Turkey’s Halkbank working with US Treasury, Justice Department after Iran case: Şimşek

DAVOS

Turkey’s state-run lender Halkbank is working closely with the U.S. Treasury and Justice Department, Deputy Prime Minister Mehmet Şimşek said on Jan. 24, after a U.S. jury found one of its executives guilty in an Iran sanctions-busting trial.

“Halkbank has been closely working both with the U.S. Treasury and the Justice Department,” Şimşek said in a televised interview with BloombergHT in Davos, where he is set to attend a session on the sidelines of the World Economic Forum’s annual meetings.

“If the issue stays in a technical and economic framework, there will be no problem. However, if it is diverted toward somewhere else, the response will be different,” he added.

A U.S. jury found Halkbank executive Mehmet Hakan Atilla guilty of helping Iran evade U.S. sanctions, convicting him on five counts, including bank fraud and conspiracy, in a case which has strained ties between Ankara and Washington.

‘No rational moves’ 

Şimşek also noted that he was hopeful about the update of Turkey’s Customs Union deal with the European Union, while also voicing some concerns.

“I am optimistic about the modernization of the deal in the medium-term, but in the short-term, I believe that Europe did not act in a rational way,” he said, adding that Turkey had good dialogue with Germany.

“I hope our relations with the Netherlands and Austria will enter a positive trend,” Şimşek added.

Regarding a question about how Turkey’s military operation in Syria’s Afrin will affect economic activity, Şimşek reiterated his views that it would have a limited impact, citing Turkey’s robust fiscal structure.

 “Turkey will continue to maintain its strong fiscal base; we will never give up our fiscal discipline policy,” he said, adding that the government did not want to lead any twin deficit climate in the economy.

Şimşek also outlined what the economy administration would do in 2018.

“We will make reforms. I am hopeful of this year. There is a maneuver space in Turkey’s fiscal side, so any slight developments will have a limited impact over the economy. Despite this, we need to further strengthen Turkey’s economic basics,” he added.

Measures to curb high prices 

Şimşek noted that Turkey had an inflation problem, adding that the government took this issue quite seriously.

“The inflation rate rose higher than expectations last year due to the parity shock. Amid domestic and foreign shocks, the Turkish Lira lost value. The good news is Turkey has been leaving such shocks behind,” he said.

“Additionally, there is an inflationist pressure or fragility which is coming from high food prices. We have taken measures to curb these prices and will take new ones,” Şimşek added.

“There are also prices that have naturally risen up after tax hikes… Over this year, we will take various fiscal measures that will not hike prices, they will even push them down,” he also said.

“The inflation rate will decrease to single digits again in a cooperative manner,” Şimşek added.