Turkey’s lira weakens 4 percent, Trump says won’t take pastor’s detention ‘sitting down’

A street vendor sells food on a main street in central Ankara, Turkey August 17, 2018. REUTERS/Umit Bektas

By Daren Butler, David Dolan and Humeyra Pamuk

ISTANBUL (Reuters) – Turkey’s battered lira weakened 3 percent on Friday after a Turkish court rejected an American pastor’s appeal for release, drawing a stiff rebuke from President Donald Trump, who said the United States would not take the detention “sitting down”.

The case of Andrew Brunson, an evangelical Christian missionary from North Carolina who has lived in Turkey for two decades, has become a flashpoint between Washington and Ankara and accelerated a widening currency crisis.

The lira has lost nearly 40 percent of its value against the dollar this year as investors fret about President Tayyip Erdogan’s influence over monetary policy.

Heavy selling in recent weeks has spread to other emerging market currencies and global stocks and deepened concerns about the economy, particularly Turkey’s dependence on energy imports and whether foreign-currency debt poses a risk to banks.

Borrowing costs may rise further after both Moody’s and Standard Poor’s ratings agencies cut Turkey’s sovereign credit ratings deeper into “junk” territory late on Friday.

“They should have given him back a long time ago, and Turkey has in my opinion acted very, very badly,” Trump told reporters at the White House, referring to Brunson. “So, we haven’t seen the last of that. We are not going to take it sitting down. They can’t take our people.”

Trump’s comments came after a court in Izmir province rejected an appeal to release Brunson from house arrest, saying evidence was still being collected and the pastor posed a flight risk, according to a copy of the court ruling seen by Reuters.

Brunson is being held on terrorism charges, which he denies. Trump, who counts evangelical Christians among his core supporters, has increasingly championed the pastor’s case.

It was not immediately clear what additional measures, if any, Trump could be considering. U.S. Treasury Secretary Steven Mnuchin told Trump on Thursday that more sanctions were ready if Brunson were not freed.

The United States and Turkey have imposed tit-for-tat tariffs in an escalating attempt by Trump to induce Erdogan into giving up the pastor. Erdogan has cast the tariffs, and the lira’s sell-off, as an “economic war” against Turkey.

The lira last traded at 6.0100 to the dollar at 2159 GMT, 3 percent weaker after tumbling as much as 7 percent earlier. Turkey’s dollar bonds fell, while the cost of insuring exposure to Turkish debt rose.

As the row deepens, Turkey has sought to improve strained ties with European allies. In a telephone call on Friday, Finance Minister Berat Albayrak and his French counterpart Bruno Le Maire discussed U.S. sanctions against Turkey and cooperation between their countries, Albayrak’s ministry said.

SPEED-BUMPS

“Diplomatic negotiations hit speed-bumps and that’s not unusual in these kinds of situations,” said Jay Sekulow, a personal attorney for Trump who is also representing Brunson’s family. “We remain hopeful there will be a prompt resolution. Having said that, we fully support the president’s approach.”

Whatever action the United States takes looks likely to cause more pain for Turkish assets.

People change money at a currency exchange office in Istanbul, Turkey August 17, 2018. REUTERS/Murad Sezer

People change money at a currency exchange office in Istanbul, Turkey August 17, 2018. REUTERS/Murad Sezer

“There has been no improvement in relations with the U.S. and additional sanctions may be on the horizon,” said William Jackson of Capital Economics in a note to clients, adding that the lira could see a downward trend in 2019 and beyond.

Turkey’s banking watchdog has taken steps to stabilize the currency, limiting futures transactions for offshore investors and lowering limits on swap transactions. On Friday, it further broadened those caps.

But some economists have called for more decisive moves.

Turkey and its firms face repayments of nearly $3.8 billion on foreign currency bonds in October, Societe Generale has calculated. It estimates Turkey’s short-term external debt at $180 billion and total external debt at $460 billion – the highest in emerging markets.

Companies that for years have borrowed abroad at low-interest rates have seen their cost of servicing foreign debt rise by a quarter in lira terms in two months.

After each downgrading Turkey by one notch, S&P said it expected a recession next year while Moody’s said a weakening of Turkey’s public institutions had made policymaking less predictable.

