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Despite all the bitter talk of the Trump administration on Iran on November 5, it somewhat relieved the country. In a speech to the White House, US Secretary of State Mike Pompeo granted a special waiver allowing Turkey to continue buying oil from Iran despite the reinstatement of sanctions.
Pompeo explained that the temporary pass, given to eight buyers in total, fulfilled their promises of either drastically reducing oil purchases or completely eliminating them. The next day, however, Turkish President Recep Tayyip Erdogan called the US sanctions "imperialist" and committed to challenging them. The Trump administration should pay close attention to his remarks, lest he become the second US government to quickly succeed Erdogan.
Turkey relies on foreign energy and imports half of its oil – about 200,000 barrels a day at full capacity – and a fifth of its gas from Iran. This makes the country one of Iran's biggest consumers for oil. In 2012, when the United States imposed its latest sanctions on Tehran, Ankara reduced its oil imports to about 120,000 barrels a day in order to benefit from similar waivers by the state department. This time, Turkey also reduced its imports to 129,000 barrels a day and managed to get one of eight exemptions granted by Washington.
Before Erdogan's harsh words on Nov. 6, Ankara had hinted that he was ready to comply with President Donald Trump's sanctions. Earlier in the month, Reuters reported that a private Turkish oil company, Petrol Ofisi, had refused fuel for Iranian aircraft operating in Turkey. In October, an unidentified Turkish "industrial source" declared Reuters first refiner in Turkey was in talks with US officials to obtain a waiver, and "if the United States told them to stop [importing oil]they [Turkey] will oblige. "
Erdogan made the same gestures of compliance last time, while doubling behind the scenes. Under the Obama administration, after transferring its payments to Iran for oil and gas imports on special escrow accounts mandated by US sanctions, Turkey then allowed the perpetrators of individual sanctions to gain access to the accounts and to launder money in Iran in the form of gold as payments for false exports. The project has reported at least $ 13 billion in Tehran alone in 2012 and 2013.
This operation still causes Erdogan headaches. In January, a Manhattan federal court sentenced Turkish banker Mehmet Hakan Atilla, deputy director of the Turkish public bank Halkbank, for his role in violating the sanctions. The US Treasury should also impose a heavy fine on Halkbank, which is a major point of contention in US-Turkish relations. The strong Turkish man wants nothing more than to do away with the whole process, including the future US investigations on the escape of sanctions by Turkey.
His wishes can come true. In October, Turkey finally released from prison an American pastor, Andrew Brunson, who had been detained for two years on charges of terrorism and espionage. The pastor's return to the United States provided Trump with important photo ops before the November 6 mid-term elections in the United States. The Turkish court's quick turn on Brunson raised the question of what Erdogan would have received in return, since Ankara had been trying for months to extract concessions from Washington in exchange for the pastor.
All indications are that the parties reached an agreement on Halkbank, which Turkey would have requested during the summer. On November 3, two days before the United States announced its derogation for Turkish oil purchases by Turkey, Erdogan had telephoned Trump to discuss the fine imposed on Halkbank. Although such negotiations have been ongoing since the end of the Atilla trial in January, this was Erdogan's first public recognition of the talks.
Turkey has also taken steps to torpedo future US investigations into Turkey's non-compliance with sanctions. Although Atilla has been condemned, the Turkish-Iranian gold dealer Reza Zarrab, the central figure in this project, is still changing. Last fall, Zarrab signed a last-minute plea bargain, which moved him from the main accused in the case to the state's flagship witness. He has since helped the FBI uncover new Iranian plots to evade sanctions on Turkish soil.
The Turkish president, whose former cabinet members have collected millions of dollars in bribes under the program, is worried about what Zarrab might disclose about Erdogan's role in these illicit activities. During the trial, Turkey declared Zarrab a traitor and seized all his property. Curiously, however, this week, a Turkish court issued a warrant against Zarrab for carrying out illegal restorations in his villa in Istanbul a few years ago. The belated warrant fulfills Turkey's first obligation to demand the extradition of Zarrab, which would put an end to her chief's cooperation with the US authorities. And Erdogan seems to believe that Trump gave him the green light.
If Trump won Brunson's freedom and Turkey promised to honor Iran's sanctions by accepting Erdogan's demands for Halkbank and Zarrab, Washington may soon regret it. Erdogan sincerely believes that he can continue to oppose sanctions imposed by the United States without consequence and relies on the coverage of European partners. (Although unlikely, the European Union is considering investing in Iran through alternative financial structures, such as euro-denominated loans to Iran and payment systems.) By sweeping under the carpet the violations committed by Erdogan by taking hostage, Trump will only emboldened the Turkish president.
Special derogations, whether provocative Turkey or compliant partners, have their own logic. It is unrealistic to expect Iranian energy-dependent customers to immediately reduce their imports, or to disrupt world markets or drive up world oil prices, which could inadvertently increase Iran's revenues. But Erdogan probably sees the waiver and its interactions with the White House that got it, as a license for more quibble.
Trump would be wise to learn from the bitter experience of the Obama administration with the double game of Erdogan. Otherwise, Erdogan could again engage with Tehran to undermine Washington's sanctions strategy against Iran.
