Today, Turkish-Iranian gold trader Reza Zarrab will go on trial in New York. He is charged with conspiring to evade US sanctions on Iran by providing gold to the Iranian government.
Eight other people– one of whom is former Turkish Economy Minister Zafar Caglayan– have also been charged, and prosecutors have accused Turkish state-owned Halkbank of facilitating the scheme. One of several disputes between Washington and Ankara, the latter has declared the case “a plot against Turkey”.
Any discoveries during the trial could implicate other high-level Turkish officials and be personally and politically damaging to Mr Erdogan, as the president is known to have a relationship with Mr Zarrab.
Shares of the lira and Turkish banks have fallen substantially in the past few months, with the latter falling more than 13% in November alone. Information incriminating more Turkish banks or government officials could lead to heavy US fines and spook investors. This could send the lira tumbling further, slow economic growth and– should the economic fallout be acute–threaten Erdogan’s success in the 2019 elections.
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Max is Foreign Brief's Chief Executive Officer. A Latin America specialist, Max is an expert in regional political and economic trends, focusing particularly on the Southern Cone.