Fitch Ratings had earlier said the absence of an orthodox monetary policy response to the lira’s fall, and the rhetoric of Turkish authorities, had “increased the difficulty of restoring economic stability and sustainability”.

DEEP CONCERNS

Albayrak, Erdogan’s son-in-law, told investors on Thursday that Turkey would emerge stronger from the currency crisis, insisting its banks were healthy and signaling it could ride out the dispute with Washington.

Economists gave Albayrak’s presentation a qualified welcome and the lira initially found some support, helped by Qatar’s pledge to invest $15 billion in Turkey.

Deep concerns remain about the potential for damage to the economy, however. Turkey is dependent on imports, priced in hard currency, for almost all of its energy needs.

Erdogan has remained defiant, urging Turks to sell their gold and dollars for lira. But foreign currency deposits held by local investors rose to $159.9 billion in the week to Aug. 10, from $158.6 billion a week earlier, central bank data showed.

Turkish markets will be closed from midday on Monday for the rest of the week for the Muslim Eid al-Adha festival.

(Additional reporting by Ece Toksabay, Tuvan Gumrukcu, and Nevzat Devranoglu in Ankara; Karin Strohecker and Claire Milhench in London; Jeff Mason and Karen Freifeld in Washington; Editing by Catherine Evans and James Dalgleish)

Erdogan says Turkey will boycott U.S. electronics, lira steadies

Businessmen holding U.S. dollars stand in front of a currency exchange office in response to the call of Turkish President Tayyip Erdogan on Turks to sell their dollar and euro savings to support the lira, in Ankara, Turkey August 14, 2018. REUTERS/Umit Bektas

By Daren Butler and Behiye Selin Taner

ISTANBUL (Reuters) – President Tayyip Erdogan said on Tuesday that Turkey would boycott electronic products from the United States, retaliating in a row with Washington that helped drive the lira to record lows.

The lira has lost more than 40 percent this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogan’s calls for lower borrowing costs and worsening ties with the United States.

The lira’s weakness has rippled through global markets. Its drop of as much as 18 percent on Friday hit European and U.S. stocks as investors fretted about banks’ exposure to Turkey.

On Tuesday the lira recovered some ground, trading at 6.4000 to the dollar at 1751 GMT, up almost eight percent from the previous day’s close and having earlier touched 6.2995.

It was supported by news of a planned conference call in which the finance minister will seek to reassure investors concerned by Erdogan’s influence over the economy and his resistance to interest rate hikes to tackle double-digit inflation.

Erdogan says Turkey is the target of an economic war and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

“Together with our people, we will stand decisively against the dollar, forex prices, inflation and interest rates. We will protect our economic independence by being tight-knit together,” he told members of his AK Party in a speech.

The United States has imposed sanctions on two Turkish ministers over the trial on terrorism charges of a U.S. evangelical pastor in Turkey, and last week Washington raised tariffs on Turkish metal exports.

It was unclear whether Erdogan’s call was widely heeded, but a Turkish news agency said traders in Istanbul’s historic Eminonu district converted $100,000 into lira on Tuesday.

Chanting “Damn America”, they unfurled a banner saying “we will win the economic war”, the Demiroren agency said. Amid calls to “burn” the dollars, the group headed to a bank branch where they converted the money, it said.

Erdogan also said Turkey was boycotting U.S. electronic products. “If they have iPhones, there is Samsung on the other side, and we have our own Vestel here,” he said, referring to the Turkish electronics company, whose shares rose 5 percent.

His call met a mixed response on Istanbul streets.

“We supported him with our lives on July 15,” shopkeeper Arif Simsek said, referring to a failed 2016 military coup. “And now we will support him with our goods. We will support him until the end.”

But shopkeeper Umit Yilmaz scoffed. “I have a 16-year-old daughter. See if you can take her iPhone away … All these people are supposed to not buy iPhones now? This can’t be.”

INVESTMENT INCENTIVES

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.

“If we postpone our investments, if we convert our currency to foreign exchange because there’s danger, then we will have given into the enemy,” he said.

Although the lira gained some respite on Tuesday, investors say measures taken by the Central Bank on Monday to ensure liquidity failed to address the root cause of lira weakness.

