Turkey-US visa progress set back by new sparring over trials
By BENJAMIN HARVEY | Bloomberg | Published: November 7, 2017
The U.S. eased its visa ban against Turkey on Monday, sparking a rally in Turkish markets. But Ankara's response suggests there's no quick solution to the problems that have turned relations between the longtime allies into a hostile standoff.
The U.S., which suspended visas from Turkey on Oct. 8 after the arrest of some of its consulate staffers, said it would begin issuing them again on a "limited" basis. It cited assurances given by Turkey's government that no other employees were under investigation, that its local staff wouldn't be arrested for performing their official duties, and that it'll receive notification if Turkey planned to detain consular employees in the future.
That announcement pushed Turkey's stock market to a record high and the lira up 1.5 percent against the dollar. Turkish Airlines, the national carrier, surged 11 percent at the close, gaining the most in more than eight years. But the euphoria was short-lived.
Hours after the market closed, the Turkish Embassy in Washington published its own statement, contradicting and objecting to large parts of the U.S. announcement. No assurances were given to the U.S. regarding ongoing court cases, and the U.S. description of the security situation in Turkey "does not reflect the truth," it said. "Turkey also has very serious concerns about the ongoing cases against Turkish citizens in the U.S.," it added.
Those cases are expected to be a main topic of conversation when Turkish Prime Minister Binali Yildirim meets with U.S. Vice President Mike Pence in Washington later on Tuesday. Several Turks have been charged with helping a Turkish-Iranian gold trader, Reza Zarrab, launder hundreds of millions of dollars and evade U.S. sanctions on Iran. They include three executives from state-run lender Turkiye Halk Bankasi AS and a former economy minister. The trial will start on Nov. 27, but Turkey has been pushing for a political agreement that secures the release of those arrested: Zarrab and Halkbank's Mehmet Hakan Atilla.
Members of Turkish President Recep Tayyip Erdogan's security detail and other Turks have also been indicted in the U.S. for a brawl that broke out between them and protesters during Erdogan's visit to Washington in May. Turkey's foreign minister visited two men charged in September, calling them "brothers" and posting photos with them on his Twitter account. Both had been charged with aggravated assault. Video footage submitted at court shows one of them kicking two women protesters repeatedly -- one to the point of unconsciousness.
The arrests are only one of the many issues that have soured Turkish-American relations. Others include the U.S. refusal to extradite Fethullah Gulen, an Islamic cleric that Turkey blames for a 2016 coup attempt against its government; the U.S. alliance with Kurdish groups in Syria that Turkey considers terrorist organizations; Ankara's decision to purchase a missile defense system from Russia; and waves of arrests and purges following the coup attempt that have affected more than 150,000 people, including leading academics, journalists and human rights activists, as well as dozens of foreign nationals.
In a column in Milliyet newspaper, Cemil Ertem, one of Erdogan's advisers, said the U.S. is planning a new "operation" against Turkey's economy and Turkey's banking system that aimed to create "uneasiness and uncertainty" in markets and constituted a continuation of last year's coup attempt. He cited efforts to create "artificial volatility" in foreign exchange markets and said they wouldn't succeed.
Prime Minister Yildirim tried to put a more positive spin on developments.
"The U.S. decision on visa processing was a positive step," Yildirim said in a press conference at the Ankara airport on Tuesday morning. On the U.S. trip, "we're looking to take up some problems between us," he said, mentioning Syria, Iraq, Gulen and differences over the Kurdish militant groups.
The lira retraced some of its gains, dropping 0.5 percent to 3.8492 per dollar as of 10:45 a.m. on Tuesday. Stocks continued to rise, gaining 0.4 percent to a record on a closing basis.
"Relations are set to remain disputatious for the foreseeable," Julian Rimmer, an emerging-markets trader at Investec Bank Plc in London, said by email. "There are more grounds for disagreement and mutual suspicion than there are for cooperation. Erdogan will threaten a growing allegiance to the Kremlin if he does not have White House backing for his foreign policy in Turkey's near-abroad, and the U.S. will use the Zarrab sanctions-busting case for leverage over Erdogan as they seek to rein in his worst excesses."