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Analysis: The growth of Turkey's defence industry

03rd August 2017 - 15:23 by Cengizhan Çatal in Ankara

Turkish Aerospace Industries (TAI) showcased the weaponised version of its Anka UAV at the Paris Air Show in June.

Nevertheless, the development of the domestic defence and aerospace industry over the last 15 years has increased demand for the systems and capabilities of Turkish firms in foreign markets.

Turkish firms are not only focused on exports, but also take into account relationship-based methods such as co-production, technology transfer and joint investment.

In 2016, Turkey's top export market was the US, with $587 million worth of business, almost a third of all Turkish exports. Other top markets were Germany ($185 million), Malaysia ($99 million), Azerbaijan ($83 million), the UK ($64 million), Saudi Arabia ($48 million), Qatar ($52 million), the UAE ($62 million) and Tunisia ($37 million).

In recent years, industry has observed a diplomatic opening to the Middle East and elsewhere.

Because of cultural and traditional ties with the Middle East, central Asia, Pakistan and Malaysia, these regions have become important markets for Turkey.

Indeed, Pakistan and Malaysia are now important markets for Turkish-made naval systems.

In 2016, Turkey and Pakistan inaugurated their first naval contract, a $90 million deal for the supply of a 15,600-ton tanker fleet, with STM, a Turkish government-controlled defence engineering company, acting as designer and prime contractor.

Turkish shipbuilder STM unveiled its TF4500 design for the first time at IDEF 2017.

When it comes to the Middle East market, one important agreement was in February between Turkish military vehicle manufacturer Otokar and UAE firm Tawazun. In a $661 million agreement, the pair formed a joint venture, Al Jasoor, to make 8x8-wheeled amphibious armoured vehicles.

Aselsan and the Saudi Arabian public company TAQNIA DST also united forces under the roof of Saudi Arabia Défense Electronics Corporation to design and produce radar, EW and EO-IR equipment.

The AgustaWestland AW139 helicopter training centre was delivered to the Qatar Air Force Command in April, under a contract signed between Qatar and Havelsan. In addition, Havelsan is planning to open an office in Qatar in the near future.

Turkey's top armoured vehicles manufacturers, including Otokar, BMC, FNSS and the newly launched RBSS – the Turkey-based joint venture between BMC, Germany's Rheinmetall and Malaysia's Etika – are aggressively seeking deals in Gulf and Asian markets. 

The combat management system (CMS) on the Turkish Navy's Barbaros-class frigates is to be replaced with a domestically-developed system from companies Aselsan and HAVELSAN.

TAI, meanwhile, is negotiating to sell the T129 ATAK helicopter to the Middle East while Aselsan and TAI are currently modernising Bahrain's Cobra helicopters.

Other potential export items include electronic and electro-mechanical systems, software, management systems, cyber security solutions, and flight simulators. Top Turkish exporters in these fields are Aselsan, Havelsan and STM.

Many of these allied nations will need financial support if they are to opt for Turkish defence industry products and services originally developed for the Turkish armed forces.

To this end, Ankara is developing mechanisms for these countries to take on loans with repayments spread over long periods, while the SSM is also examining the existing regulations and practices on granting loans to foreign customers.

If favourable finance models can be applied, export revenues are expected to increase further, placing Turkey firmly on the path of defence industry independence. 

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