The bringing of a US criminal case against Turkish state lender Turkiye Halk Bankasi (Halkbank) for participating in an Iran sanctions-busting conspiracy is a huge matter for Turkey’s President Recep Tayyip Erdogan “as it alleges wrongdoing right to the top of his administration”.

The Erdogan administration “did everything to try and bury it” added Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Management, on October 17.

The investigation behind the case has been simmering away for several years. The indictment was filed this week in a Manhattan federal court by the US attorney for the Southern District of New York (SDNY). The SDNY is famously independent of its bosses at Main Justice, in Washington—given its resources, pursuit of high-profile cases and independence from presidential administrations, as well as its tenacity, the SDNY is sometimes referred to as the "Sovereign District of New York".

Analysts are thus still debating whether US President Donald Trump was even aware the indictment was about to be filed. Erdogan’s level of knowledge of the alleged sanctions-evasion conspiracy has been probed by investigators and the Turkish president has put in a lot of effort appealing firstly to the Obama administration and secondly the Trump administration to have the investigation into Halkbank quashed.

“My read is that Trump was trying to block this as long as possible but has become so weak with impeachment proceedings and his cock-up now in Syria [in withdrawing US troops, thus allowing Turkey to invade] that he could no longer hold the line for Erdogan,” said Ash.

“He may well have not even known the SDNY was announcing the indictment—the US establishment had just become so fed up with Trump’s foreign policy they just decided to go with it,” he added.

Ash concluded: “So the Halkbank indictment should not be seen as part of the same package of sanctions as those announced by the Treasury earlier in the week [in relation to the Syria incursion]. If anything Trump still tries to protect Erdogan from sanctions due to their special personal bond.”