Turkey PM Erdogan: “International Plot” Attacking Corruption Probe

The corruption probe in Turkey pitting two former Islamist allies, the Gulen Movement (GM) versus the inner circle of the AKP party of Premier Erdogan, has roiled the Middle East country and its economy.  Premier Erdogan suggested that an international plot was behind the alleged corruption probe, saying at a rally in Samsun, Turkey, “an ill-intentioned move of local and foreign actors targeting the government. This is an operation with international dimensions and local sub-contractors”. US Ambassador to Ankara Francis T. Ricciardo  issued a statement refuting the allegation that the US was behind the graft probe to which the Turkish Foreign Ministry concurred. Thursday, weposted a denial of involvement issued by expatriate leader of the GM, Sheikh Muhammad Fethullah Gulen who resides in a fortified complex in the Poconos Mountains of Eastern Pennsylvania. The state-run Andalou News Agency cited the range of arrests and detentions, the outgrowth of a two year investigation:

Sixteen people, including the sons of two ministers, have been charged in connection with a sweeping corruption investigation targeting allies of the Prime Minister, Recep Tayyip Erdo?an.

Suleyman Aslan, the general manager of state-owned Halkbank, was also formally arrested and charged alongside Baris Guler, the son of the Interior Minister, and Kaan Caglayan, the son of the Economy Minister, Turkey’s state-run news agency reported on Saturday. The son of a third minister and a construction magnate were freed from custody pending trial.

A total of 24 people are now in detention, awaiting trial on corruption allegations – money laundering, gold smuggling and bribery.

Premier Erdogan has dismissed 25 police heads in the Istanbul police department in the midst of the corruption probe. The split between the two Islamist groups arose because of a move by the AKP government to shut down private schools, a major source of income for the GM in Turkey.

The GM’s control in the US of more than 135 charter schools in 20 states with enrollment of over 45,000 has been the subject of exposes by the New York Times and other publications. A recent FBI raid of a Gulen science academy in Louisiana has raised questions about employment of Turkish nationals as faculty admitted under the US H1-B Visa program.  See our post, here.

Premier Erdogan is seen as very autocratic given his draconian handling of protests in major Turkish cities this past summer.  That and the current confrontation with the GM, which  has a heavy presence in Turkey’s national and local police and judiciary,  have raised questions about the AKP’s viability.  Municipal elections and Erdogan’s proposed referendum to grant executive powers to Turkey’s Presidency are scheduled in 2014. Ironically, the current incumbent in the largely ceremonial post of President, Abdullah Gul, is a leading Gulenist. He is rumored to be contemplating running for the Premiership, should Erdogan opt to run for the Presidency. Erdogan, who has regional Muslim Brotherhood ties including Hamas, is promoting a national referendum on proposed changes to the Presidency granting the position wide executive powers.  There are fears that if the referendum is approved and Erdogan opts to run for the Turkish government executive post, he might become an Islamist autocrat seeking to reinstate a Turkish Caliphate, a throwback to the Ottoman Empire.  Ironically, the GM controlled prosecutors following the 2007 AKP sweep of parliamentary elections tried and convicted a number of secular Turkish Generals charged with conspiring to overthrow the Islamist regime of Premier Erdogan.

According to the The Hurriyet Daily News, the country’s leading business group, TÜS?AD, has waded into the controversy, decrying the government’s interference with the Judiciary in this “landmark” corruption probe and police purge.  That comment by TÜS?AD’s leaders, is reflected in concerns over the weakening of the Turkish Lira in foreign exchange trading markets as reported by The Wall Street Journal, “Turkish Lira Falls to Fresh Lows”.   The WSJ market report noted, “Turkey’s currency and bonds slumped again Friday, dented by domestic and international stress that are piling further pressure on a central bank that is short on cash and lacking in investors’ confidence.”  A Goldman Sachs emerging markets analyst, Sam Finkelstein cited the current domestic crisis not helping to assuage international investors’ confidence in Turkey’s economy, saying, “This political crisis is destabilizing, adding a set of dark clouds to an already difficult situation.”

One of those arrested in the Turkish corruption probe is the head of  the state-owned Halkbank involved in the gold trading with Iran, a subject of  importance in the debate over Iran nuclear sanctions relief in the P5+1 agreement. Cliff May, President of the Washington, DC, Foundation for the Defense of Democracies (FDD) drew attention to this aspect of the current debate over new sanctions legislation in an email on Saturday.  May cited FDD investigations into gold trading with Iran and illicit finance in Turkey:

Turkey’s state-owned Halkbank is at the center of the current corruption scandal in Turkey – and throughout this year FDD has been studying Halkbank’s role in helping Iran evade sanctions.  Notably, FDD executive director Mark Dubowitz teamed up with Roubini Global Economics to produce this report in May documenting how Iran benefited to the tune of $13 billion in gold transfers — despite an Obama administration executive order in July 2012 prohibiting such trade. Jonathan Schanzer, FDD’s vice president for research, also wrote about Halkbank’s role in gas-for-gold for The Atlantic. That piece can be found here.

More recently, Schanzer has looked at the way Turkey has colluded with Iran on a range of issues and written about this relationship for the National Interest. That piece can be found here.  Schanzer also wrote for Reuters earlier this month about how Turkey is looking to cash in on the sanctions relief recently offered to Iran at Geneva.  That article can be found here.

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Finally, FDD’s research on Turkey’s illicit finance issues informed a letter signed by 45 members of Congress which can be found here.

The raging conflict between the two Islamist groups in Turkey over the corruption probe, coupled with both domestic and international political and economic concerns could add more complications to the already roiling Middle East.  Given a stalemate in the 33 month civil war in neighboring Syria, to be addressed in the upcoming January 2014 Geneva II discussions, and the P5+1 negotiation with Iran over its nuclear program, Erdogan’s AKP is engaging in risky business.

EDITORS NOTE: This column originally appeared on The New English Review.