Turkey and its U.S. and European allies could be on a collision course over Iran. Despite international efforts to isolate Iran over its disputed nuclear program, Turkey has deepened trade and financial relations with Tehran. A Turkish state bank recently helped transfer a multi-billion-dollar payment to Iran. The deal comes in the face of Washington's calls on Ankara to stop cooperation.
The Turkish state-owned Halkbank recently has helped India transfer part of a $5 billion payment to Iran for oil deliveries. The intervention of the Turkish bank is a major boost to Tehran, according to Turkey-Iran expert Mehrdad Emadi.
"This money was very badly needed and it actually had caused shortage of hard currencies in Tehran," said Emadi. "So in that sense, it actually gives a new lease of life to regime."
The Indian payment had been delayed by increasingly tightening Western sanctions on Iran. The West suspects Iran is developing nuclear weapons. Iran says its program is for peaceful energy development.
Jamshid Assadi of France's Burgundy Business School says Washington is increasingly successful in stopping Western financial dealings with Tehran.
"The sanctions is much harder for Iran, in the financial flows because the financial networks are much globalized. And when it's globalized, American banks are very powerful on it. For financial transactions, it's very difficult," said Assadi.
In a recent a visit to Turkey, senior U.S. treasury official Roger Cohen spelled out Washington's concerns. "As trade increases, as financial ties expand, it runs counter to the international community's desire to constrain Iran and to ensure the choice that has been put to the Iranian leadership between continued defiance and integration with the international community, is as sharp as possible," he said.
Cohen cited Iran's Mellat bank, which operates in Turkey, as helping to foster Tehran's nuclear program. Despite Western calls for its activities to be restricted, the Turkish branch recently announced increased profits and growth.
Washington has reportedly warned Turkish banks operating in the U.S. that they could face prosecution if they violate Iran sanctions. According to a diplomatic source, at least one Turkish bank is under investigation by U.S. authorities.
But Ankara has mostly refused to abide by sanctions on Iran. Bilateral trade has continued to grow.
Turkish politician Volkan Bozkir, who heads the parliamentary foreign affairs committee, dismisses U.S. threats.
"Countries should be careful in warning Turkey [that] it's the not the country of 10 years ago. Is there any rule in the world that the U.S. can impose any sanctions without any U.N. support or legal institutions? It's only the U.N. which can impose sanctions. We will abide with the U.N. sanctions."
Still, Ankara is wary of harming relations with Washington, says former Turkish diplomat Murat Bilhan, especially when it come to military alliances.
"Turkey does not feel any threat from Iran, but I would definitely say Turkey would not hurt Turkish-American relations just for the sake of Iran. Because Turkey does observe the interest of the United States, as you have seen that in the missile shield," said Bilhan.
Bilhan is referring to Ankara's decision to allow the placement of U.S. radar on its territory as part of NATO's anti-ballistic missile system aimed at detering Iran. The decision was praised by Washington this week and condemned by Tehran.