>> from our studios in new york city, this is "charlie rose." >> sophisticated manipulation of public opinion.

luckily we avoided an international escalation on the syrian conflict. >> vitaly churkin is here. he is russia's ambassador to the united nations. the country is also a key player in nuclear negotiations with iran. close to the home, president vladimir putin recently bailed out ukraine's embattled government as an attempt to increase influence. the eyes of the world are on russia as it prepares to host the winter olympics in sochi next month. as concern mounts over terror threats, president obama has offered full security assistance. i'm pleased to have vitaly churkin back at this table. welcome. >> thank you. good to be back. >> let's start at the g-2 conference. it seems to be a dispute among some people over the objective

of the conference. certainly what it means for president bashar al-assad. where is russia? >> the objective is to end the crisis in syria, the killing. for that objective to be attainable almost a year-and-a-half ago, we negotiated the so-called geneva communiqué. now it is regarded as the basis of negotiations. it is a complex document. parties idea is the two should get together and discuss a transition to a future where everyone would be comfortable to live, all ethnic and religious groups that exist in the country. this is where we are coming from. specific issues need to be negotiated. this particular matter of the future of president assad is certainly complex and delicate. it is a thorny issue.

the government is adamant that he should stay. the opposition is adamant he should go. tactic it is a very wise that lakhdar brahimi is pursuing . >> the u.n. representative. >> his contact with the parties has started in geneva today to try and find common ground on some issues first. maybe humanitarian issues. exchange of prisoners. access to areas where humanitarian assistance has not come for a long time. after they find common ground on those issues, they will keep discussing other matters, including forming a transitional body with representatives of both sides and hopefully they will have a clearer understanding of where things can go in order -- >> here is what secretary kerry said. option, aly one

transitional government from regional ascent -- consent stuff" that means assad will not be part of that government? >> the first part of the statement is absolutely accurate. it is a quote from the geneva communiqué. the rest of it is not something said in the geneva communiqué about bashar al-assad. that issue was not addressed by the geneva communiqué. there was difference between the two parties on that matter. in order to have a realistic chance to move forward, we believe we need to tackle matters first where conceivably agreement can be reached between the government and the opposition. >> president assad said the purpose should be to discuss ways to fight terrorism and that it is totally unrealistic to think he would share power with the exiled opposition. >> both of the government and opposition groups made some pretty tough opening shots going into the conference.

the opposition was saying the first thing is to make sure assad will go. the government responded, including president assad, with very strong statements to the contrary. this is something i suppose which could have been anticipated. now the challenge is to try to make sure that they will find things to talk about and agree on. with the mediation of lakhdar brahimi. >> there is also the introduction of these photographs of torture and killing. supposedly taken by someone who documented it. there is some official organization that says they have verified this. does your government have a position on this? >> we have no idea. we heard the news. it was rather strange that the announcement was made in a rather precipitous way on the eve of the conference. obviously there was a political agenda behind it and trying to create a certain atmosphere for the conference.

maybe even derail the conference. fortunately, that has not happened. but over the three years of the conflict, there has been a lot of manipulation of public information and a lot of propaganda, misinformation. this matter should be seriously investigated. >> these are very serious allegations of torture and death. with these awful photographs. >> awful photographs. >> if they are true and crimes committed by the syrian government, what is the conclusion? >> we are all on the security council, all the countries participating in this effort, we all believe that there should be no impunity. the geneva communiqué does address that. enter into thes political settlement of the crisis, that there must also be effort to punish all those who

may have been involved in the committing of various crimes in the course of the conflict. it is clear from both sides, some rather horrific things happens. terrorist groups operate against syria. they have been particularly notorious in committing mass excuse in some murders, etc. all of those things need to be investigated. that is for sure. >> they are simply unacceptable on the part of anybody. >> absolutely. >> you will find the facts and make sure -- >> absolutely. no impunity. gashomever might have used -- >> we had long discussions on the security council. a commission put together by the secretary-general. a lot of the discussion we had on december 16, after the final report of this mission, we believe it proved quite conclusively, beyond reasonable doubt, that those were

opposition groups that committed those. on august 21 and august 19. sayse united states conclusively that the syrian government -- >> they did argue against arguments represented. they made a statement without substantiating it by anything. >> you are not saying that the u.s. government does not believe the syrian government did it? >> you may have read the famous articles investigating this whole thing. i do not know what the u.s. government believes or not. i know -- >> what do they say to you? >> they say it was the syrian government, but do not give any proof of their allegations. >> they believe it. >> it is a complicated world. lately those people who claim initially that it was the syrian government, obviously and quite visibly have a conviction and -- lost any conviction in that.

