Bolton spoke, Berman got fired, Halkbank boomed

As I sat down to write this article around noontime on June 22, Halkbank shares seemed to have started off the week with a 6.5{4a62a0b61d095f9fa64ff0aeb2e5f07472fcd403e64dbe9b2a0b309ae33c1dfd} increase. This increase had even reached 8.5{4a62a0b61d095f9fa64ff0aeb2e5f07472fcd403e64dbe9b2a0b309ae33c1dfd} in the morning, sometime after the opening of the Istanbul Stock Exchange. “It’s a big increase for a bank,” said a friend of mine who follows the stock market by the minute per their job; “there were profit sales once it hit 8.5, so it doesn’t count as a decrease.” Whereas before the end of the week, US President Donald Trump’s former National Security Advisor John Bolton had stirred the pot by publishing a book that included Trump’s conversation with Turkish President Tayyip Erdoğan concerning the Halkbank case. Furthermore, Trump’s Justice Minister Bill Barr had dismissed New York South District Prosecutor Geoffrey Berman, who had been investigating cases that Trump didn’t like, including one on one of Turkey’s public bank Halkbank. Barr removing prosecutor Berman from office was the first outcome of the publishing of Bolton’s book, titled The Room Where It Happened. Its second outcome, I’m guessing, was Halkbank shares gaining value. 

Among those most satisfied with this development must be Borsa İstanbul General Manager Mehmet Hakan Atilla. Because Hakan Atilla had been arrested on March 28, 207, during a US trip. The accusation was that Halkbank, of which he was assistant general manager, had violated the US embargo on Iran. The arrest, carried out when Preet Bharara was the prosecutor, had taken place while Reza Zarrab, an Iranian-Turkish dual-citizen arrested in the US, was agreeing to testify against Halkbank. After serving 28 months in prison in the US, Atilla was appointed as the General Manager of the Istanbul Stock Exchange upon his return to Turkey.  

So, despite the ongoing Halkbank case and Prosecutor Berman being dismissed, how come had Halkbank shares increased so much? 

What had happened? What is going on?

It seems like some of the terms expressed in Bolton’s book had led to this development. But before we get to those, we’d better take a look at the issue’s background. 

Erdoğan had a telephone conversation with Trump on July 16, 2018. This call had been presented to the public as mainly a demand for the withdrawal of US-protected PYD/YPG militants in Manbij, Syria. Bolton recounts in his book that Erdoğan had brought up Halkbank, US-resident Islamist preacher Fethullah Gülen, and the S-400/F-35 issue. Trump, in response, had reiterated his demand to release Pastor Andrew Brunson. As a result of this tension, Trump had posted that baleful August 10 tweet which led to an unprecedented depreciation of the Turkish lira against the US dollar. Meanwhile, even though Erdoğan had engaged in a prisoner exchange rhetoric referring to the Gülen-Brunson case, the Turkish court nevertheless released Brunson on October 12. After this development, the Turkish Lira had gained value even though it couldn’t reach its previous level against the dollar.

Now back to Bolton. I’m not getting into whether it’s correct for now, but below is a quote from Bolton’s book. 

“With the Brunson matter now six weeks behind us, the two leaders met bilaterally on December 1 at the Buenos Aires G20 summit, largely discussing Halkbank. Erdogan provided a memo by the law firm representing Halkbank, which Trump did nothing more than flip through before declaring he believed Halkbank was innocent of violating US Iran sanctions. Trump asked whether we could reach Acting US Attorney General Matt Whitaker, which I sidestepped. Trump then told Erdogan he would take care of things, explaining that the Southern District prosecutors were not his people, but were Obama people, a problem that would be fixed when they were replaced by his people.”

Obama’s prosecutors vs. Trump’s prosecutors?

But Berman wasn’t only dealing with the Halkbank case. He was also investigating allegations of corruption and fraud, including relations with Russia, which could put Trump on a difficult spot in the upcoming November election. So the reason for his dismissal wasn’t only Erdoğan or the Halkbank affair. But what do you make of the words above by Trump? Does it seem like Trump is taking Erdoğan’s word for it in the Halkbank issue, that he couldn’t influence prosecutors before because they were “Obama’s men,” but that the case would be closed once the matter would be entrusted to “Trump’s Prosecutors” and not “Obama’s Prosecutors?” The market certainly seems to have understood it that way. Of course, the markets also seem to have understood that Halkbank would be safe as long as Trump, who dismissed Berman accusing him of being “Obama’s Prosecutor,” remains in office.  

