Is a face-saving in the making for Turkey?

This Friday, Oct. 5 inherently appeared as a new deadline in front of Ankara to decide whether United States Pastor Andrew Craig Brunson, whose almost two-year detention in Turkey has continued in the form of house arrest since July 25, would eventually be freed. Everyone who deals with the Turkey file in Washington has been impatiently waiting for the Oct. 12 hearing in İzmir.

Since the collapse of the July negotiations for a swap deal between Brunson and former Halkbank Deputy General Manager Mehmet Hakan Atilla, who currently serves his sentence in New York for busting Iran sanctions. The United States—behind closed doors as well as publicly—insisted their door is closed toward any formula that might look like reciprocal action. U.S. officials insisted there is no way to convince U.S. President Donald Trump to move an inch from his firm position unless his expectation of a personal favor from Turkish President Tayyip Erdoğan is fulfilled and Brunson is put on a plane bound for Washington.

Furthermore, the bureaucracy claimed they were having an awfully hard time stalling Trump not to come up with new sanctions to hit Turkey’s already struggling economy once again. After Donald Trump decided to punish Ankara for not releasing Brunson by doubling the tariffs on Turkish steel and aluminum imports on Aug. 10, Turks were warned they might expect a new sanction every week from Trump until he gets what he wants.

However, that has not been the case, whether it be because wisdom surprisingly prevailed and Trump was convinced to give diplomacy another chance, or he has simply been too occupied with the legal troubles of his lawyer Michael Cohen or sexual assault allegations against his Supreme Court nominee. In any case, it is quite astonishing almost two months have passed without new sanctions.

What is even more staggering is to learn that despite a continuous “release Brunson and then we will talk about Turkish demands and expectations” line from Washington, in the last weeks, the U.S. has indeed re-opened the door to providing some sort of leverage or face-saving to Ankara by fixing the fine on Halkbank. After Halkbank’s top executive Atilla was sentenced and former defendant who later became a government witness Reza Zarrab pled guilty for the execution of a scheme to evade U.S. sanctions against Iran, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) has pursued an investigation to decide on a possible fine against the bank itself.

Despite claims by the Turkish government that Halkbank did not evade any sanctions and thus would not be penalized, a simple little comparative look at Halkbank’s situation and previous examples of fines that were issued to European banks suggests a highly different scenario.

In 2012, British bank HSBC paid the U.S. authorities $1.9 billion in a settlement over money laundering that helped countries like Iran and North Korea. The same year, Germany’s Commerzbank AG paid $1.45 billion for similar violations.

Undoubtedly, the most striking case in recent history has been that of French bank BNP Paribas. According to the U.S. District Court for the Southern District of New York (SDNY), BNP Paribas breached U.S. sanctions against Iran, Sudan and Cuba between 2002 and 2009 by handling $30 billion worth of transactions with them. The bank ended up agreeing to pay $8.9 billion to resolve accusations.

The U.S. law gives the administration right to fully or partly waive a penalty in accordance with the “national security” level of the issue.

Although the talks between U.S. treasury officials and Halkbank’s lawyers have been conducted in a strictly secretive fashion, I could recently gather that Turkey’s state-owned bank is not that far away from a settlement. Chances for a small fine looks plausible, sources tell me. We will find out in only four days if the outcome of last minute negotiations with the U.S. Department of Treasury will yield results.