China missile talks may continue further

Turkey may extend the deadline for contract talks with China, set to expire on April 30, on the procurement of a missile system. As sunday’s Zaman went to press, the undersecretariat for the Defense Industry (ssM), the country’s state-owned arms procurement agency, had not yet asked European and us companies whether they would remain in the tender, signaling that talks on the acquisition of long range missiles from China will continue for an indefinite period.

Franco-Italian Eurosam, offering the sAMP/T system, and us firms Lockheed Martin and Raytheon, competing with the PAC-3, are the second and the third runners-up in the missile project. If talks with China fail, Turkey will proceed with them in order.

It has been learned that the ssM has not completed negotiations with China Precision Machinery Import and Export Corp. (CPMIEC) for its HQ-9 system, and the degree of high technology China would transfer for joint development of the missiles is a key discussion point.

Last september, Turkey selected CPMIEC as the top choice for its long-standing project to procure long-range air and missile defense system, known as T-Loramids, over rival offers from Eurosam, Lockheed Martin and Raytheon.

NATO allies in general and the us in particular, in the meantime, are keeping up pressure on alliance-member Turkey to abandon its plans to buy missiles from China, arguing that they would not be operable with the NATO air-defense network.

A senior us official was in Ankara recently to explain to Turkey once again that contrary to Turkey’s claims, Chinese missile systems are not operable with NATO systems because the alliance will not release the information necessary for them to be integrated with NATO’s air defense network.

Turkey cited China’s high-technology transfer offer as well as its price tag — about $3.4 billion — in its selection of CPMIEC as the top contender for the T-Loramids program, over which negotiations are ongoing.

There has been, in the meantime, increased speculation in Ankara that Prime Minister Recep Tayyip ErdoGan, the sole decision-maker in arms acquisition, wants to continue talks with China in order to avoid offending the country. That aside, some are claiming that he has come to the point of either canceling the tender altogether or stopping talks with China, as he is beginning to feel the heat coming from Turkey’s NATO allies.

On the other hand, some are saying that China understands Turkey’s difficulties with its allies and if Ankara cancels the project with CPMIEC, Beijing is not expected to react harshly.

For China, the important thing was being selected by a NATO member country for negotiations on a highly advanced missile system.

“China has gained prestige with the Turkish selection of China in T-Loramids,” said a local defense industry source close to the project.

In the meantime, a Eurosam team visited Ankara on April 10 and allegedly sweetened its technology transfer offer. Details on Eurosam’s offer are not available; it is only known that Eurosam has increased its local content offer in the project but did not change its earlier price of about $4 billion.

us companies, however, have so far declined to offer Turkey higher technology transfer in the T-Loramids project. us companies are of the opinion that Ankara may use a sweetened offer as a bargaining chip in talks with CPMIEC.

In response to reactions from its allies, Turkey urged the European and us companies to improve their technology transfer offers to benefit local Turkish industry.

New ssM chief’s arrival

The recent replacement of Murad Bayar, who served for a decade as the ssM undersecretary, by Professor Ismail Demir, could be a factor in the potential extension of the deadline for the missile talks with China.

Demir, an aircraft engineer, was the general director of Turkish Airlines’ (THY) Turkish Technic Inc. before being appointed on April 11 as new the ssM undersecretary.

The fact that Demir was being briefed on military projects in general by the senior ssM team might have prolonged the China missile talks, since he had to be updated on this specific and highly controversial project.

Demir, close to the ruling Justice and Development Party (AK Party), is also expected to reshuffle the ssM’s staff and install people with whom he would like to work with closely.

Ankara-based Western defense industry insiders who worked with him on foreign contractors’ defense offset pledges fulfilled through THY believe that he is an efficient bureaucrat who is knowledgeable about defense matters.

Demir is expected to continue his predecessor Bayar’s policy of emphasis on boosting the local defense industry. But it is not yet known whether he will be as assertive as Bayar was about imposing on foreign contractors the condition of bringing high-technology inputs to the domestic industry. That strategy has at times backfired.

Demir, in the meantime, will face a major challenge in leading the long-stalled privatization drive that Turkey’s defense industry requires to become competitive on a global level. The Turkish government’s efforts to privatize and downsize the country’s 18 state-owned military companies affiliated with the Foundation to strengthen the Turkish Armed Forces (TsKGV) have long been stalled. One of Demir’s priorities is thought to be to push these efforts forward.