Is A Perfect Storm Brewing for Erdogan?

In my previous post, I outlined the precarious position Turkey found itself thanks to the misguided and selfish actions of its president Recep Tayyip Erdogan.

And I posed the question whether Erdogan can be stopped.

Let's review it together.

Erdogan's polarizing tactics worked well and there are no internal actors left to put up a fight with him. Opposition is fragmented and the main opposition party CHP has never been able to set the agenda or counter Erdogan's discourse effectively. Consequently, the electorate believes that there is no viable alternative to Erdogan.

External actors do not have much leverage as Erdogan seems to have outfoxed them through a number of cynical moves.

Last year, he allowed (perhaps actively encouraged is a better term) a huge refugee exodus towards Europe as a way to blackmail the European Union (EU).

Thousands died in the process but the gambit was successful. Hundreds of thousands reached Europe, threatened the Schengen space and exposed EU's internal divisions.

EU crumbled, offered a sizable bribe to strike a cynical and possibly illegal deal and promised to be silent about Erdogan's strategery.

In fact, the sharp decline in the number of refugees within days of the deal clearly shows the artificial nature of the crisis:

Between March 20 — the day the deal went into effect — and March 26, daily arrivals fell from 930 to 78. On Sunday there were 73 arrivals, according to official figures published by the Greek government.

As for the US, when Erdogan realized that Obama was turning against him he made a u-turn and offered Incirlik airbase as the coalition HQ. He figured that he could participate in sorties against ISIS only to hit Syrian Kurds. He gambled that the Americans might allow some operating leeway for the use of Incirlik.

And they did.

In fact, the only black spot in Erdogan's foreign policy moves aimed at neutralizing his potential opponents was his disastrous chess game and the check mate he suffered after the peculiar jet downing incident.

In the span of a few months, Putin destroyed the oil trade between ISIS and Turkey, stopped the arms and personnel flow from Turkey to ISIS, energized Syrian troops and caused ISIS to lose 22 percent of its territory.

Russia is leaving because Putin is reluctant to risk a confrontation that might pull NATO in but by leaving behind the S400 missiles, heavy artillery and armored vehicles he is still boxing Erdogan in.

The long rumored palace coup whereby the founding members of AKP Bulent Arinc and Abdullah Gul (former Prime Minister and President) were going to form a new political party to challenge Erdogan is a case of too little too late.

While it is true that senior AKP figures have been attacking Erdogan since mid-January, something unheard of in Islamist circles, Erdogan ended up getting the upper hand and silencing them effectively.

Bulent Arinc, former Deputy PM and a smarmy faker of sincerity, criticized Erdogan sharply throughout January and February and he even hinted that he might disclose where the skeletons are buried.

Similarly, Abdullah Gul had a long meeting with Erdogan after which he was reported to have said that he pulled the plug on him (he later denied that).

But nothing came out of these outbursts as Erdogan now controls the media and government contracts. Any criticism is met with a barrage of counter attacks by troll-journalists in the pro-Erdogan media. And given the spoils distributed by Erdogan himself in the form of large government contracts, no media owner or CEOs of large corporation want to displease him.

However, a recent development might turn these disparate elements into a perfect storm that could engulf Erdogan's increasingly autocratic presidency.

Iranian Money Launderer Arrested in the US

This haggard and well-fed man in the picture is Reza Zarrab, Iranian-born and naturalized Turkish businessman who was arrested in Miami last week.

He was indicted by Preet Bharara, the pugnacious US Attorney for the Southern District of New York. The indictment alleges that Zarrab was a key player in the international scheme to help Iran bypass UN and US sanctions and asks for up to 70 year jail sentence and confiscating of his multi-billion dollar assets.

You see, when Iran was pushed out of the SWIFT international money transfer system used by almost all companies in their daily transactions, it had to find a way to sell its oil and import goods. 

Tehran then decided to use a bypass system based on Turkey’s Halkbank. SWIFT was sidelined first by setting up front companies in China. Money was sent to the Chinese bank accounts of these companies from Iran as if they were reimbursements for exports. That money was instantly transferred to front or real companies in Turkey, also as export reimbursements. Gold bought with that money was moved to Iran via Dubai. 

And Iran used those gold bullions to import what it needed, including, I am assuming, hardware for its nuclear program.

Zarrab and Babak Zanjani were the two pillars of this oil-for-gold-to-evade-sanctions arrangement. Zanjani, recently sentenced to death in Iran, handled the Iranian end and Zarrab was in charge of the Turkish side. 

A Turkish investigation showed that he was paying huge sums to the CEO of Halkbank and several Cabinet ministers.

Zarrab, who assumed the Turkish name of Riza Sarraf after acquiring Turkish citizenship, allegedly was running his operation with the cooperation of some Cabinet ministers and their offspring. According to a local allegation, Zarrab was paying the minister of economy, Zafer Caglayan, a commission — that is, a bribe — of 0.3% to 0.4%. Zarrab is known to have paid Caglayan 103 million Turkish lira (some $35 million) and to have paid Halkbank CEO Suleyman Arslan 16 million lira (about $5.67 million).