“What you want to see is tight monetary policy, a tight fiscal policy and a recognition that there might be some short-term economic pain — but without it there’s just no credibility of promises to restabilize things,” said Craig Botham, Emerging Markets Economist at Schroders.

Dollar-denominated bonds issued by selected Turkish banks continued to fall on Tuesday, although sovereign bonds steadied.

Relations between NATO allies Turkey and the United States are at a low point, hurt by a series of issues from diverging interests in Syria, Ankara’s plan to buy Russian defense systems and the detention of pastor Andrew Brunson.

U.S. national security adviser John Bolton on Monday met Turkey’s ambassador to the United States to discuss Brunson’s detention. Following the meeting, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries’ leaders.

Ankara has repeatedly said the case was up to the courts and a Turkish judge moved Brunson from jail to house arrest in July. Infuriated by the move, Trump placed sanctions on two Turkish ministers and doubled tariffs on metal imports, adding to the lira’s slide.

Brunson’s lawyer said on Tuesday he had launched a fresh appeal to a Turkish court for the pastor’s release.

(Additional reporting by Ece Toksabay and Ezgi Erkoyun, Writing by Humeyra Pamuk and Dominic Evans, Editing by William Maclean and Jon Boyle)

Erdogan tells Turks to buy free-falling lira as Trump doubles metals tariffs

FILE PHOTO: A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 2, 2018. REUTERS/Murad Sezer/File Photo

By Behiye Selin Taner and Tuvan Gumrukcu

ISTANBUL/ANKARA (Reuters) – President Tayyip Erdogan told Turks on Friday to exchange their gold and dollars into lira, with the country’s currency in free fall after President Donald Trump turned the screws on Ankara by doubling tariffs on metals imports.

The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the United States. That turned into a rout on Friday, with the lira diving more than 18 percent at one point, the biggest one-day drop since Turkey’s 2001 financial crisis.

It has also lost more than 40 percent this year, hitting a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

Trump said he had authorized higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminum and 50 percent on steel. The lira, he noted on Twitter, “slides rapidly downward against our very strong Dollar!”

“Our relations with Turkey are not good at this time!” he said in an early morning post.

Those duties are double the level that Trump imposed in March on steel and aluminum imports from a range of countries.

The White House said he had authorized the move under Section 232 of U.S. trade law, which allows for tariffs on national security grounds.

While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of U.S. citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. A delegation of Turkish officials held talks with counterparts in Washington this week but there was no breakthrough.

Waves from the crisis spread abroad, with investors selling off shares in European banks which have large exposure to the Turkish economy.

The lira sell-off has deepened concern particularly about whether over-indebted companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.

Erdogan’s characteristic defiance in the face of the crisis has further unnerved investors. The president, who says a shadowy “interest rate lobby” and Western credit ratings agencies are attempting to bring down Turkey’s economy, appealed to Turks’ patriotism.

“If there is anyone who has dollars or gold under their pillows, they should go exchange it for lira at our banks. This is a national, domestic battle,” he told a crowd in the northeastern city of Bayburt. “This will be my people’s response to those who have waged an economic war against us.”

“The dollar cannot block our path. Don’t worry,” Erdogan assured the crowd.

“AMERICAN-MADE CRISIS”

Erdogan, elected in June to a new executive presidency, enjoys the support of many Turks even though food, rent, and fuel prices have all surged. “This crisis is created by America,” said Serap, a 23-year-old clerk at a clothes store in central Istanbul.

However, the Istanbul Chamber of Industry expressed its concern about the lira while some economists were less impressed by the government’s handling of the crisis.

“The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and abroad,” said Seyfettin Gursel, a professor at Turkey’s Bahcesehir University.

“Confidence needs to be regained. It is obvious how it will be done: since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders.”

Turkey’s sovereign dollar-denominated bonds tumbled with many issues trading at record lows. Hard currency debt issued by Turkish banks suffered similar falls.

Meanwhile, the cost of insuring exposure to Turkey’s sovereign debt through five-year credit defaults swaps has spiraled to the highest level since March 2009, topping levels seen for serial defaulter Greece, which has three bailouts in the last decade.

THE TWEET AND THE SWORD

New Finance Minister Berat Albayrak – Erdogan’s son-in-law – acknowledged that the central bank’s independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

Presenting the government’s new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust.

