By Stephen Adler and Parisa Hafezi
NEW YORK (Reuters) - Turkish President Tayyip Erdogan said a Turkish court, not politicians, will decide the fate of an American pastor whose detention on terrorism charges has hit relations between Ankara and Washington.
U.S. Secretary of State Mike Pompeo said on Monday he was hopeful Turkey would release evangelical pastor Andrew Brunson this month. The preacher was moved to house arrest in July after being detained for 21 months.
In an interview with Reuters late on Tuesday while he was in New York for the United Nations General Assembly meetings, Erdogan said any decision on Brunson would be made by the court.
"This is a judiciary matter. Brunson has been detained on terrorism charges ... On Oct. 12 there will be another hearing and we don't know what the court will decide and politicians will have no say on the verdict," Erdogan said.
If found guilty, Brunson could be jailed for up to 35 years. He denies the charges. "As the president, I don't have the right to order his release. Our judiciary is independent. Let's wait and see what the court will decide," Erdogan said.
U.S. President Donald Trump, infuriated by Brunson's detention, authorized a doubling of duties on aluminum and steel imported from Turkey in August. Turkey retaliated by increasing tariffs on U.S. cars, alcohol and tobacco imports.
The Turkish lira has lost nearly 40 percent of its value against the dollar this year on concerns over Erdogan’s grip on monetary policy and the diplomatic dispute between Ankara and Washington.
"The Brunson case is not even closely related to Turkey's economy. The current economic challenges have been exaggerated more than necessary and Turkey will overcome these challenges with its own resources," Erdogan said.
Turkey’s central bank raised its benchmark rate by a hefty 625 basis points this month, boosting the lira and possibly easing investor concern over Erdogan's influence on monetary policy. Erdogan said he was against the measure.
"It shows the central bank is independent. As the president, I am against high interest rates and I am repeating my stance here again," he said, adding that high rates "primarily scare away investors".
"This was a decision made by the central bank ... I hope and pray that their expectations will be met because high rates lead to high inflation. I hope the other way around will happen this time."
The lira firmed slightly on Wednesday morning, after Erdogan's assurance on the independence of the central bank was published.
IMPROVING TIES
In an effort to boost the economy and attract investors, Erdogan will travel on Sept. 28 to Germany, a country that is home to millions of Turks.
"We want to completely leave behind all the problems and to create a warm environment between Turkey and Germany just like it used to be," Erdogan said, adding that he will meet Chancellor Angela Merkel during his visit.
The two NATO members have differed over Turkey’s crackdown on suspected opponents of Erdogan after a failed coup in 2016 and over its detention of German citizens.
On Syria, Erdogan said it was impossible for Syrian peace efforts to continue with President Bashar al-Assad in power.
Earlier this month, Turkey and Russia reached an agreement to enforce a new demilitarized zone in Syria's Idlib region from which "radical" rebels will be required to withdraw by the middle of next month.
But Erdogan said the withdrawal of "radical groups" had already started.
"This part of Syria will be free of weapons which is the expectation of the people of Idlib ... who welcomed this step," he said. The demilitarized zone will be patrolled by Turkish and Russian forces.
Close to 3 million people live in Idlib, around half of them displaced by the war from other parts of Syria.
Erdogan said Turkey will continue to buy natural gas from Iran in line with its long-term supply contract despite Trump's threats to punish countries doing business with Iran.
"We need to be realistic ... Am I supposed to let people freeze in winter? ...Nobody should be offended. How can I heat my people's homes if we stop purchasing Iran's natural gas?," he said.
Trump pulled the United States out of a 2015 multinational nuclear deal with Iran and in August Washington reimposed sanctions on Tehran, lifted in 2016 under the pact. U.S. sanctions on Iran’s energy sector are set to be re-imposed in November.