A Turkish court has convicted but freed US pastor Andrew Brunson.

US President Donald Trump tweeted after the verdict: "My thoughts and prayers are with Pastor Brunson, and we hope to have him safely back home soon!"

Though Brunson was sentenced to three years and one month in prison for terrorism-related offences under the decision announced on the afternoon of October 12, he need not spend any more time in detention—which was reduced to house arrest with an electronic tag and a travel ban in July—because of time already served. Prosecutors had sought a 10-year jail term.

Despite his conviction, the evangelical pastor is now free to return to the US and is expected to do so soon after undergoing a full medical at an American air base in Germany. 

The Brunson case is a big part of the multi-faceted diplomatic spat between Washington and Ankara. The falling out has even led to an unprecedented tit-for-tat exchange of asset sanctions imposed against top officials between two countries that are Nato allies.

Brunson was charged with both terror offences and espionage activities, but the latter charges were dropped at the latest hearing.

Turkey’s leverage over the US in resolving the two countries’ soured relations may have increased given the role Ankara can expect to play in clearing up the Jamal Khashoggi affair. Washington may be anxious to help big Middle East ally Riyadh extricate itself from the scandal—in which the Saudis are denying claims that specially deployed agents brutally murdered journalist Khashoggi after he on October 2 entered the Saudi consulate in Istanbul—without too much embarrassment or economic consequences that could also prove highly damaging to US interests.

Ahead of the court's decision, US broadcaster NBC reported that Turkey and the US had reached a secret deal for Brunson to be freed in exchange for the US easing sanctions.

Halkbank’s shares bounce
Shares in Turkey’s state-controlled Halkbank bounced up 2.16% d/d after the court decision—Halkbank potentially faces US fines for its alleged connection to a money laundering scheme to evade American sanctions on Iran that has seen one of its deputy CEOs convicted and jailed by a New York court. There is now speculation that the bank may escape such penalties as part of a behind-the-scenes deal over Brunson.

Now that Brunson has been freed, markets will hope reduced tensions between Turkey and the US will help the Turks fight their currency crisis and spreading economic turmoil, including roaring inflation and dangerous levels of foreign currency-denominated debts weighing on banks and corporates.

Turkish daily Yeni Safak reported witnesses in the court as saying Brunson wept as the decision in his case was announced. Before the judge's ruling, the pastor reportedly told the court: "I am an innocent man. I love Jesus, I love Turkey."

"We're grateful to the [US] president, members of Congress and diplomatic leaders who continued to put pressure on Turkey to secure the freedom of Pastor Brunson," Brunson's lawyer, Jay Sekulow, said in a statement after the court decision.

"The release of pastor Andrew Brunson is an answer to the prayers of millions of Christians around the world," tweeted Russell Moore, director of the Southern Baptist Convention's Ethics & Religious Liberty Commission.

Both Trump and Vice President Mike Pence, who is close to the Christian Right which has been vociferously campaigning for the freeing of the pastor from North Carolina, have taken a strong stance in demanding Turkey release Brunson, detained two years ago.

“Gift from Erdogan to Trump”
Timothy Ash, an economist at BlueBay Asset Management, tweeted after the release: “A gift from [Turkish President Recep Tayyip] Erdogan to Trump this side of the [US] midterms. I can just see the ticker tape and Trump milking what he will say is a victory for his style of diplomacy.”

Brunson worked as an evangelical Presbyterian pastor at the Izmir Resurrection Church, which had a congregation of about two dozen. He has lived in Turkey for more than 23 years with his wife and three children, according to the American Center for Law and Justice, which had advocated for his release.

By around 23:15 local time on October 12, the Turkish lira (TRY) was very slightly stronger by 0.03% d/d against the USD, trading at 5.9113.

Brunson was arrested over alleged links to political groups, including the banned Gulenist movement which Turkey’s Erdogan administration claims was behind the failed coup attempt in July 2016.

He was detained amid a huge post-coup attempt crackdown, during which more than 50,000 people were arrested. The US is still pursuing the release of several other US citizens who were detained during the massive security sweep.

The authorities also accused Brunson of having links with the outlawed Kurdistan Workers' Party (PKK), which has fought a decades-long insurgency campaign in Turkey.

Witnesses told the court attached to a prison complex in Aliaga, near Izmir on Turkey’s western Aegean Sea coast, that testimonies attributed to them against the pastor were inaccurate.

Brunson appeared in the court wearing a black suit, white shirt and red tie. His wife Norine looked on from the visitors’ seating area as he listened to testimony from defence and prosecution witnesses. “I do not understand how this is related to me,” Brunson said at one point, according to Reuters, after the judge questioned one witness. He said the judge was asking the witness about incidents he was not involved in.