When the whole thing became public, Erdogan moved swiftly to quash the investigation. He fired or removed all prosecutors, judges and police officers involved in the case. And for good measure, he passed a publication ban to prevent journalists asking question about it.

Despite leaked audio tapes clearly implicating Erdogan in the corruption scandal, he went on to get himself elected President in 2014 and last year, he helped his party get almost 50 percent of the vote in legislative elections. 

This is largely due to the fact that he succeeded in convincing his constituency that, regardless of the validity of the allegations, the Gulen sympathizers were trying to get rid of him and, as I mentioned in my previous post, nothing terrifies the Islamists and the conservative coalition behind Erdogan more than the massive backlash that they will very likely face after his departure. 

Now, if Zarrab decides to cooperate with the US authorities, as I suspect he will for a reduced jail sentence and a portion of his assets, the pro-Erdogan media will simply claim that the US government is in cahoots with Fethullah Gulen, the moderate Islamist preacher who supported Erdogan from the beginning and provided most of the technocrats that assisted his successive Cabinets.

In fact, they have already begun.

The pro-government newspaper Sabah used Twitter to share a doctored photograph that supposedly showed him [Bharara] collecting an award from a charity linked to Mr Gulen, the President’s arch-foe.

Erdogan, who survived worse crises, would not be worried under normal circumstances. He would assume that the US would not push the Zarrab investigation too far, as Turkey remains an important player in the region. And if unpleasant revelations surfaced, he could always use his almost total control over media to block them and to convince his supporters to stick with him. 

There are two problems with this normally reasonable calculation.

Contrary to what new Turkish Twitter fans of Bharara think, this is not a move directed against Erdogan. In my opinion, it is the first critical move to strengthen Rouhani's administration in Iran and to force a significant reform of the Islamic Republic.

Zanjani and Zarrab were helping Ahmadinejad's conservative administration to evade sanctions. All the corruption and money laundering that went with it are their problem. Not only them but the religious clergy and the Revolutionary Guard, who supported them, are implicated.

Since taking office, Rouhani has systematically sought to discard corrupt remnants of the Ahmadinejad era and also counterbalance the IRGC and other hard-line elements. Indeed, in the past two years, Zanjani has been sentenced to death for allegedly embezzling oil money, businessman Mahafarid Amir Khosravi has been hanged for defrauding Iran’s banking system and Ahmadinejad’s First Vice President Mohammad Reza Rahimi has begun serving a 5-year prison term for bribing members of parliament.

In that context, I view the Bharara indictment as Obama Administration helping Rouhani curb the power of the conservative clergy and transform Iran into a more moderate force.

The confrontation is already happening.

While Supreme Leader Ayatollah Ali Khamenei emphasized the “resistance economy” in his March 20 Nowruz speech, Rouhani underscored the necessity of constructive engagement with the world.

Zanjani could not point fingers as he is in Iran and that would only hasten his execution. But Zarrab will. And when he exposes the scheme, he will implicate not only Ahmadinejad but also, by sheer necessity, Erdogan and his party.

This context could prove much more problematical for Erdogan than a simple corruption scandal. He has been claiming that Turkey, and therefore he was the leader of the Sunni alliance in the Middle East. As Iran is the bete noire of Saudi Arabia, Qatar and every other Sunni country in the region, a Zarrab confession would mean that Erdogan was, Allah forbid, helping the Shia.

This would have serious repercussions inside the core Islamist behind AKP as well. As I keep repeating, Sunni Muslims hate Shia more than the Jews, Christians (as they are People of the Book after all) and even perhaps the atheist infidels.

It is a big deal.

When that happens, Abdullah Gul and dissidents within AKP might surface as a solution that is acceptable to everyone.

Think about it.

What is it that everyone says is the main problem with replacing Erdogan and AKP? Why, they have no alternative. CHP is a joke, MHP is a bigger joke and HDP, well, they are an ethnic party. AKP is serious, they are the governing party. Look what they have achieved in the last 14 years.

Well, what if the other founding member of AKP were to take over. 

He and Arinc and Celik were part of the success story, right? In fact, these were the folks who distanced themselves from Erdogan as soon as he began acting crazy. They are clean and they were not part of the Zarrab scheme. They can take over and return to the pre-2013 era of stability and economic prosperity with no polarization. 

The non-Islamist would be relieved as they had been looking at Erdogan as someone who could not be toppled. There were opinion polls from two years ago indicating that CHP voters would support Gul as President.

The Islamist core group would be happy as a clean and pleasant Islamist would come to power. No backlash and no secular government to replace AKP.

The Kurds might extend a hopeful hand that they would assume that Gul and his people would grab.

And the business people would join the party seeing a period of stability and prosperity.

Externally, EU, Russia and the US would rejoice.

Regional actors would be pleased. That improbably includes Iran, Syria and the Sunni powers. Which tells you how isolated Erdogan really is.

In that scenario, Erdogan would be all alone. 

Perfect storm indeed.

We'll see.