Ankara has slammed the conviction in the U.S. of a Turkish banker for violating U.S. sanctions on Iran.

“This is the scandalous verdict of a scandalous case,” Presidential Spokesperson İbrahim Kalin told reporters at the presidential palace. “Unjust and unfortunate,” said the Turkish foreign ministry in a statement, adding, “the evidence was fake and open to political exploitation.”

Mahir Unal, the spokesman for Turkey’s ruling AKP, pointed the finger directly at Washington. “The purpose of the case in United States is interference in the internal affairs of Turkey. This case is a violation of international law and a legal disaster. It is clear that this decision has no provision for us,” tweeted Unal.

But Turkish President Recep Tayyip Erdogan, who has in the past been at the forefront of condemning the case, has remained silent on the verdict.

That silence is telling, claimed political consultant Atilla Yesilada of Global source partners.

“Erdogan was misled by his advisers, who told him Mr. [Hakan] Atilla would be acquitted. Now he understands that if the United States really intends to kick Turkey in the shin, they have received the perfect excuse to do so. At this point, he realizes it’s not wise to antagonize the United States. Now I am sure there are high-level contacts with Washington on how to make this case ago away,” said Yesilada.

On Wednesday, Mehmet Hakan Atilla, who headed international banking at the Turkish state-owned Halkbank, was convicted by a New York court on 5 of 6 charges of violating U.S. sanctions on Iran. With prosecutors presenting evidence of several Turkish banks involved in extensive laundering of money to avoid Iranian sanctions, analysts warn the door is open to a potential wide range of financial sanctions.

Such measures range from fines on Turkish banks to extensive restrictions on banks’ ability to borrow from U.S. financial markets. Turkey borrows on average about $16 billion a month to sustain existing loans and meet its financial obligations.

Joon Kim, the acting U.S. attorney in Manhattan, speaking after the conviction, made clear there would be consequences. “Foreign banks and bankers have a choice: You can choose willfully to help Iran and other sanctioned nations evade U.S. law, or you can choose to be part of the international banking community transacting in U.S. dollars. But you can’t do both.”

“Best-case scenario is a couple of billion dollars in fines against Halkbank for violating sanctions and the American administration closing the file, and that’s the end of it,” said consultant Yesilada.

The Turkish finance minister, Mehmet Simsek, already has guaranteed that any fines would be covered by the government.

Despite international investors reportedly closely watching the New York case, Turkish financial markets Thursday were largely unaffected by Wednesday’s verdict.

The experience of previous foreign banks caught violating U.S. sanctions suggests the repercussions could be severe for Turkish banks. 

In 2015, the French bank BNP Paribas was fined about $9 billion for violating U.S.-Iranian sanctions. An economist specializing on financial matters relating to Turkey — working for an international bank and speaking anonymously — warned that given the scale of the violations outlined by prosecutors in the New York case, Halkbank could face fines of up to $40 billion. Last year Turkey’s Haber Turk newspaper reported U.S. authorities were considering a similarly large fine. 

Observers single out the Halkbank case from previous sanction-busting cases. During the New York trial, the prosecutor witness implicated Turkish government involvement in sanctions violations, including then-Prime Minister Erdogan.

“If the Trump administration wants to portray this as a state crime, as Ankara systematically violating Iranian sanctions, I don’t think anyone can stop them,” said political consultant Yesilada.

Analysts suggest the price of leniency by Washington could be Ankara having to cool its warming relationship with Moscow, and Tehran, as well as the toning down of its hostility toward the Syrian Kurdish militia, which has been backed by the U.S. in fighting Islamic State militants.

Ankara accuses the militia of being terrorists linked to an insurgency in Turkey. Both issues have contributed to recent deep strains in U.S.-Turkish relations. But Washington’s decision in December to restore normal visa services after being severely curtailed was seen as a sign of its commitment to improving ties.

Even if Ankara can come to an agreement with the White House, Congress still remains a problem. 

“The American Congress acts independently of both the judiciary and the executive, and the information I receive from my sources in the United States, it’s extremely angry with Turkish behavior, and it might consider a sanction law against Turkey,” warned consultant Yesilada. “But I think the financial markets collectively don’t think that the United States does want to push this any further. There, I don’t agree with the markets, but as the American game plan is crystallized over the coming weeks, market sentiments will change to a negative.”
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