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May 26, 2017 | 09:00 GMT

Turkey Builds a Military-Industrial Complex to Match Its Ambitions

(Stratfor)
Forecast Highlights

  • The Turkish government is determined to further develop the country's indigenous defense industry.
  • An increasingly capable and mature defense industry will help Ankara enhance its self-sufficiency, stimulate its economy and develop tighter relationships with foreign partners. 
  • Turkey's defense industry will remain a work in progress, however, as the country continues to depend on foreign technology and subsystems. 

Turkish officials have been hinting for weeks that the country is on the cusp of finalizing export deals worth up to $2 billion, the largest contracts in the nation's history. The agreements, primarily for maritime systems, are with Saudi Arabia and another unspecified nation. Though Turkey's defense exports doubled from 2011 to 2016, total deals in the industry remained relatively low at $1.68 billion last year — accounting for less than 1 percent of global arms exports. The rumored upcoming sales highlight not only Turkey's determination to boost its defense exports, but also Ankara's ambition to greatly expand its indigenous defense industry.

Why Having an Arms Industry Matters

There are three main reasons Turkey is expanding this particular sector. The first is to save money and stimulate economic growth. Turkey maintains the second-largest military force in NATO, which requires considerable investment in equipment. Ankara plans to pump even more resources into its military as it accelerates a modernization drive that will phase out and replace obsolescent Cold War-era equipment. Successfully mobilizing Turkey's indigenous defense industry to produce materiel for the Turkish armed forces would not only alleviate the need to spend copious funds on foreign equipment and weaponry, but also help to grow the domestic industrial sector and the economy at large.
 
Second, Turkey hopes to enhance its self-sufficiency and independence. Ankara has historically relied on its key NATO partners — especially the United States and Germany — for weaponry, though its attempts to make purchases have been occasionally rebuffed. In December 2014, the U.S. Congress prevented the transfer of two Oliver Hazard Perry-class guided missile frigates to Turkey, citing Ankara's hostile stance toward Israel and its opposition to natural gas exploration by American companies near Cyprus. Even more important are the congressional blocks imposed on the sale of drone technology to Turkey, which caused Ankara to move expeditiously toward developing its own drone technology from 2008 onward. Germany has also moved to reject Turkish arms requests in recent years, citing human rights concerns. Though eight of these requests were turned down between 2010 and 2015, at least 11 have been refused since November 2016. As a result, reducing the country's dependence on arms imports has become critically important for Ankara. In fact, its goal is to achieve full self-sufficiency by 2023. 
 
Global Arms Exports
Finally, Turkey seeks to strengthen its own arms exports. Beyond the obvious economic benefits, arms sales are a key way in which Ankara can develop close and long-lasting relationships with customers, with an expectation of better relations overall. For instance, Turkey has worked to enhance its ties with Gulf Cooperation Council countries, including Saudi Arabia and Qatar, and it is no surprise that these states are primary targets for Ankara's arms export ambitions as well.

The Drive for Development 

Bolstering Turkey's local arms trade is President Recep Tayyip Erdogan's established passion — something he hopes will accelerate the national defense industry, too. Constitutional reforms passed in Turkey's April 2016 referendum greatly increased Erdogan's oversight and control of defense procurement. The presidency, for instance, now oversees the Defense Industry Executive Committee, which is the ultimate arbiter of defense procurement projects. These statutory changes will undoubtedly drive Turkey's aspirations in the armaments sector forward.
 
The Turkish government wants to establish a respectable industry based around a wide array of defense projects — some of which Erdogan has a keen interest in — from maritime vessels to army vehicles to aerospace projects. In the naval sphere, Turkish defense industries including Istanbul Shipyard and Golcuk Naval Shipyard are close to securing warship and submarine contracts worth billions of dollars with countries such as Pakistan, Indonesia and Saudi Arabia. Meanwhile, Turkish defense electronics producer Aselsan already exports its products to more than 60 countries globally. Nurol Machinery, a growing Turkish armored vehicle producer, experienced a twentyfold rise in sales over a four-year span and has begun to sell its armored vehicles on the export market. These are just some of the Turkish defense companies, big and small, that are increasing their production portfolios as they take advantage of the government's effort to enhance the Turkish defense industry.
 
Even with the increase in arms export orders, however, the largest market by far for Turkish defense companies is the Turkish government. The Turkish military not only is adding capabilities it never had before, but is also working to replace large stocks of aging Cold War-era equipment across its force structure. For instance, Sedef Shipbuilding is currently building Turkey's first amphibious assault ship for the Turkish navy, a vessel that will eventually form the foundation of a Turkish aircraft carrier program. Turkish Aerospace Industries is also spearheading efforts to develop indigenous drones, such as the Anka UAV, for the military after previous efforts to import the technology failed. When it comes to replacement products for aging Turkish equipment, flagship programs include the Altay main battle tank, developed by Turkish defense company Otokar, as well as the T129 attack helicopter produced by Turkish Aerospace Industries in partnership with Anglo-Italian company AgustaWestland. As is the case with the T129 helicopter, Turkish defense companies have sought to strategically partner with foreign firms in the development of numerous weapons programs to compensate for continued deficiencies in their technological know-how. 
 
Turkey has come a long way in the development of an indigenous defense industry, a core part of its ambition to strengthen its military and bolster its regional interests. Since 2002, the rate at which Turkey's defense industry has met Ankara's procurement requirements has risen from 24 to 64 percent and is still climbing. Yet while these numbers are indeed impressive, they are also somewhat misleading. What Turkey labels as indigenous programs are more often than not still heavily linked to foreign partnerships and almost invariably include imported subsystems. So while the continued rise of the Turkish defense industry is impressive at face value, the reality is that progress will remain uneven, and Ankara will not be able to forgo its dependence on critical foreign systems anytime soon.
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