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ANKARA (Reuters) - Turkish President Erdogan said on Sunday that Turkey would not succumb to blackmail by the United States in the trial of a Turkish bank executive being charged with evading U.S. sanctions on Iran.

Already strained ties between NATO allies Ankara and Washington have deteriorated as Turkish-Iranian gold trader Reza Zarrab, who is cooperating with U.S. prosecutors, detailed in court a scheme to evade U.S. sanctions.

Erdogan said Turkeys dealings were in line with the decisions of the United Nations, adding that they were not against Ankaras alliance with Washington.

What have we done, for example? We bought natural gas from a country we have an agreement with so our citizens wouldnt be cold in the winter. Like other countries, only the UNs decisions bind us, and Turkey followed them to the dot, he told members of his ruling AK Party in the eastern province of Mus.

Over three days of testimony, Zarrab has implicated top Turkish politicians, including Erdogan. Zarrab said on Thursday that when Erdogan was prime minister he had authorized a transaction to help Iran evade U.S. sanctions.

Ankara has cast the testimony as an attempt to undermine Turkey and its economy, and has previously said it was a clear plot by the network of U.S.-based cleric Fethullah Gulen, who it alleges engineered last years coup attempt.

This case is nothing more than the 17-25 December plot being carried across the ocean. Excuse us, but we will not succumb to this blackmail, Erdogan said, referring to 2013 leaks about alleged government corruption which were blamed on his opponents.

Although he has not yet responded to the courtroom claims, Erdogan has dismissed the case as a politically motivated attempt to bring down the Turkish government, led by Gulen.

Turkey has repeatedly requested Gulens extradition, but U.S. officials have said the courts require sufficient evidence before they can extradite the elderly cleric, who has denied any involvement in the coup.

Gulen has lived in self-imposed exile in Pennsylvania since 1999.

Reporting by Tuvan Gumrukcu. Editing by Jane Merriman

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Turkey's Erdogan says will not succumb to U.S. 'blackmail ...

It's the first time Erdogan has been named in the closely-watched US criminal case over Iran's violations of international sanctions and movement of billions of dollars.

The case's central figure, Reza Zarrab, an Iranian-Turkish gold trader, was arrested in Miami last year and has since been the case's top named defendant. There are eight other defendants facing similar charges.

He quietly cut a plea deal last month and admitted to defrauding the United States, money laundering, and bank fraud, according to court documents.

On Thursday, Zarrab testified in federal court about Erdogan's alleged role in Zarrab's scheme, which involved laundering funds from Iranian oil and gas sales through Turkish banks, including the state-run bank, Halkbank.

Zarrab testified that when the amount of money illegally flowing through Turkey's Halkbank became too much to handle, Erdogan approved getting two more Turkish banks involved: VakfBank and Ziraat Bank.

Zarrab said he received this information from the government official he claims to have bribed to take part in the scheme, former Turkish economy minister Zafer Caglayan. Caglayan denied all allegations in a Turkish probe into these allegations that started in 2013.

On Thursday, Erdogan responded to Zarrab's testimony from Wednesday, saying Turkey "did the right thing" and did not violate US sanctions against Iran, according to CNN Turk.

"The prime minister of that time, Recep Tayyip Erdogan, and [then] Minister of Treasury Ali Babacan had given orders for them to start the trades, the banks," Zarrab said Thursday. CNN has sought comment from the Turkish government on Zarrab's testimony and is awaiting response.

In their court filings, the US government has not alleged that Erdogan cooperated in the scheme.

On Wednesday, Zarrab testified that he paid Caglayan more than 31 million Euros ($36.7 million) in bribes to help Iran launder money and dodge international sanctions. Caglayan denied all allegations in a Turkish probe into the claims, which started in 2013.

One of the police officers in the 2013 Turkish probe has since fled Turkey and will now serve as a witness in the US government's case, prosecutors said in court earlier this week.

For years, US and United Nations sanctions on Iran have kept that country from accessing billions of dollars stored in banks around the world. The tactic is meant to punish Iran for its attempts to develop nuclear weapons and threatening Israel and the United States.

Zarrab's detailed testimony, which surprised those in the courtroom, brings the criminal case's focus to top levels of the Turkish government and may help explain why Erdogan has lambasted the American investigation. The Turkish government has sought the return of Zarrab. Erdogan loyalists view the Zarrab case being tried in New York as a political move against the President and his party.

Cash to CAG

On Wednesday, Zarrab testified about his role in helping Iran dodge sanctions to access money stuck in Turkish banks.

Zarrab recalled how he paired up with a jeweler in 2012 to devise a scheme in which they would trade gold for cash in order to launder billions of dollars for Iran. He told the court how money would traverse through nearly a dozen banks and shell companies and sometimes wind up in American banks including Standard Chartered and others. They did this so that Iran could conduct international business through proxies and circumvent international sanctions.

"A few billion ... euros" were withdrawn in this scheme "under disguise of gold trade," Zarrab said.

