Bank Deal Sparks Court Debate Over Turkey‑US Ties

A Manhattan judge requested prosecutors to explain why they agreed to drop a long‑running criminal case against Turkish state‑run bank Halkbank. The lawsuit accused the bank of helping Iran dodge U. S. sanctions, a claim that had strained U. S. –Turkey relations. The agreement, announced Monday, lifted the bank’s share price and could ease tensions between the NATO allies after President Trump returned to office last year. The State Department had earlier said settling this case was key to Turkey’s role in negotiating an October 2025 ceasefire between Israel and Hamas. During the hearing, Judge Berman asked prosecutor Michael Lockard how national security concerns influenced the deal. Lockard replied that the court should not weigh those interests.The settlement is a deferred prosecution agreement: Halkbank must stop any transactions that aid Iran and hire an independent monitor to check its compliance with sanctions and anti‑money‑laundering rules. No money changes hands, and the charges will likely be dropped after a compliance review. Halkbank had pleaded not guilty but did not admit wrongdoing in the deal. U. S. judges usually cannot refuse such agreements on their terms, but they can ensure the deals align with legal precedent. For now, prosecutors and Halkbank ask Judge Berman to pause the case for 90 days so the bank can prove it follows the agreement. The top Manhattan prosecutor, Jay Clayton, wrote that the deal serves U. S. interests by curbing financial support for Iran’s government. Turkish President Tayyip Erdogan has called the case unlawful and “ugly. ”