This did nothing to revive the currency. “The tweet is mightier than the Turkish sword,” Cristian Maggio, head of emerging markets strategy at TD Securities, said in a note to clients. “Albayrak’s plan was uninspiring at best.”

Erdogan, a self-described “enemy of interest rates”, wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing. His comments on interest rates — and his recent appointment of his son-in-law as finance minister — have heightened perceptions that the central bank is not independent.

The central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.

 

(Additional reporting by Karin Strohecker, Claire Milhench and Ritvik Carvalho, Lisa Lambert and Susan Heavey; Writing by Humeyra Pamuk and David Dolan; Editing by Dominic Evans, Catherine Evans and David Stamp)

Turkish court rejects U.S. pastor’s appeal for house arrest to be lifted

FILE PHOTO: U.S. pastor Andrew Brunson reacts as he arrives at his home after being released from the prison in Izmir, Turkey July 25, 2018. Demiroren News Agency, DHA via REUTERS

ISTANBUL (Reuters) – A Turkish court has rejected an appeal for U.S. Christian pastor Andrew Brunson to be released from house arrest during his trial on terrorism charges, state broadcaster TRT Haber said on Tuesday.

Relations between Turkey and the United States have spiraled into a full-blown crisis over the trial of Brunson, who was in custody for 21 months in a Turkish prison until he was transferred to house arrest last week.

Brunson, who has been living in Turkey for more than two decades, was accused of helping supporters of Fethullah Gulen, the U.S.-based cleric who Turkish authorities say masterminded the 2016 coup attempt against President Tayyip Erdogan in which 250 people were killed.

He was also charged with supporting outlawed PKK Kurdish militants and espionage.

Brunson’s lawyer, Ismail Cem Halavurt, told Reuters he had not been notified of a court ruling.

Brunson’s next hearing as part of the trial is scheduled for October 12.

(Reporting by Ezgi Erkoyun; Editing by Ece Toksabay and Dominic Evans)

U.S. pastor appeals for release, lifting of travel ban: lawyer

FILE PHOTO: U.S. pastor Andrew Brunson reacts as he arrives at his home after being released from the prison in Izmir, Turkey July 25, 2018. Demiroren News Agency, DHA via REUTERS

ISTANBUL (Reuters) – A Christian American pastor standing trial in Turkey on terrorism charges has appealed to a Turkish court to release him from house arrest and lift his travel ban, his lawyer told Reuters on Monday.

Relations between Turkey and the United States have spiraled into a full-blown crisis over the trial of pastor Andrew Brunson, who was in custody for 21 months in a Turkish prison until he was transferred to house arrest last week.

President Donald Trump last week threatened to impose “large sanctions” on Turkey unless it frees Brunson, who is accused of helping the group Ankara says was behind a failed military coup in 2016. Brunson faces up to 35 years in jail if found guilty of the charges, which he denies.

FILE PHOTO: Ismail Cem Halavurt, lawyer of pastor Andrew Brunson, arrives at Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan/File Photo

FILE PHOTO: Ismail Cem Halavurt, lawyer of pastor Andrew Brunson, arrives at Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan/File Photo

The appeal document seen by Reuters said although Brunson was freed from jail, the pastor was still deprived of his freedom and was unable to return to his normal life and carry out his religious duties.

Brunson’s lawyer Ismail Cem Halavurt said it would take the Turkish court in Aegean province of Izmir, where Brunson stood trial, three to seven days to make a decision on the appeal request.

His next hearing as part of the trial is scheduled for October.

Brunson was accused of helping supporters of Fethullah Gulen, the U.S.-based cleric who Turkish authorities say masterminded the coup attempt against President Tayyip Erdogan in which 250 people were killed. He was also charged with supporting outlawed PKK Kurdish militants.

Gulen denies any involvement in the coup attempt.

Speaking to reporters during his trip to South Africa, Erdogan said Turkey would stand its ground in the face of Trump’s sanctions threat.

It was not clear what would be the nature of sanctions threatened by Trump but Washington was already working on bills related to Turkey.

The U.S. Senate has demanded a block on sales of F-35 jets to Turkey unless Trump certifies that Turkey is not threatening NATO, purchasing defense equipment from Russia or detaining U.S. citizens.