reasonableeyond doubt not only that the opposition did it, but that the syrian government could not have done it on august 21, because 21ply, proceeding august they were not mixing it. it, you cannotix use it. it is very volatile. you have to prepare it a few days before you use it. it was a lengthy six-page statement made. you can read it. i think it proves quite conclusively that they could not have done it. on march 19, they were the ones who immediately demanded in this occasion -- an investigation. the u.k., the united states, and france prevented an investigation from taking place. so, you know, when you look at this tragic story, if you believe it was the syrian government who did it, there are many contradictions. inexplicable things. if you come to the conclusion that it was the opposition, then everything becomes obvious and

clear what actually happened. red lines. the opposition wanted the red lines to be crossed. >> russia stepped forward and said we could make a deal. you can get those chemical weapons somehow out of syria. where are we on that? has the syrian government done everything it can to meet the timetable and done all it can to get the chemical weapons out of syria? >> i think everyone, including this joint mission that are conducting the program, they're generally satisfied with the cooperation of the syrian government. the syrian government put the operation in place. the international operation is in place. the american vessel is on the way to its location that it has

not reached yet. i think things are moving ahead. >> with -- at what date will they all be removed? >> they are supposed to be destroyed by mid-2014. july 1 of this year. >> let me go back to the pictures. to be clear that i understand because of how you are firm about it. there is, if in fact it turns thathat those awful crimes these photographs represent were committed by the syrian government, would that affect your support of the assad government? will you stop supporting him if you found out that government committed those crimes against its people? >> no impunity to those who commit crimes. it needs to be investigated if the crimes have been committed. you mentioned the crimes which were committed by the opposition , somehow it did not deter many countries supporting them. >> no, no.

interesting you say that. it depends on what part of the opposition. they have so many aces. -- faces. your government is very upset about this part of the opposition as well. on the others you have less concern, right? some are much more jihadists. >> terrorist organizations, we are concerned about them. that is why we insisted they should not be invited to the geneva conference. they were not. the other parts of the opposition were dealt with. we are dealing with. the national coalition came to montréal and is now in geneva. engaging the opposition, trying to engage the opposition in the course of the conflict to bring the two parties together. >> you are the russian ambassador to the united nations. your secretary-general said you are inviting iranians. then they took back the invitation. what happened? >> the secretary-general was

misled by some people and they were not necessarily -- -- not necessarily the iranians. he was not very happy with the iranians. but the iranians were not the only people who may have misled him. >> who are the other people? >> those who are putting pressure on the secretary-general. >> is it the u.s.? >> i think this is behind us. it is not such a big deal, frankly. in diplomacy, things happen. i would not exaggerate the importance of this episode. important is what the secretary-general, his spokesperson, said about the participation of iran. it was a cleverly written statement. it said the secretary general does not expect iran to participate in the one-day montréal event. which means that the

secretary-general kept open the door for iran's participation in the process. happen for iran to participate? >> the whole thing was completely artificial, completely artificial. there was every indication in thetext agreed between united states, russia, and the united nations -- if you accept the invitation, you accept the conditions that are there. so iranians were prepared to accept the invitation -- >> but when they asked if they accepted conditions, they refused to say so? >> wait -- asked, they were said no. >> they did not say no. they said they were not prepared to come without preconditions. all other participants, some of them have interpreted the geneva communiqué completely differently from what was said.