The expected political outcome of such a development would be Trump and Erdoğan getting a little closer. But Bolton’s aim with this book was to expose Trump’s dirty laundry as a comeback for having expended him. So Bolton felt the need to express that his thoughts are the opposite of Trump’s not only concerning Halkbank but also Erdoğan and Turkey, in the following quote from the book. 

“This ongoing criminal investigation threatened Erdoğan himself because of allegations he and his family used Halkbank for personal purposes, facilitated further when his son-in-law became Turkey’s Finance Minister. To Erdoğan, Gulen and his “movement” were responsible for the Halkbank charges, so it was all part of a conspiracy against him, not to mention against his family’s growing wealth. He wanted the Halkbank case dropped, unlikely now that US prosecutors had their hooks sunk deep into the bank’s fraudulent operations.”

Bolton seemed to have made up his mind about Erdoğan and Halkbank as though he was the judge, as he was still serving as the President’s National Security Adviser.

Bolton’s son-in-law obsession

Bolton seems to be particularly obsessed with Trump’s son-in-law Jared Kushner whom he made his Middle East Special Envoy. It’s not just about Turkey. For example, it irritated Bolton when British Prime Minister Boris Johnson called Kushner on a matter that directly interested Bolton. In his book, he recounts with joy how he brought up the personal relationship between Kushner and Erdoğan’s son-in-law and Turkish Finance Minister Berat Albayrak, to incite US Foreign Minister Mike Pompeo and Treasury Minister Steven Mnuchin. He writes the following. 

“Turkey retaliated with its own tariffs, and Trump responded by requesting more sanctions. Mnuchin tried to slowroll Trump on sanctions, which I thought would only frustrate him further. Then the Vice President suggested Jared Kushner call Turkey’s Finance Minister, since they were both sons-in-law of their respective countries’ leaders. Really, what could go wrong? I briefed Pompeo and Mnuchin on this new “son-in-law channel,” and they both exploded, Mnuchin because the Turkish son-in-law was Finance Minister, his counterpart, and Pompeo because this was one more example of Kushner’s doing international negotiations he shouldn’t have been doing (along with the never-quite-ready Middle East peace plan). I always enjoyed bringing good news. Trump and Kushner were flying to a political fund-raiser in the Hamptons where Mnuchin had already arrived, and Kushner called me later to say Mnuchin had “calmed down.” Kushner also said he had told the Turkish son-in-law he was calling in his “personal” capacity as a matter of “friendship” and in no way was signaling “weakness” to the Turks. I doubted the Turks believed any of that.”

At the time it had also been brought up that this “friendship” dimension played a role in Albayrak getting a White House appointment with Trump on April 16, 2019. Investors, upon reading Bolton’s account on Trump’s closeness to not only Erdoğan on a personal level but also as families, they must have rushed to the Halkbank shares. 

Wasn’t Bolton also Trump’s man?

I think of Bolton as a politician who embodies nearly everything I stand against in international politics. He’s one of those Neo-con hawks who had written to Democratic President Bill Clinton in January 1998, telling him that they were against him, but that they would give him full support, should he decide to attack Iraq. Like some of the other signatories of that letter, including Donald Rumsfeld, Dick Cheney, Paul Wolfowitz, and Zalmay Khalilzad, Bolton, too, found his place in the George W. Bush administration. This was the crew that started the Iraq war in 2003. I see Bolton is right-wing enough to be considered fascist, submerged in religious fanaticism enough to be considered bigoted, prejudiced, and conspiracist. So why do I take Bolton seriously and write an article about him? Because it is precisely this kind of people who are ready to shamelessly betray those they’ve worked with as soon as they encounter a conflict of interest, spreading their dirty laundry, escaping accountability as though they had nothing to do with the deeds they expose. From his account, Bolton omitted the actions he was indeed involved in. And that may be why he’s reluctant to testify to legal authorities. But the other things he has written are probably true. 

According to Bolton, Trump said that the “prosecutors were not his people, but were Obama people, a problem that would be fixed when they were replaced by his people.” But wasn’t Bolton also “Trump’s man?” From April 9, 2018, to September 10, 2019, he was in his closest team as National Security Advisor. Hadn’t he figured out Trump’s personality defect, that of sending off in bad odor those he welcomed with a smile? 

And what about Berman? According to the Bharara, who penned an opinion on the matter for the New York Times on June 21, Berman was a known Republican, now dismissed. Furthermore, he had donated to Trump’s election campaign and had been interrogated personally by Trump before taking his post. So he was not an Obama supporter, contrary to what Trump said to Erdoğan according to Bolton. So that wasn’t true either.