(Reporting by Ezgi Erkoyun; Writing by Humeyra Pamuk; Editing by Dominic Evans and Alison Williams)

U.S. Christian pastor leaves Turkish prison after court ruling

U.S. pastor Andrew Brunson reacts as he arrives at his home after being released from the prison in Izmir, Turkey July 25, 2018. Demiroren News Agency, DHA via

By Ezgi Erkoyun and Daren Butler

ISTANBUL (Reuters) – A U.S. Christian pastor on trial in Turkey on terrorism charges left prison on Wednesday after a court ruled he should be transferred to house arrest, a step that could help reduce tension between the NATO allies.

Andrew Brunson, who has worked in Turkey for more than 20 years and has been detained for the last 21 months, was escorted out of prison by officials in the coastal city of Izmir, live television footage showed. He departed in a convoy of cars.

Brunson, who is from North Carolina, was detained in October 2016 and charged with helping the group which Ankara says was behind a failed military coup earlier that year.

His lawyer Ismail Cem Halavurt said Brunson has to wear an electronic ankle bracelet and is banned from leaving the country.

The same court rejected a week ago a call by Brunson’s defense for his release. The state-owned Anadolu news agency said the court had decided, after re-evaluating the case, that he could leave prison on health grounds and because he would be under effective judicial control.

Brunson’s detention deepened a rift between NATO allies Washington and Ankara, who are also at odds over the Syrian war and Turkey’s plan to buy missile defenses from Russia.

A source in the United States familiar with the developments said the sudden shift came a day before U.S. Vice President Mike Pence had been set to unveil a harsh new policy on Turkey.

The source, who was not authorized to speak publicly about the matter, said U.S. and Turkish officials had been working on a deal that would lead to Brunson’s release, with Washington expecting him to be freed at the trial last week.

U.S. officials had been under the impression that the deal was in place, the source said, adding that when Brunson was not released, Pence spoke with President Donald Trump and the two agreed harsh new policy measures were needed to force the issue.

Pence spoke by phone on Wednesday with Brunson, who expressed gratitude for the help from Trump and his top officials in securing his move from prison, the source said.

“LONG OVERDUE NEWS

Brunson was accused of helping supporters of Fethullah Gulen, the U.S.-based cleric who Turkish authorities say masterminded the coup attempt against President Tayyip Erdogan in which 250 people were killed. He was also charged with supporting outlawed PKK Kurdish militants.

The pastor, who denies the charges, faces up to 35 years in jail if found guilty.

U.S. Secretary of State Mike Pompeo welcomed what he said was the “long overdue news” of Brunson’s transfer, but said it was not enough. “We have seen no credible evidence against Mr. Brunson, and call on Turkish authorities to resolve his case immediately in a transparent and fair manner,” he said on Twitter.

Financial markets took the transfer order as a positive, seeing in it the potential for improvement in ties between Ankara and Washington.

The Turkish lira strengthened to 4.8325 against the dollar from 4.8599 before the report. Shares of Halkbank, whose former deputy general manager was convicted in January of evading U.S. sanctions on Iran, jumped 12 percent.

Erdogan has previously linked Brunson’s fate to that of the Muslim cleric Gulen, whose extradition from the United States has been a long-held demand of Turkish authorities. Gulen denies any involvement in the coup bid.

Trump said in a tweet last week that Brunson was being held hostage and that Erdogan should “do something to free this wonderful Christian husband & father”.

The U.S. Senate passed a bill last month including a measure that prohibits Turkey from buying F-35 Joint Strike Fighter jets because of Brunson’s imprisonment and Turkey’s purchase of Russia’s S-400 air defence system.

(Additional reporting by Omer Berberoglu in Istanbul; Tuvan Gumrukcu in Ankara; Roberta Rampton and Doina Chiacu in Washington; Writing by Dominic Evans and David Dolan; editing by David Stamp and Mark Heinrich)

Turkish court rules that U.S. pastor move from jail to house arrest

FILE PHOTO: A prison vehicle, believed to be carrying jailed U.S. pastor Andrew Brunson, leaves from the Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

By Ezgi Erkoyun and Daren Butler

ISTANBUL (Reuters) – A Turkish court ruled on Wednesday that an American pastor be transferred from jail to house arrest, his lawyer said, after nearly two years in detention on terrorism charges in a case which has strained ties between Ankara and Washington.