but they were not required to swear in blood that they were not going to differ from the communiqué. the requirement was only made exclusively of iranians. >> secretary kerry suggested they had troops on the ground and in syria. >> the united states was very reluctant about iran. but i have reason to believe that the united states understands the iranians need to participate in this. it is very encouraging in the interview shown yesterday on american television between the foreign minister of iran, he indicated iranians are prepared to participate in the political process. which everybody is interested in having. >> they have a vested interest and strong support of president assad. i want to come to the nuclear negotiations. the finance minister of france said -- >> foreign minister. >> i'm sorry.

he said that if the conference it will accentuate a crisis. >> of course. if the conference fails, the crisis will probably deepen further. >> he said, if it fails, it will be a real crisis. >> i cannot comment on the foreign minister of france, but i think there is a real crisis. ,f the conference were to fail we would have to start looking for some other approach. >> most people that i know or have talked to analysts but , nonparticipants, believe it will not be successful. do you believe it will be successful? what will have to happen to declare it a success? >> there is a chance, a hope. >> a small chance? >> the task is very daunting.

we all agree that it will take time. that it will require continued commitment from all those who can achieve it positively. we are encouraged that russia and the united states worked closely. working with john kerry and talking almost every day on the phone. two dozen meetings, most of them on syria. there are some ingredients that make us hope it can be a success. but obviously the obstacles are enormous. there are some players who do not want to see any settlement at all. they want syria to become a hub of international terrorism. trying to bridge some obstacles. a good example that you alluded to was the deal on the nuclear program in iran. the parties were coming from different directions. the u.s. and iran has had a history of animosity. but in a certain configuration,

diplomatic consideration -- configuration, progress was made. >> on that agreement, p5 + 1, which includes russia and germany those negotiations have , produced this agreement. that means the united states and russia see this exactly the same? >> we continue, all of us. the united states has its own perspective, but this mechanism of six has been working well. they have produced joint positions and deal to bring common positions across. to have the iranians except those common positions. as a result this agreement was , concluded in november. now they will move ahead to the final agreement. >> we have had several interesting statements come out. president rouhani is in davos. he reiterated that they want to -- that iran does not want nuclear bombs.

at the same time, he reiterated that iran wants the opportunity to the peaceful use of nuclear energy. >> exactly. said it is not true that iran has agreed to his mental centrifuges. -- dismantle centrifuges. tosaid, we never agreed that. you are here and can tell us whether they agreed or not. >> i watched his interview. i think it is being sensationalized in a negative way. >> how is it being sensationalized? >> let me explain. he complained about some terms that is being used to discredit. that are not actually used in the document. at the same time he said, let's not engage in that. let's not engage in that argument. let us implement the agreement we reached. this is what was said. >> how can you implement an

agreement if you differ over the agreement you have reach? both sides,rence on of course, they tried to embellish their achievements. the american officials have used certain terms which the iranians i understand are not happy about. because those terms are not actually used in that meeting. but the agreement is completely clear. there was an extra discussion on how to implement the agreement which was successfully concluded. they started implementing that agreement on january 20. the thing is not to engage in those empty discussions and arguments about who is going to do what. it is absolutely clear. now the thing is to implement it and move on to a second stage of negotiations on definitive solutions. >> at what point will they begin to reduce the sanctions? >> it is in the agreement. they are already reducing some unilateral sanctions.

the agreement is in miniscule detail. the thing to do is to implement the things which have been agreed upon and reflected in that agreement. >> everything we talked about there is a difference among the parties as to what the deal is. every thing, photographs, what the agreement says, what assad has done. >> this particular case with iran, first of all, there is a document in geneva. then there is a technical document that was additionally negotiated with iranians, specifying step by step, minute by minute, centrifuge by centrifuge, what exactly they need to do and how. >> tell me in your words -- are they required to dismantle centrifuges? >> let me put it this way, if the word "dismantle" is not used in the agreement, they are not required to dismantle. they are required to diffuse. some of the uranium which has

