{"id":30504,"date":"2020-08-17T08:45:00","date_gmt":"2020-08-17T08:45:00","guid":{"rendered":"https:\/\/staging.sightlinemg.com\/defensenews\/uncategorized\/2020\/08\/17\/turkish-industry-prospers-but-foreign-relations-are-limiting-its-potential\/"},"modified":"2026-08-07T22:37:48","modified_gmt":"2026-08-07T22:37:48","slug":"turkish-industry-prospers-but-foreign-relations-are-limiting-its-potential","status":"publish","type":"post","link":"https:\/\/staging.sightlinemg.com\/defensenews\/top-100\/2020\/08\/17\/turkish-industry-prospers-but-foreign-relations-are-limiting-its-potential\/","title":{"rendered":"Turkish industry prospers, but foreign relations are limiting its potential"},"content":{"rendered":"\n

ANKARA, Turkey \u2014 The official numbers are impressive. In President Recep Tayyip Erdogan\u2019s narrative, the number of Turkish defense industry programs rose from 62 in 2002 to 700 today. In the same period, the number of defense and aerospace companies rose from 56 to 1,500. The government was administering $5.5 billion worth of programs then; now this is at $75 billion. Local industry turnover rose from $1 billion to $10.8 billion; and exports jumped from a mere $248 million to more than $3 billion.<\/p>\n\n\n\n

Two Turkish companies that weren\u2019t on the Defense News Top 100 list<\/a> last year have made their way onto the list this year, making the total number of Turkish firms on the list to seven, from five the year prior. Those companies are military electronics specialist Aselsan (48th on the list), Turkish Aerospace Industries (53th), armored vehicles maker BMC (89th), missile maker Roketsan (91st), military technologies specialist STM (92nd), armored vehicle maker FNSS (new this year at 98th) and military software specialist Havelsan (new this year at 99th). Of the seven, five are government-controlled companies. BMC, a Turkish-Qatari partnership, and FNSS are privately owned.<\/p>\n\n\n\n

Click here to see the Defense News Top 100 list.<\/b><\/a><\/p>\n\n\n\n

A success story, by any criteria. Thanks to which, according to the Turkish government, the country\u2019s dependence on foreign defense systems plunged from 80 percent to 30 percent. Erdogan says he aims to end dependency on foreign systems by 2023, the centennial of the Turkish republic.<\/p>\n\n\n\n

However, while the Turkish defense industrial base has made progress, there have been lingering roadblocks along the way.<\/p>\n\n\n\n

It can be difficult to determine the percentage of foreign input in a system. And what the Turkish authorities portray as \u201cindigenous systems\u201d (or 100 percent national systems, in local jargon) are often not.<\/p>\n\n\n\n

\"\"
A crowd of people gather around a full-scale model of Turkish Aerospace Industries’ TF-X at Paris Air Show on June 17, 2019. (Valerie Insinna\/Staff)<\/figcaption><\/figure>\n\n\n\n

One of the major weaknesses of the Turkish industry is the lack of engine technology<\/a>. For instance, one of Turkey\u2019s most prestigious \u201cindigenous\u201d programs, the Altay tank, is struggling to make progress, despite a serial production contract, due to the lack of a power pack \u2014 the engine and the transmission mechanism.<\/p>\n\n\n\n

Similarly, Turkey\u2019s most ambitious indigenous program \u2014 the design, development and production of a national fighter jet, dubbed TF-X \u2014 appears stalled, as Turkish aerospace authorities are yet to find an engine for the planned aircraft. The TF-X program was officially launched in December 2010. In January 2015 then-Prime Minister Ahmet Davutoglu announced that the planned fighter would have a twin engine. That was when the search for an engine began.<\/p>\n\n\n\n

The amphibious assault ship TCG Anadolu, the Turkish Navy\u2019s flagship vessel under construction with license from Spain\u2019s Navantia, is progressing as planned, but industry experts say it is no more than 60 percent Turkish-made and is a copy of the Spanish Navy warship Juan Carlos I.<\/p>\n\n\n\n

Turkey\u2019s indigenous T129 attack helicopters are a Turkish variant of the A129 built by the Italian-British company AgustaWestland. The T129 is produced under license from AgustaWestland. A $1.5 billion export deal with Pakistan for a batch of 30 T129s has long been stalled<\/a> as it awaits U.S. export licenses, which is required because the helo is powered by an American engine.<\/p>\n\n\n\n

\"\"
A Turkish T129 helicopter is on display during the Farnborough International Airshow in England on July 16, 2014. (Senior Airman Micaiah Anthony\/U.S. Air Force)<\/figcaption><\/figure>\n\n\n\n

For the past decade, Turkey\u2019s local industry has been unable to produce a national solution for the need for long-range air and anti-missile defense systems. After years of uncertainty Turkey signed a $2.5 billion deal for the acquisition of the Russian-made S-400 system. In response, the United States ejected Turkey<\/a> from the American-led multinational Joint Strike Fighter program that builds the F-35 fighter jet.<\/p>\n\n\n\n

\u201cThat will cost the Turkish industry critical capabilities it could have earned during the production cycle,\u201d a Western industry source in Ankara told Defense News. \u201cIt also means a loss of significant income for the Turkish industry.\u201d<\/p>\n\n\n\n

Otherwise, local and international analysts agree that drone<\/a>, shipbuilding, military electronics and armored vehicles technologies have been progressing exponentially in Turkey. The country has found foreign customers for these systems due to high technological standards and competitive pricing. The combat-proven technologies easily find their place in export markets, especially in countries with which Turkey has friendly political relations. Lucrative markets for Turkish companies include those in Qatar \u2014 Turkey\u2019s most important regional ally \u2014 as well as some north African countries, Azerbaijan<\/a>, Pakistan, Turkic republics in Central Asia, and Muslim countries in southeast Asia like Indonesia and Malaysia<\/a>.<\/p>\n\n\n\n

Turkish exporters have been augmented by a steady decline<\/a> of the country\u2019s national currency. The U.S. dollar was trading at 1.7 Turkish liras five years ago. Today, the exchange rate is $1 to 7 liras. That plunge gives an exchange rate boost to companies with higher local input rates and export potential. In other words, when the local currency experienced a decline, the commodities produced in Turkey generally became cheaper for foreign customers.<\/p>\n\n\n\n

However, those companies dependent on now pricey foreign technology have seen their international competitiveness badly pruned.<\/p>\n\n\n\n

The lira\u2019s slide downward also slows or altogether suspends government-run programs due to a cash shortage. Overseas investors have withdrawn $7 billion from Turkey\u2019s local currency bond market in the first six months of 2020. The economy is in recession, and inflation and unemployment rates are soaring. At the end of May 2020, Turkey\u2019s national budget produced a deficit of 90.1 billion liras (U.S. $12.9 billion), or 65 percent of the government\u2019s deficit target for the entire year of 2020.<\/p>\n\n\n\n

That macroeconomic picture may further squeeze the government in financing its weapons programs, economist warn.<\/p>\n","protected":false},"excerpt":{"rendered":"

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