Andrew Brunson, a Christian pastor from North Carolina who has worked in Turkey for more than 20 years, was detained in October 2016 and indicted on charges of helping the group which Ankara says was behind a failed military coup earlier that year.

Brunson’s lawyer Ismail Cem Halavurt confirmed Turkish media reports that the court had ruled for him to be moved to house arrest. He will have to wear an electronic ankle bracelet and is banned from leaving the country, Halavurt said.

A week ago the same court rejected a call by Brunson’s defense for his release. State-owned Anadolu news agency said the court decided, after re-evaluating the case, that he could leave prison on health grounds and because he would be under effective judicial control.

It said Brunson’s defense had been completed and evidence for the case was almost all collected.

Brunson’s detention deepened a rift between NATO allies Washington and Ankara – also at odds over the Syrian war and Turkey’s plan to buy missile defenses from Russia – and financial markets took his transfer order as a positive sign.

The Turkish lira strengthened to 4.8325 against the dollar from 4.8599 before the report. Shares in Halkbank, whose former deputy general manager was convicted in January of evading U.S. sanctions on Iran, jumped 12 percent.

Brunson was indicted on charges of helping supporters of Fethullah Gulen, the U.S.-based cleric who Turkish authorities say masterminded the coup attempt against President Tayyip Erdogan in which 250 people were killed. He was also charged with supporting outlawed PKK Kurdish militants.

The pastor, who denies the charges, faces up to 35 years in jail if found guilty.

Erdogan has previously linked his fate to that of Gulen, whose extradition from the United States has been a long-held demand of Turkish authorities. Gulen denies any involvement in the coup.

President Donald Trump said in a tweet last week that Brunson was being held hostage and that Erdogan should “do something to free this wonderful Christian husband & father”.

The U.S. Senate passed a bill last month including a measure that prohibits Turkey from buying F-35 Joint Strike Fighter jets because of Brunson’s imprisonment and Turkey’s purchase of Russia’s S-400 air defense system.

(Reporting by Daren Butler and Tuvan Gumrukcu; Writing by Dominic Evans; editing by David Stamp)

Turkey says it has new evidence of Gulen coup links, will discuss with U.S

FILE PHOTO: U.S.-based Turkish cleric Fethullah Gulen at his home in Saylorsburg, Pennsylvania, U.S. July 10, 2017. REUTERS/Charles Mostoller/File Photo

ISTANBUL (Reuters) – Turkey has obtained fresh evidence linking supporters of a U.S.-based cleric to a 2016 failed military coup, Justice Minister Abdulhamit Gul said, adding he would discuss the new information with his U.S. counterpart later on Friday.

Turkey’s so far fruitless two-year effort to seek cleric Fethullah Gulen’s extradition from the United States has deepened strains between the NATO allies. Washington has asked Ankara to produce more persuasive evidence against Gulen.

Gulen, who has lived in the United States since 1999, has denied involvement in the coup attempt and condemned it.

State news agency Anadolu quoted Gul as saying new evidence was found on the phone of a follower of Gulen.

“We obtained a new piece of evidence showing FETO was directly connected to the coup that night, strengthening all of the hypotheses and information that we have already given,” Anadolu reported Gul as saying.

FETO is the term the Turkish government uses to describe Gulen’s network.

Gul said he planned to discuss the new evidence in a phone call with U.S. Attorney General Jeff Sessions later on Friday. A spokeswoman for Sessions declined to comment.

U.S.-Turkish relations took another hit this week when a Turkish court ruled to keep an American pastor in prison on terrorism charges that the United States rejects.

A U.S. official in Turkey said on Friday that cooperation between Turkish and U.S. law enforcement agencies over Gulen had improved in recent months, but Ankara needed to produce evidence of his involvement that would be persuasive enough for a U.S. court to authorize his extradition.

Speaking on condition of anonymity, the official said U.S. Justice Department authorities were working closely with their Turkish counterparts to ensure that any extradition request Turkey submits to a U.S. court is “detailed enough to have a chance of success.”

“My colleagues at the Justice Department tell me that they have spent more time on the Gulen extradition request than on any other extradition request in their memory… thousands of hours,” the official said.

