With his threats against Isbank, Erdogan can succeed in manipulating the Turkish news cycle for a few more days, thereby buying himself some respite from embarrassing reports on the deepening crises in the economy and in Syria. However, both Erdogan and Turkey would fare better if the Turkish president could keep his hands off the country’s largest listed lender and start addressing the fallout from his and his son-in-law’s misguided economic and foreign policies.
Washington’s maximum pressure strategy has had severe macroeconomic and fiscal consequences for Tehran’s clerical regime, but the pressure remains far from its real maximum.
If Ankara decides to pivot back to the transatlantic alliance and its values, Washington should welcome its wayward NATO ally back into the fold. But U.S. officials would fare better by remaining cautious about any meaningful Turkish reorientation so long as Erdogan stays at the helm. The Turkish president, for his part, can start by curbing his inflammatory anti-Western rhetoric and ending the funding he has provided to radical Islamists.
The case against Halkbank has been a longstanding point of tension in the increasingly fraught relationship between Ankara and Washington. If Halkbank decides to acquiesce and appear in court, the highly publicized case is likely to further tarnish the reputation of the Erdogan government and strengthen accusations that Turkey has become a permissive jurisdiction. If the public lender insists on its civil contempt of court, this might ultimately sever its ties with the U.S. financial system, hurting not only the bank but also Turkey’s increasingly fragile financial sector.