been enriched. everything is in the agreement. they need to do -- they not have uranium enriched to 20% after this agreement is made? >> i do not remember the exact terms. let me reiterate, everything is spelled out in incredible detail. rare, and agreement of this sort in such detail. a roadmap is there. incidentally, there is going to be a special commission between the six and iran. to iaea, which is going observe the implementation. it is not something where you rely on the iranians and trust them. the whole thing will be observed by the iaea. >> the olympics are going to take place in sochi. are you concerned about security? >> of course. >> are you open to the americans

assisting? >> i do not think "assisting" is the proper word. >> what word would you use? >> we have been cooperating. >> cooperation. >> with american experts on anti-terrorism. not just with americans. the british have been sharing their experience. as the spokesman of the white house said yesterday or the day before yesterday, many major events these days -- these days require serious effort to make sure there are no terrorist attacks. the olympic games is a major event. >> you are referring to jay carney. my impression is -- i have been talking about this for a number of programs -- the concern has ratcheted up. of security and the secure nest of the -- secureness of the facility. we have some people who are suggesting that they intend to commit terrorist attacks.

>> when there are major events, there are always people who intend to commit terrorist attacks. olympicsber the london , they put guns on the roofs in london. nothing should be left to chance. obviously we are not leaving anything to chance. all measures are taken by russia, including cooperation with others who are interested in making sure that nothing goes wrong in sochi. >> one of the things they've point their finger at is [indiscernible] is he alive? >> there were reports he may have been killed, but it has not been confirmed yet. >> the important thing is you take this seriously and you assure the olympians they will be secure, and their families who come to these games will be secure and the russian government will cooperate with everybody to make sure that happens. >> we are cooperating with everyone and taking all the efforts that can be taken. in order to make that secure.

>> the ukraine. here is the conventional wisdom. russia did not want to see ukraine move towards the european union. therefore it spent a ton of money to rescue its economy and its energy supply in order to prevent that. correct? >> no. not really. ukraine is very important to us. than to theportant united states or the european union. >> it used to be part of russia? >> it is a part of our history, common history, which is over 1000 years of history. >> that is an interesting point. is it your wish and president putin's wish to restore the soviet union? >> no, it is not. we are realists.

-- economiche integration is important in our part of the world, like for other parts of the world. we have created the customs union with belarus and has extend. kazakhstan.d -- we think that ukraine will benefit if they were to work on integration with the russia. we believe and it is important to understand that the future anyway is common economic space between that union. the whole thing. but we believe under current circumstances, we have been clear about that. it is the decision that ukraine needs to make on their own. it is their sovereign decision. the association agreement that was offered by the european union would have catastrophic consequences for the economy of ukraine. that could have a negative impact on the russian economy because of the way our two economies are integrated. it is their sovereign decision to make.

at the last moment, the ukrainian authorities realized what they were offered by the european union was something which would bring about collapse of their economy. they changed their mind. as you pointed out correctly, we give credit to the ukrainians. >> will they be able to pay it back? >> it is a big country. we hope they will. >> here we have russia and the united states. because of this relationship, between minister lavrov and secretary kerry, secretary kerry being very active. lavrov cooperating. does this signal somehow a new era in cooperation between russia and the united states? >> it might be. i hope it will develop into that. >> it has that possibility. >> i hope so.

>> what stands in the way? >> we will still have some different interests. we still have things on where we have different attitudes. we still have not nearly enough economic relations we need to have for two very large economies. there are plenty of things which need to be done. >> what would russia like to see from the united states? more trade? what else? >> more trade, and really being more serious about taking an interest in each other. like the europeans have their bid tohat in drag ukraine into the association agreement, they were reckless. they were putting their finger on something which was extremely sensitive both for ukraine and russia. i personally do not see that from the united states ishink the united states unfortunately acting in a very

provocative manner toward ukraine. >> how was that? ?hat is provocative >> trying to put pressure on the government. basically inciting violent acts. demonstrations are motivated by the united states government? >> not because of the u.s. government, but when the government has to take measures to prevent thoughts from destroying downtown -- thugs from destroying downtown kiev, and the united states says the right police were destroying downtown kiev, how that is viewed. placing sanctions on government officials, completely of thoseing the acts people trying to destabilize the situation in ukraine. this is a very disconcerting policy. first of all, it is a policy which seems to be regarding very

light -- lightly the interests of the ukrainian people. >> what is your government's position about gays in russia? >> no discrimination. we do not discriminate. we do not differentiate. >> you have laws that are not enforced? >> we have a law. about which there has been a lot of talk. banning gay propaganda among miners -- minors. >> why do you associate those two things, gay rights and pedophilia? >> those are things that we have seen in some countries. >> that is what president putin said. it is not about pedophilia. >> it is not about gay rights. there is no discrimination in russia. there is no discrimination of gays or any others. no difference between us and the united states and human rights. we believe human rights should be upheld. >> the conventional wisdom is otherwise.

