Reza Zarrab paying price of challenging US financial hegemony
The reasons for the case against Reza Zarrab in the U.S. are many, but probably the biggest one is Turkey's inimical financial challenge to U.S. interests
On March 21, Reza Zarrab, an Iranian-born Turkish businessman, was arrested in Miami, Florida. He was charged with conspiracy to defraud the United States, conspiracy to violate the International Emergency Economic Powers Act, bank fraud and money laundering.
When news of Zarrab's arrest hit the wires, all eyes turned to Turkey, where he had become a household name during the Gülen Movement's failed attempt to overthrow the country's democratically elected government. According to media reports, Zarrab was a key figure in a gold-for-oil arrangement between Turkey and Iran, whose economy was crippled by U.S. sanctions. A closer examination of the indictment, however, reveals that the investigation into the financial activities of the Iranian-Turkish dual citizen, who will stand trial along with two Iranian nationals, have little to do with Turkey - except the fact that Turkey had actively contributed to a global rebellion against U.S. financial hegemony in 2010.
The high-profile arrest took place against the background of terror attacks across Europe, Russian withdrawal from Syria and a ground offensive to liberate Mosul. Meanwhile, Turkey reached an agreement with the European Union to stem the flow of refugees into the continent. In other words, a new balance of power is slowly emerging from the rubble of the Arab Spring with regional players maintaining some influence over the Middle East while the United States calls the shots.
At this point, the Obama administration desperately wants to keep Iran, which recently signed a nuclear deal with Washington to break years of isolation, under control. According to foreign policy experts in the Turkish capital, the United States seeks to end the power struggle between the sponsors of former president Mahmoud Ahmadinejad and Hassan Rouhani, his successor, with a clear victory for the latter group.
Reza Zarrab's arrest, nonetheless, represents an effort by the United States to prevent Turkey from dominating the Iranian market. It all started in January 2013 when Gülenist operatives within the Turkish police and judiciary raided a private jet at Istanbul Ataturk Airport based on an anonymous tip that the aircraft was carrying 1.5 tons of gold. At the time, the story about "the gold rush at Ataturk Airport" appeared in multiple media outlets. What appeared to be a common instance of illegal gold trade was actually the second act of an elaborate plot - which was first uncovered when Gülenist prosecutors tried to arrest Hakan Fidan, Turkey's spy chief. Moving forward, the movement -in cooperation with the U.S. government - turned against Halkbank, which, they claimed, played a central role in an international money laundering scheme. In truth, at least two U.S. companies had processed the same kind of payments without raising red flags. It was not until the Gülen Movement directly confronted the government in December 2013 that the public discovered the true meaning of the airport raid.
The Gülen Movement's attacks against Halkbank were not coincidental, but the public wasn't aware that the bank had participated in a rebellion against the global financial system controlled by the United States. In this sense, the December 2013 coup attempt targeted not only President Recep Tayyip Erdogan but also Turkey as an autonomous power in the Middle East.
Selva Tor, a financial security expert, recently published an op-ed piece on al-Jazeera Turk to support the above claims. Turkey-U.S. relations became increasingly strained following the Chinese Central Bank's open challenge to the Western monetary system in the wake of the 2008 financial crisis, she argues. The challenge was followed by "billions of dollars disappearing from the Chinese stock market" that caused China to shelf the proposal. "This didn't stop an estimated $100 billion from disappearing from the international payments system, on which the greenback's hegemony depends," Tor says. "The reason was not China but Turkey, which in 2010 positioned itself as an emerging power [and] helped Iran circumvent U.S. sanctions to process oil and natural gas payments."
According to Turkish officials, this was when Turkey started facing challenges in the international arena. Having challenged the global financial system, the country witnessed the Gezi Park protests unfold, the Kurdish peace process fail and the Syrian crisis turning into a deadlock.
The United States took a clear stance against the financial challenge by enlisting the services of the United Nations and the U.S. Senate to define all financial transactions involving Iran's oil revenues as "money laundering." Over the next few months, U.S. Treasury officials visited a number of countries including Turkey to prevent them from cooperating with Iran. In 2010, Assistant Secretary Daniel Glaser and the recently-appointed Undersecretary for Terrorism and Financial Intelligence David Cohen had warned Turkish banks "not to work with Iranian banks." At the time, then-State Minister Zafer Çağlayan made the following statement: "The United States has imposed sanctions [on Iran] to ban all financial transactions [involving Iranian oil revenues]. Turkey is only bound by U.N. resolutions, not U.S. regulations. The Turkish banks must be brave."
If this is too detailed for you, here's a quick refresher: Bilateral trade between Turkey and Iran increased from $1 billion in 2002 to $11 billion by 2010. Over the next five years, Turkish officials believed, the trade volume would have reached $35 billion. Keeping in mind that Halkbank had started processing India's oil revenues, Turkey's financial potential raised red flags in Washington. In the end, the U.S. government moved to put Reza Zarrab behind bars and closed a crucial chapter in financial history.