The official said that the U.S. Justice Department has been separately probing a network of American charter schools run by Gulen’s followers since long before Turkey began investigating the cleric. Gulen and Turkish President Tayyip Erdogan were close allies until the two men had a public falling-out in 2013.

(Reporting by Julia Harte and Gulsen Solaker; Editing by Dominic Evans and Raissa Kasolowsky)

Turkish court keeps U.S. pastor in jail; Trump calls on Erdogan to act

A Turkish soldier stands guard in front of the Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

By Ezgi Erkoyun

ALIAGA, Turkey (Reuters) – A Turkish court decided on Wednesday to keep an American pastor in jail, dashing hopes that he could be released during his trial on terrorism and spying charges, a case that has deepened a rift with NATO ally Washington.

Andrew Brunson, a Christian pastor from North Carolina who has lived in Turkey for more than two decades, was indicted on charges of helping the group that Ankara blames for a failed 2016 coup against President Tayyip Erdogan, as well as supporting outlawed PKK Kurdish militants.

Brunson, who denies the charges, faces up to 35 years in jail if found guilty.

“It is really hard to stay in jail and be separated from my wife and children,” Brunson, wearing a black suit and a white shirt, told the court in Turkish.

“There is no concrete evidence against me. The disciples of Jesus suffered in his name, now it is my turn. I am an innocent man on all these charges. I reject them. I know why I am here. I am here to suffer in Jesus’s name.”

U.S. President Donald Trump late on Wednesday said in a tweet that Erdogan “should do something to free this wonderful Christian husband and father,” saying that Brunson has “been held hostage far too long.”

The U.S. Senate passed a bill last month including a measure that prohibits Turkey from buying F-35 Joint Strike Fighter jets because of Brunson’s imprisonment and Turkey’s purchase of Russia’s S-400 air defense system.

The U.S. envoy to Turkey said he was “disappointed” by the ruling of the court in the Aegean province of Izmir, where Brunson had been living.

“Our government is deeply concerned about his status and the status of other American citizens and Turkish local employees of the U.S. diplomatic mission who have been detained under state of emergency rules,” Charge d’Affaires Philip Kosnett told reporters outside the courtroom.

“We have great respect for both Turkey’s traditional role as a haven for people of faiths and Turkey’s legal traditions,” he said. “We believe this case is out of step with these traditions.”

NEW WITNESSES

Erdogan has previously linked Brunson’s fate to that of Fethullah Gulen, a U.S.-based Muslim cleric who Turkey accuses of masterminding the failed coup. Gulen denies any involvement in the coup, in which at least 250 people were killed.

The spokesman of Turkey’s ruling AK Party, Mahir Unal, said that just as Washington had responded repeatedly to Ankara’s requests for Gulen’s extradition by saying it was a matter for the U.S. courts, so Brunson’s fate was a judicial matter.

Brunson was pastor of the Izmir Resurrection Church, serving a small Protestant congregation in Turkey’s third-largest city, south of the Aegean town of Aliaga where he is now on trial.

His lawyer Ismail Cem Halavurt had raised hopes that Brunson could be released as the prosecution witnesses finish testifying.

But Halavurt said on Wednesday the prosecution has added the testimony of two new anonymous witnesses to the case and that the court would reconvene on Oct. 12 to hear them and view new evidence.

Turkey’s lira weakened against the dollar immediately after the ruling, reflecting investor worries about tensions with the United States.

Brunson’s trial is one of several legal cases that have raised tensions between Washington and Ankara. A U.S. judge sentenced a Turkish bank executive in May to 32 months in prison for helping Iran evade U.S. sanctions, while two locally employed U.S. consulate staff in Turkey have been detained.

The two NATO allies are also at odds over U.S. policy in Syria, where Washington’s ally in the fight against Islamic State is a Kurdish militia that Turkey says is an extension of the PKK, which has waged a three-decade insurgency in southeast Turkey.

In a statement late on Wednesday, four Republican U.S. senators called for the immediate release of Brunson and other U.S. citizens being held in Turkey, warning of legislative reprisals otherwise.