as you know, the president has even spoken. president obama has spoken and said that is one of the reasons he appointed some people to lead the delegation as his representatives. >> the conventional wisdom in the u.s. is not always the conventional wisdom. it is often unconventional. >> you're saying president obama misunderstands what president putin leaves about gay rights? >> i do not know exactly, but clearly this is an issue that has been inflated artificially for whatever political purposes. >> tommy what is not true. that is what i want to know. any discrimination -- >> there are no laws that are unenforced? >> there are laws. the question of if they are enforced or not, there are laws

against propaganda of unorthodox sexual orientation among men. there is one law that is on the books. i do not know if it has ever been applied. probably not. but there is such a law that was adopted last spring by our parliament. -- has nott created treated discrimination by anyone. >> how do you define propaganda? >> you know it when you see it. to remember the famous expression. >> about pornography. i know it when i see it, what he said. >> yes. >> russia is excited about their olympics? it is said president putin has invested a lot in it. and $10050 billion billion. >> you know, we have this expression. it is not appropriate to try to

count money in somebody else's pocket. my point was you have spent a lot of money because the olympics are important to you. >> we spent a lot of money because we wanted to hold the olympic games. >> are you going? >> unfortunately not. too much work. >> >> thank you for coming. >> thank you. >> vitaly churkin is the russian ambassador to the united nations. back in a moment. stay with us. >> we focus tonight on the turkey prime minister erdogan's government. he is being accused of corruption. several members have resigned and the cabinet is being shuffled. some call it a coup. it is widely believed that some followers are involved. he a reclusive preacher residing in exile in pennsylvania. they have joined forces over the last decade in a series of trials.

many accuse the government of using the trials to curb the opposition. joining me from washington, james jeffrey is the former u.s. ambassador to turkey and iraq. at the world policy institute. on the phone from istanbul is benjamin harvey, bloomberg era chief -- bureau chief in turkey. ambassador, please tell me what you think is happening at the moment and what you think it means? >> first of all, we are seeing a power struggle between the faction that is part of erdogan's ruling party and erdog an himself. many institutions that have had an independent and separate existence have been accommodated or otherwise shunted aside by prime minister erdogan. he has probably a majority of the population behind him and is doing his best to continue to

expand his power, which is normal in any democratic system or other system. they feel threatened and are reacting against this by having people in the administration, particularly the judiciary and police, unveil these corruption scandals which almost certainly are more or less correct. nonetheless, they are being exploited politically. >> you've often said that the revolution always eats its children. how does that fit into this context? >> we are in the late stages of an epic struggle. it has been going on for more than 10 years now beginning with the election of erdogan and 2002 and 2003. erdogan represents kind of a new guard and new wave in turkish politics. he represents the lower middle class and the entrepreneurs. people from the heartland of turkey.

they have been struggling for more than a decade with the secular elite that has been entrenched in turkish society for more than 80 years. it was basically put in power by ataturk. that has been an extraordinary struggle. erdogan gone after and prosecuted and marginalized a huge number. what is happening now, the vanguard, the sort of turkish vanguard led by erdogan, is starting to crack up itself. it is split into two wings. i think what is so troubling to me is that turkey has been a very stable place, a democratic base for the last -- erdogan has brought stability and economic growth to that country that it

has not seen before. i think that is coming to an end. >> has he changed because the -- of power? >> i do not think erdogan has ever changed, and i don't think he ever brought change to turkey. >> he is what he was. >> i think the things that made erdogan great are the very things and doing them now. >> which is? >> he is very mercurial. is very hot tempered. he is from a neighborhood in istanbul -- keep has played -- he has played soccer. he calls himself a black turk. as dexter pointed out, they were the people that came up from the heartland and the grassroots. that oppose the secular elites. they took that turkey for the turkish people. and who he calls the black turk's. -- turks.

