A key defendant in an Iranian sanction-busting case has now become its “most important witness.” Following weeks of speculation, Reza Zarrab, a Turkish-Iranian businessman, pleaded guilty on Tuesday to charges of helping Iranian entities evade U.S. sanctions through his international network of businesses, possibly with the help of Turkish banks and government officials. Today, Zarrab is expected to testify in a Manhattan court. His testimony is likely to implicate prominent figures in both Turkey and the United States. Zarrab played a central role in setting up schemes that enabled Iran to purchase gold with oil and gas revenues at a time when the country was under crippling U.S. sanctions. He was indicted along with Mehmet Hakan Atilla, a Turkish banker in U.S. custody, and seven additional defendants, some of whom held cabinet positions under Recep Tayyip Erdogan, the president of Turkey.
Since Zarrab is now cooperating with U.S. prosecutors, his testimony is likely to damage Erdogan’s international and domestic standing, ahead of Turkey’s 2019 presidential elections. For this reason, Erdogan has bashed the trial, casting it as a U.S. plot to undermine Turkey’s economy and unleashing a torrent of anti-American rhetoric on Turkish airwaves. Of course, ties between the Unites States and Turkey, long-time NATO allies, have been strained since Washington threw its support behind Kurdish militants in Syria, and refused to extradite exiled cleric Fethullah Gulen, who Erdogan claims fomented last year’s failed coup attempt.