a time when the government of President Recep Tayyip Erdogan was arresting tens of thousands of people -- including a number of other Americans -- in a crackdown following an attempted coup. Brunson is accused of having links to the outlawed Kurdistan Workers’ Party, or PKK, and to followers of Fethullah Gulen, the Turkish cleric living in exile in Pennsylvania whom Erdogan accuses of orchestrating the coup attempt. Brunson was released to house arrest in July following almost two years of incarceration. The case against him "seems to be based on secret evidence and a secret witness," says the U.S. Commission on International Religious Freedom, which advocates for his release.

2. Why did Trump get involved?

Trump brought up Brunson’s case in a May 2017 meeting with Erdogan. Soon there was talk that Erdogan might be willing to release the pastor in exchange for Reza Zarrab, a Turkish-Iranian gold trader in U.S. custody who has admitted to participating in a conspiracy to help Iran evade U.S. economic sanctions. (Zarrab testified that Erdogan supported the effort as well.) In April 2018, when Brunson went on trial, Trump called him on Twitter "a fine gentleman and Christian leader" who is "being persecuted in Turkey for no reason." In July, Trump tweeted, "A total disgrace that Turkey will not release a respected U.S. Pastor, Andrew Brunson, from prison. He has been held hostage far too long." On July 26, Trump threatened Turkey with "large sanctions," the first of which were imposed on Aug. 1, targeting any U.S. assets or business interests of Turkey’s justice minister, Abdulhamit Gul, and interior minister, Suleyman Soylu.

3. Why would such sanctions affect Turkey’s economy?

Ordinarily they might not. But the Turkish economy was already jittery, with the lira under pressure from one of the largest current-account deficits in emerging markets, which stokes inflation and hampers the ability of companies to repay their foreign-currency loans. Sanctions that slow the flow of funds into Turkey, or merely startle investors, add pressure on the currency. And the U.S. is threatening additional sanctions if Brunson isn’t released.

4. What explains Turkey’s position?

For Erdogan, the failed coup of July 2016 remains a festering sore. So does Washington’s reluctance to extradite Gulen, whom Erdogan blames for inspiring a “deep state” that’s infiltrated Turkey’s security services, schools and courts. American officials say Turkey’s evidence against Gulen, who moved to the U.S. two decades ago and lives in a compound in the Pocono Mountains, is insufficient to extradite him. While Turkish officials say the Brunson case is a judicial matter and not political, Erdogan fed U.S. suspicions that he’s engaging in "hostage diplomacy" by suggesting last year that the two nations could trade Brunson for Gulen.

5. What else is straining ties?

In the U.S. case in which Zarrab is a cooperating witness, Turkey alleges that the conviction of Mehmet Hakan Atilla, former head of international banking at state-owned Halkbank, relied on fabricated evidence given by followers of Gulen. In Syria, where both nations are fighting Islamic State forces, the U.S. and Turkey are at odds over U.S. support for a Kurdish-led militia that Turkey says is an extension of a terrorist group active in Turkey for more than three decades. (Turkish forces have attacked the American-backed Kurds in Syria.) Then there’s Turkey’s plan to purchase a missile defense system from Russia that isn’t compatible with those used by other members of NATO.

6. Can the U.S.-Turkey marriage be saved?

Probably, given the common interests that prevented past disputes from escalating into a permanent rupture. Turkey depends on short-term foreign investments from Americans and others who take a lead from Washington. Meanwhile, the U.S. is short of dependable allies in the Islamic Middle East, a region where Russia and its ally Iran are ascendant. Trump is promising a much tougher line against Iran, and may not want to push Turkey -- which has NATO’s second-biggest army -- too far into the opposing camp.

The Reference Shelf

• QuickTake explainers on the dispute over arming Syrian Kurds, Fethullah Gulen and Erdogan’s expanded powers.
• A summary of the Brunson case by the U.S. Commission on International Religious Freedom.
• All about Turkey’s power struggles.
• A Congressional Research Service report on U.S.-Turkey relations.
• Trump has other issues with NATO.

To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net

To contact the editor responsible for this story: Benjamin Harvey at bharvey11@bloomberg.net

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