NEW YORK, March 11 (Reuters) - A U.S. judge on Wednesday asked federal prosecutors to explain the geopolitical considerations behind its agreement to end its long-running criminal prosecution of Turkish state-run lender Halkbank, which centered on allegations that the bank helped Iran evade American economic sanctions. 

The deal, announced on Monday, sent Halkbank's share price soaring. If approved by Manhattan-based U.S. District Judge Richard Berman, it would relieve an irritant between the United States and Turkey, as the NATO allies experience their best ties in decades following Donald Trump's return to the U.S. presidency last year. 

The State Department had told the Manhattan U.S. Attorney's office several months ago that resolving the Halkbank case was an important part of diplomatic negotiations over Turkey's assistance in securing the October 2025 ceasefire between Israel and Hamas, prosecutors said in court papers. 

At the outset of a hearing on Wednesday, Berman asked prosecutor Michael Lockard how those considerations fit into the court case. 

Lockard responded that it was not the court's role to assess the national security interests at issue in the case. 

Under the deal, known as a deferred prosecution agreement, Halkbank would be barred from entering transactions that benefit Iran and would be required to hire a monitor to review its sanctions and anti-money-laundering compliance. 

No money would change hands, and the charges would likely be dismissed after the monitor reviews Halkbank's compliance, according to the agreement. The bank, which had previously pleaded not guilty to the charges, did not admit any criminal wrongdoing as part of the agreement.

U.S. judges generally lack the discretion to reject deferred prosecution agreements based on their terms, but may review the deals to ensure they are supported by judicial precedent, according to legal experts. 

For now, prosecutors and Halkbank are asking Berman to pause the case for 90 days to give Halkbank the chance to demonstrate its compliance with the terms of the deal. 

Jay Clayton, the top federal prosecutor in Manhattan, said in a letter to Berman the agreement would serve U.S. interests by combating financial support for Iran's government.

Turkish President Tayyip Erdogan once called the case unlawful and "ugly."