what he has done with this brandish meant -- brandishment, he is willing to sacrifice the stability he put forth in turkey for the past 11 years, politically and more importantly economically, which is the bigger risk in turkey today. >> put together for me, benjamin, some sense of the trial that turkey has been having. what does all of that mean? >> the prosecutor has now been removed from the case that was part of a massive purge of the judiciary and the police. the numbers are in the thousands. officers have been removed from their posts in this corruption probe. trial,as the generals on the government is in an uncomfortable situation. they supported them. they said the judiciary is independent, and now the judiciary is going after them and they are having to rethink that at that -- that a bit.

saying the judiciary is corrupt. saying they need to do a massive purge and reform of the judiciary. >> go ahead, dexter. >> i got a chance to look closely at some of these cases a year and a half ago. file. file after i discovered that these prosecutions of the elite of the turkish military, newspaper editors, the owners of tv stations, the evidence as far as i can see -- and i looked at a lot of cases -- it was ridiculous. in some cases absolutely preposterous. these are the means by which havean and his government shored up the old guard. coming back tos bite him, basically. the same prosecutors that were turned loose on the military and other institutions are now turning back and going after

erdogan. >> what is the threat to erdogan? >> i think the threat is grave. by ane to power with -- alliance with the cleric you mentioned who lives in pennsylvania. that is one of the largest and still basically unknown islamic orders in the world. second only to the muslim brotherhood. isis an islamic order that restrained, very very moderate. also very secretive. >> to have a lot of schools throughout turkey. >> throughout the world. >> they have 140 schools right here in the united states. >> 2000 schools around the world. it is an extremely powerful organization. very secretive. they have built an alliance with erdogan more than 10 years ago to come to power.

that is what is coming apart. that is what we are witnessing right now. >> and they split over what? >> a couple of things. i think this is a classic fight over power. this is a knife fight. >> ambassador, add what you think about the conflicts the prime minister finds himself engaged in, and how does he emerge out of this? >> as you have already heard, the underlying problem is, be it the military and the old elite, erdogan and his coalition, the judiciary and the police, all are trying to exploit their positions in society to establish control over the entire society in a system that is normally officially democratic. the majorityim is

majoritarian idea of wherever the people elect should call the shop applies to him. thus, he's going after the police and the judicial figures who have uncovered this corruption scandal which almost certainly has a lot of evidence behind it. nonetheless, it is being politically utilized and exploited. erdogan needs to win this one if -- needs to win this battle if he wants to become president of a politically more powerful presidency. that requires a constitutional change and for him to win crucial municipal elections in istanbul, and elsewhere. this is a big agenda. he has lost an ally. he is in some trouble to expand his power. >> power rather than change has been the defining common denominator as you have gone from decade to decade. >> absolutely.

you are seeing the manifestation of that now. the power struggle that you are seeing now where erdogan is willing to risk the very thing that has kept him in power and garnered him even more power. in 2002, erdogan won by a -- 34% of a majority vote. in 2007, that went up to 47%. in the last election in 2011, he won by 49.8%. nearly 50% of the turkish population voted for tayyip erdogan. in a small town in the anatolian heartland, part of what they call the anatolian tigers, towns in the middle of the heartland that have come up and supported entrepreneurs and contributed to turkey's economic gain. at this town, where there is an air force base, you have a lot of military presence.

