In a significant diplomatic overture, Turkey reportedly proposed a $100 million settlement to the United States last month to resolve the long-running criminal case against Halkbank, the state-owned Turkish bank accused of helping Iran evade U.S. sanctions. The proposal was discussed during a White House meeting between Turkish President Recep Tayyip Erdoğan and U.S. President Joe Biden, according to sources familiar with the matter.
The initiative underscores Ankara’s renewed efforts to mend strained U.S.–Turkey relations and bring closure to a legal case that has complicated diplomatic and economic ties for nearly a decade.
Background: The Halkbank Controversy
Halkbank has been at the center of one of the most politically charged sanctions cases in recent U.S. legal history. Prosecutors in New York allege that the Turkish lender participated in a complex scheme to illegally move billions of dollars on behalf of Iran, circumventing U.S. sanctions by disguising oil revenue as food and medicine transactions under a humanitarian exception.
The U.S. Department of Justice accused Halkbank of fraud, money laundering, and conspiracy, claiming the bank used front companies and false documentation to conceal the transactions. In 2019, the Southern District of New York formally charged the bank, igniting a diplomatic standoff between Washington and Ankara.
Turkey has consistently rejected the allegations, calling them politically motivated and an affront to national sovereignty. Halkbank, for its part, has pleaded not guilty, arguing that as a state-controlled entity, it should be immune from prosecution under the doctrine of sovereign immunity.
The Settlement Proposal
According to insiders, Turkey proposed a $100 million payment as part of a potential settlement that would allow Halkbank to avoid admitting guilt — a nonnegotiable term for Ankara. The offer was reportedly floated as a goodwill gesture during Erdoğan’s September visit to the White House, where he sought to reset ties with Washington amid a backdrop of lingering tensions over defense policy, regional conflicts, and trade.
While it is unclear how the Biden administration responded, the fact that such a proposal was raised directly at the presidential level highlights Turkey’s determination to find a diplomatic solution. The White House has not publicly commented on the matter, and officials from the U.S. Department of Justice have declined to confirm whether any negotiations are ongoing.
Legal experts note that while the U.S. government sometimes reaches financial settlements in sanctions-related cases, the political sensitivity of the Halkbank prosecution — combined with the scale of the alleged wrongdoing — makes any resolution highly complex.
Judicial Developments: Supreme Court Denies Halkbank Appeal
The timing of Turkey’s proposal is notable. Just days before the White House meeting, the U.S. Supreme Court rejected Halkbank’s appeal to dismiss the case on sovereign immunity grounds, ruling that the prosecution could proceed in U.S. courts. That decision effectively cleared the way for the criminal trial to move forward in the Southern District of New York.
The Supreme Court’s move was a significant blow to Turkey, which had hoped the high court would intervene. Halkbank’s defense team had argued that the prosecution violated international law and diplomatic protocol, but the justices found that the Foreign Sovereign Immunities Act did not shield the bank from criminal liability.
With that door closed, Turkey’s push for a negotiated settlement appears to be a pragmatic attempt to prevent further reputational and financial fallout.
Diplomatic Context: A Reset in U.S.–Turkey Relations
The Halkbank case is just one of several flashpoints in U.S.–Turkey relations. Tensions escalated after Turkey purchased Russia’s S-400 missile defense system in 2019, prompting Washington to block Ankara’s participation in the F-35 fighter jet program and impose sanctions on Turkey’s defense procurement agency.
Despite these challenges, both countries have sought to rebuild trust. Ankara has recently played a key role in mediating between Russia and Ukraine over grain exports and regional stability — efforts that Washington has quietly supported. Analysts say Erdoğan’s outreach to the White House last month reflects a broader strategy to reposition Turkey as a crucial U.S. ally in the Middle East and Eastern Europe.
“The Halkbank case remains one of the biggest irritants in bilateral relations,” said a former U.S. State Department official. “By offering a settlement, Turkey is signaling that it wants to move past this issue and open a new chapter with Washington.”
Challenges to a Settlement
Even if Washington were open to a settlement, several legal and political obstacles remain. U.S. prosecutors have long treated sanctions violations with severity, particularly those involving Iran. Previous cases have resulted in multi-billion-dollar fines — for instance, BNP Paribas paid $8.9 billion in 2014 for violating sanctions against Iran, Sudan, and Cuba.
Given that precedent, some legal observers suggest that a $100 million proposal may fall short of expectations, especially for a case involving a state-owned bank. Moreover, any agreement that allows Halkbank to avoid admitting wrongdoing could face criticism from lawmakers who view sanctions enforcement as central to U.S. foreign policy.
For Turkey, however, acknowledging guilt could have domestic and diplomatic repercussions, potentially undermining Erdoğan’s position ahead of upcoming elections.
What Lies Ahead
As the criminal proceedings resume in New York, Halkbank continues to maintain that it operated within international law and that the charges are “unfounded.” Turkish officials have reiterated their commitment to pursuing “a fair and lawful resolution” to the dispute through dialogue.
Whether the U.S. will engage in further discussions remains to be seen. For now, the Halkbank case stands as a test of both countries’ willingness to balance legal enforcement with diplomatic pragmatism — a delicate equilibrium in an already complicated bilateral relationship.
For legal professionals, the Halkbank case is a timely reminder of how international sanctions law, diplomacy, and criminal enforcement intersect in high-stakes litigation.
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