When a top official at Turkey's Halkbank refused to let Zarrab do that, Zarrab said he went to Caglayan -- then the economy minister -- to pressure Halkbank to play along.

Caglayan agreed to meet in person, and asked Zarrab details about the illegal deal and its profit margins, Zarrab testified.

"I can work with this, sharing profits 50/50," Caglayan said, according to Zarrab's testimony.

US federal prosecutors showed American jurors what they said were spreadsheets kept by Zarrab during the operation of his illegal trading business. In it were several payments marked "cash to CAG," a reference to Caglayan.

Nate Schenkkan, a Turkey analyst at the pro-democracy organization Freedom House who is watching the trial, told CNN this is the first time the public sees "the raw scale of the bribes and corruption."

Zarrab's witness testimony and documents displayed at trial "would show that this conspiracy to launder money for Iran was not a rogue operation. It would show the Turkish government at its very highest level understood what was going on and approved of it," Schenkkan tsaid.

Zarrab is also testifying in this trial against the deputy general manager of Halkbank, Mehmet Hakan Atilla, who until recently was Zarrab's co-defendant. Atilla has pleaded not guilty.

Zarrab testified that he conducted these types of business deals for the National Iran Oil Company, and the scheme would move money between bank accounts at Halkbank that belonged to a major Iranian bank, along with the Turkish companies Botas, Tupras and others, before moving the money out internationally.

In essence, Zarrab painted a picture that portrayed Halkbank as a laundering tool within its own walls.

In a written statement, Halkbank denied the accusations: "Our bank did not do any illegal transfers about any country. There is no systematic or conscious violation in order to bypass the embargo."

Zarrab also testified that he engaged in a scheme to pull Iranian money out of Aktif Bank, the largest privately-owned investment bank in Turkey.

On a daily basis, Zarrab said he brokered the illegal movement of US $5-10 million of Iranian money out of Aktif Bank. But Zarrab claimed he lost the illegal business when the bank cut him out as the middleman and started doing it on its own.

The US connection

In testimony on Wednesday, Zarrab told the court he initially hired American lawyers to pursue some sort of "prisoner exchange" between the United States and Turkey -- an odd effort that failed.

It is unclear who would have been part of that prisoner swap. But the Turkish government has several Americans jailed under suspicious circumstances whom it sees as bartering tools with the United States, according to Schenkkan, the analyst.

Zarrab did not mention the lawyers by name in court, but after his March 2016 arrest he hired former US Attorney General Michael Mukasey and former New York Mayor Rudy Giuliani, a supporter of and former campaign advisor to US President Donald Trump.

"That receptiveness is hardly surprising when one considers that none of the transactions in which Mr. Zarrab is alleged to have participated involved weapons or nuclear technology, or any other contraband, but rather involved consumer goods, and that Turkey is situated in a part of the world strategically critical to the United States," Giuliani said, according to the filing.

CNN's Kara Fox and Isil Sariyuce contributed to this report.

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Erdogan helped Iran evade US sanctions, witness claims - CNN

ANKARA (Reuters) - Turkish President Tayyip Erdogan said on Sunday businessmen who attempted to move assets abroad were traitors, and called on his cabinet to block any such moves.

I am seeing signals, news that some businessmen are trying to move their assets abroad, and I call on firstly my cabinet from here to never allow this exit for any of them because these people are traitors, Erdogan said.

Speaking to members of his ruling AK Party in the eastern province of Mus, Erdogan did not say to whom he was referring, nor did he single out a single business, person or country of destination.

His comments come after the state-run Anadolu news agency said on Friday that Turkish prosecutors were set to seize the assets of Turkish-Iranian gold trader Reza Zarrab, who is cooperating with U.S. prosecutors in the trial of a Turkish bank executive charged with evading U.S. sanctions on Iran, and his acquaintances.

The trial has caused already strained ties between NATO allies Ankara and Washington to deteriorate further as Zarrab detailed in court a scheme to evade the U.S. sanctions, saying that Erdogan personally authorized two Turkish banks to join the scheme when prime minister.

Ankara has cast the testimony as an attempt to undermine Turkey and its economy, and has previously said it was a clear plot by the network of U.S.-based Fethullah Gulen, who it alleges engineered last years coup attempt.

We cannot take kindly to those who earn in this country and then try to take those earnings abroad, Erdogan said.

Reporting by Tuvan Gumrukcu; Editing by Mark Potter

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ANKARA (Reuters) - Courts in the United States cannot put Turkey on trial, Turkish President Tayyip Erdogan said on Saturday, in reference to the case of a Turkish bank executive who has been charged with evading U.S. sanctions on Iran.

Already strained ties between NATO allies Ankara and Washington have deteriorated in recent weeks as Turkish-Iranian gold trader Reza Zarrab, who is cooperating with U.S. prosecutors, detailed in court a scheme to evade U.S. sanctions.