“We encourage the Administration to use all the tools at their disposal to ensure the release of these innocent people before Congress is forced to press for even stricter legislative measures that will be difficult to unwind,” Senators Thom Tillis, Jeanne Shaheen, James Lankford, and Lindsey Graham said.

(Writing by Ezgi Erkoyun and Humeyra Pamuk; Editing by John Stonestreet and Leslie Adler)

Turkish court keeps U.S. pastor in jail, Washington says deeply concerned

Ismail Cem Halavurt, lawyer of the jailed pastor Andrew Brunson, talks to media in front of the Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal A

By Ezgi Erkoyun

ALIAGA, Turkey (Reuters) – A Turkish court decided on Wednesday to keep an American pastor in jail, dashing hopes that he could be released during his trial on terrorism and spying charges, a case that has deepened a rift with NATO ally Washington.

Andrew Brunson, a Christian pastor from North Carolina who has lived in Turkey for more than two decades, was indicted on charges of helping the group that Ankara blames for the failed 2016 coup against President Tayyip Erdogan, as well as supporting outlawed PKK Kurdish militants.

Brunson, who denies the charges, faces up to 35 years in jail if found guilty.

“It is really hard to stay in jail and be separated from my wife and children,” Brunson, wearing a black suit and a white shirt, told the court in Turkish.

“There is no concrete evidence against me. The disciples of Jesus suffered in his name, now it is my turn. I am an innocent man on all these charges. I reject them. I know why I am here. I am here to suffer in Jesus’s name.”

President Donald Trump has called for his release and the U.S. Senate passed a bill last month including a measure that prohibits Turkey from buying F-35 Joint Strike Fighter jets because of Brunson’s imprisonment and Turkey’s purchase of Russia’s S-400 air defense system.

The U.S. envoy to Turkey said he was “disappointed” by the ruling by the court in the Aegean province of Izmir where Brunson had been living.

“Our government is deeply concerned about his status and the status of other American citizens and Turkish local employees of the U.S. diplomatic mission who have been detained under state of emergency rules,” Charge d’affaires Philip Kosnett told reporters outside the courtroom.

“We have great respect for both Turkey’s traditional role as a haven for people of faiths and Turkey’s legal traditions. We believe this case is out of step with these traditions,” he said.

NEW WITNESSES

Brunson was pastor of the Izmir Resurrection Church, serving a small Protestant congregation in Turkey’s third-largest city, south of the Aegean town of Aliaga where he is now on trial.

His lawyer Ismail Cem Halavurt had raised hopes that he could be released as the prosecution witnesses finish testifying.

Jailed U.S. pastor Andrew Brunson's wife Norine Brunson leaves from Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

Jailed U.S. pastor Andrew Brunson’s wife Norine Brunson leaves from Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

But Halavurt said on Wednesday the prosecution has added the testimonies of two new anonymous witnesses to the case and that the court will hold its next

hearing on October 12 to hear them and view new evidence.

Turkey’s lira weakened against the dollar immediately after the ruling, reflecting investor worries about tensions with the United States. It was nearly half a percent weaker on the day, at 4.8215 at 1234 GMT.

Brunson’s trial is one of several legal cases that have raised tensions between Washington and Ankara. A U.S. judge sentenced a Turkish bank executive in May to 32 months in prison for helping Iran evade U.S. sanctions, while two locally employed U.S. consulate staff in Turkey have been detained.

The NATO allies are also at odds over U.S. policy in Syria, where Washington’s ally in the fight against Islamic State is a Kurdish militia Turkey says is an extension of the PKK, which has waged a three-decade insurgency in southeast Turkey.

Philip Kosnett, U.S. Charge d'affaires in Turkey, talks to media in front of the Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

Philip Kosnett, U.S. Charge d’affaires in Turkey, talks to media in front of the Aliaga Prison and Courthouse complex in Izmir, Turkey July 18, 2018. REUTERS/Kemal Aslan

The Turkish government says Brunson’s case will be decided by the courts. But Erdogan has previously linked his fate to that of Fethullah Gulen, the U.S.-based Muslim cleric Turkey blames for the coup attempt and whose extradition Ankara seeks.

Gulen has denied having any link to the failed coup, in which at least 250 people were killed.

(Writing by Ezgi Erkoyun and Humeyra Pamuk; Editing by Dominic Evans, David Dolan and Andrew Heavens)