it is very secular. at theking to people polling stations about who they were going to vote for, i came across one gentleman who said to me, i am going to vote for erdogan. not because i like erdogan. because i don't like an unstable turkey. i remember turkey in the 1970's and 1980's. he said, we cannot go back to that again. brings stability. what we saw in his reaction to when all these corruption charges came up against him, he is willing to unstablize the economy of turkey. he -- >> in the interest of power. >> in the interest of power, he of lobbed all sorts accusations again something called the interest rate lobby. people have read into that, whether that means that he is

talking about the jews or the banks or whatever he is talking about. that is very unsettling to investors who have commented turkey precisely because they believe that erdogan has brought stability into the country. >> there is also this relationship, ambassador, with america. the president and the prime minister were said to have a good relationship. and yet now you hear the prime minister blaming outside forces for some of the turmoil in turkey. >> that is exactly what is happening. the outside force keep hicks on picks on the he most easy united states. the low standing the u.s. has in polls in turkey, erdogan can exploit this. i don't think he is particularly warm toward the united states. it is a transactional relationship in his mind. nonetheless, america and turkey

have a lot of common interest. we had a falling out over syria. erdogan thought we should have been more aggressive going after the assad regime, using military force over the chemical weapons issue. nonetheless, the united states and turkey share a lot of common interests in the region. and it is quite important that we keep this relationship as steady as we can. >> the ambassador might disagree with me on this. i feel for precisely that reason , for the last four or five got a pass from the united states on a lot of these prosecutions, which we knew -- >> cracking down on journalistic freedom. >> there are more jailed journalist in turkey than any other country in the world, more than china or iran. where is business now, and

people who have benefited and promoted the idea of turkey as an emerging economy that at one time had a very healthy growth rate? >> if you look at the markets over the past month, you see the reaction has been pretty brutal. look at virtually any major turkish assets class, bonds, stock market, currency, it has been one of the worst performing in the world. definitely had an effect. you have to understand this in the context of turkey being a country that was going to be disproportionately affected by the tapering of monetary stimulus. this is a country that runs one of the world's biggest current account deficits. because of that, when the u.s. is talking about cutting down stimulus, turkey would always be vulnerable. you have this political crisis on top of that. the reaction has been pretty brutal in the markets. >> talk to me if you will about this goal for oil deal.

>> it is a state-run lender. it was the bank that was authorized to do transactions with oil. basically what happens, the iranian government had an account. turkey would buy oil and gas from iran and pay to that account. what would happen from there is they would distribute those payments and, because they were blocked off from the international financial system from dollars, they would buy physical gold from turkey and ship it into iran. what we see now is one of the men at the center of the scandal, especially the bribery allegations, an iranian who is now on jail. -- in jail. the bank ceo is also in jail. the bank says it has had no role in this. so far there is no evidence that the bank itself is implicated. >> what would be decisive in terms of where turkey goes, and

what should be looked at? >> it is all coming to a head right now. i think the corruption charges and the allegations are by and large pretty credible. follow themhey there is a good chance they will eat all the way back to erdogan's family. and i think if the prosecutors follow those leads it is going to get pretty nasty. >> i think in the longer-term, there are local elections in march. i think that is going to be the litmus test for erdigab himself -- erdogan himself. there was a poll that showed his support has dropped to 40% from 50%. the chp, the people's republic party, has gained in the polls. the keyare able to take cities the ambassador was , that is going to be an indication on where

erdogan stands. needs to go..p. he is coming down hard now. he has introduced her county and internet laws. he is trying to censor the media even more. there was a report today that no one in the media to report on any of the graft or corruption charges any longer. turkey is in for a roller coaster over the next couple of months. we will see what happens in march, and the combination will ation will be in august when turkey will for the first time elect their president directly. and akp get aogan lot of legitimacy. that seems to be unraveling now.

turks vote with their wallets as much as anybody else. >> ambassador? >> first of all, my colleagues have hit the nail on the head. first of all, on the economy it andmportant that erdogan his people understand that their economic success over the past decade is based upon integration into the international economy, to cover current account losses, and the ability to attract capital and innovate. that is based on the stability we have talked about and also the rule of law and predictability. that is all being called into question. as we just heard, that can have an impact. the final thing to watch is if erdogan runs into a difficult patch with elections with corruption charges and economy, how is he going to react? towhat degree will he try seriously change the democratic

constitutional system? that is the big question. >> thank you. >> thank you very much. >> thank you for joining us. see you next time. ♪

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