When news of Zarrab's arrest hit the wires, all eyes turned to Turkey, where he had become a household name during the Gülen Movement's failed attempt to overthrow the country's democratically elected government. According to media reports, Zarrab was a key figure in a gold-for-oil arrangement between Turkey and Iran, whose economy was crippled by U.S. sanctions. A closer examination of the indictment, however, reveals that the investigation into the financial activities of the Iranian-Turkish dual citizen, who will stand trial along with two Iranian nationals, have little to do with Turkey - except the fact that Turkey had actively contributed to a global rebellion against U.S. financial hegemony in 2010.
The high-profile arrest took place against the background of terror attacks across Europe, Russian withdrawal from Syria and a ground offensive to liberate Mosul. Meanwhile, Turkey reached an agreement with the European Union to stem the flow of refugees into the continent. In other words, a new balance of power is slowly emerging from the rubble of the Arab Spring with regional players maintaining some influence over the Middle East while the United States calls the shots.
At this point, the Obama administration desperately wants to keep Iran, which recently signed a nuclear deal with Washington to break years of isolation, under control. According to foreign policy experts in the Turkish capital, the United States seeks to end the power struggle between the sponsors of former president Mahmoud Ahmadinejad and Hassan Rouhani, his successor, with a clear victory for the latter group.
Reza Zarrab's arrest, nonetheless, represents an effort by the United States to prevent Turkey from dominating the Iranian market. It all started in January 2013 when Gülenist operatives within the Turkish police and judiciary raided a private jet at Istanbul Ataturk Airport based on an anonymous tip that the aircraft was carrying 1.5 tons of gold. At the time, the story about "the gold rush at Ataturk Airport" appeared in multiple media outlets. What appeared to be a common instance of illegal gold trade was actually the second act of an elaborate plot - which was first uncovered when Gülenist prosecutors tried to arrest Hakan Fidan, Turkey's spy chief. Moving forward, the movement -in cooperation with the U.S. government - turned against Halkbank, which, they claimed, played a central role in an international money laundering scheme. In truth, at least two U.S. companies had processed the same kind of payments without raising red flags. It was not until the Gülen Movement directly confronted the government in December 2013 that the public discovered the true meaning of the airport raid.
The Gülen Movement's attacks against Halkbank were not coincidental, but the public wasn't aware that the bank had participated in a rebellion against the global financial system controlled by the United States. In this sense, the December 2013 coup attempt targeted not only President Recep Tayyip Erdogan but also Turkey as an autonomous power in the Middle East.
Selva Tor, a financial security expert, recently published an op-ed piece on al-Jazeera Turk to support the above claims. Turkey-U.S. relations became increasingly strained following the Chinese Central Bank's open challenge to the Western monetary system in the wake of the 2008 financial crisis, she argues. The challenge was followed by "billions of dollars disappearing from the Chinese stock market" that caused China to shelf the proposal. "This didn't stop an estimated $100 billion from disappearing from the international payments system, on which the greenback's hegemony depends," Tor says. "The reason was not China but Turkey, which in 2010 positioned itself as an emerging power [and] helped Iran circumvent U.S. sanctions to process oil and natural gas payments."
According to Turkish officials, this was when Turkey started facing challenges in the international arena. Having challenged the global financial system, the country witnessed the Gezi Park protests unfold, the Kurdish peace process fail and the Syrian crisis turning into a deadlock.
The United States took a clear stance against the financial challenge by enlisting the services of the United Nations and the U.S. Senate to define all financial transactions involving Iran's oil revenues as "money laundering." Over the next few months, U.S. Treasury officials visited a number of countries including Turkey to prevent them from cooperating with Iran. In 2010, Assistant Secretary Daniel Glaser and the recently-appointed Undersecretary for Terrorism and Financial Intelligence David Cohen had warned Turkish banks "not to work with Iranian banks." At the time, then-State Minister Zafer Çağlayan made the following statement: "The United States has imposed sanctions [on Iran] to ban all financial transactions [involving Iranian oil revenues]. Turkey is only bound by U.N. resolutions, not U.S. regulations. The Turkish banks must be brave."
If this is too detailed for you, here's a quick refresher: Bilateral trade between Turkey and Iran increased from $1 billion in 2002 to $11 billion by 2010. Over the next five years, Turkish officials believed, the trade volume would have reached $35 billion. Keeping in mind that Halkbank had started processing India's oil revenues, Turkey's financial potential raised red flags in Washington. In the end, the U.S. government moved to put Reza Zarrab behind bars and closed a crucial chapter in financial history.