Over three days of testimony, Zarrab has implicated top Turkish politicians, including Erdogan. Zarrab said on Thursday that Erdogan personally authorized two Turkish banks to join the scheme when he was prime minister.

Ankara has cast the testimony as an attempt to undermine Turkey and its economy, and has previously said it was a clear plot by the network of U.S.-based Fethullah Gulen, who it alleges engineered last years coup attempt.

Reuters was not immediately able to reach representatives for the ministers implicated by Zarrab in the trial.

Turkey has repeatedly requested Gulens extradition, but U.S. officials have said the courts require sufficient evidence before they can extradite the elderly cleric, who has denied any involvement in the coup.

Erdogan, who has governed Turkey for almost 15 years, told members of his ruling AK Party in the northeastern province of Kars on Saturday that U.S. courts can never try my country.

Although he has not yet responded to the courtroom claims, he has dismissed the case as a politically motivated attempt to bring down the Turkish government and on Friday the state-run Anadolu news agency said Turkish prosecutors are set to seize the assets of Zarrab and his acquaintances.

Turkey has stepped up its pressure on the U.S. and on Saturday Anadolu quoted Foreign Minister Mevlut Cavusoglu as saying that Gulens followers had infiltrated the U.S. judiciary, Congress, and other state institutions.

The United States says its judiciary is independent of any political or other interference.

Some 150,000 people have been sacked or suspended from their jobs over alleged links to Gulen since the attempted coup, while close to 50,000 people from the military, public and private sector have been jailed.

And in a further blow to Turkish-U.S. ties, Turkish authorities on Friday issued an arrest warrant for former U.S. Central Intelligence Agency (CIA) officer Graham Fuller over suspected links to the abortive putsch.

Rights groups and Turkeys Western allies have voiced concerns that Erdogan is using the crackdown to muzzle dissent, but the government says the purges are necessary due to the gravity of the threat it faces.

Reporting by Tuvan Gumrukcu; Editing by Alexander Smith

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Whatever the verdict is, we did the right thing, he said at a closed meeting with his deputies, Turkish state media reported. We have never made commitments to the U.S. on our energy ties with Iran.

The world is not only about the U.S., he said. We also have trade and energy relations with Iran.

Mr. Zarrabs testimony about Mr. Erdogan was relatively brief, coming in the first week of the trial of a Turkish banker, Mehmet Hakan Atilla, 47, who was also charged in the scheme.

Mr. Zarrab testified that it was Zafer Caglayan, Turkeys economy minister at the time, who said Mr. Erdogan had directed the two banks, Ziraat Bank and VakifBank, to participate in the scheme. Mr. Caglayan told me that Mr. Prime Minister had given approval for this work, Mr. Zarrab said through an interpreter, referring to the Iranian trade.

On Wednesday, Mr. Zarrab testified that he had paid tens of millions of dollars in bribes to Mr. Caglayan; he said Mr. Caglayan asked for 50 percent of the profits generated by the scheme, which prosecutors say was being run through a Turkish state bank, Halkbank. On Thursday, Mr. Zarrab said he had also paid bribes to the general manager of Halkbank, Suleyman Aslan, whom he described as being critical to the arrangement.

Mr. Caglayan and Mr. Aslan, who have also been charged in the case, remain at large, prosecutors have said.

Mr. Zarrab testified that he had never paid a bribe to Mr. Atilla the defendant being tried, who was the deputy general manger of Halkbank.

In Turkey, reaction to Mr. Zarrabs allegations was muted. Mainstream television and news outlets have largely kept to the government line that the trial is a plot against Turkey, and have not reported the potentially most explosive allegation: that Mr. Erdogan was involved.

Many Turks have turned instead to social media, which has been buzzing about the trial. But some fell quiet after Mr. Zarrab seemed to implicate the president. One Turkish user said on Twitter that he did not dare write what he was hearing and then deleted even that tweet.

Mr. Zarrab maintained his respectful tone in a second day of testimony on Thursday, but one aspect of his appearance did change: his clothing.

On Wednesday, Mr. Zarrab testified while wearing tan-colored jail clothes. But after the jury was sent home for the day, Judge Richard M. Berman asked whether there was any reason the witness could not appear in civilian clothes.

Its hard enough to appear in court, Judge Berman said. There is certainly no reason to make things more difficult by not providing, for example, a shirt and a tie or jacket or whatever. He said he would sign an order to that effect.

Even Mr. Atilla, the defendant, who is being held in jail, was granted permission to wear a suit during the trial a common courtroom practice.

On Thursday, Mr. Zarrab testified in a sport coat and white dress shirt, though no tie.

When the prosecutor, Sidhardha Kamaraju, asked why he had changed his clothing, Mr. Zarrab said it had been done with the permission of the honorable judge.

Judge Berman then interjected. I may be overly sensitive to the clothing issue, he said wryly. And the reason is that Im always hearing in the back of my head my wife saying, What are you wearing? So, anyway.

Mr. Zarrabs testimony continued.

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