Turkey’s AKP Claims Export Win Amid Economic Pressures

On 24 May, Turkey’s ruling party – the Justice and Development Party (AKP) – claimed that Pakistan signed its contract for 30 Turkish Aerospace Industries (TAI) T129 ATAK attack helicopters.

The AKP’s statement is as follows (translated): “a very short while ago, contracts were signed with Pakistan for the sale of 30 ATAK helicopters.”[1] In the beginning of May, the Turkish Undersecretary for Defence Industries (SSM) had informed the state-owned TRT Haber news channel that there would be positive news regarding the T129 sale, stating: “In Pakistan, we will have important developments related to the export of ships and attack helicopters. God Willing, we will have news about the ATAK helicopter sale to Pakistan next week.”[2] Thus, official government confirmation has been given regarding the T129 sale.

Granted, the original equipment manufacturer (OEM) – TAI – has yet to announce the sale, but one would imagine that two government entities (including the state head of stewarding Turkey’s defence industry) would stand for credible information. If correct, it would mark a significant breakthrough for the Turkish defence industry, especially in its efforts to secure big-ticket exports of its products and services.

The Pakistani ATAK would be Turkey’s single largest defence export order to-date, seconded only by the potential $1 billion US sale of four MILGEM Ada corvettes to Pakistan and further joined by a $350 million US program to upgrade the Pakistan Navy’s Agosta 90B mid-life-update program.[3] [4] If each of these deals comes to complete fruition, Turkey’s defence industry activities in Pakistan would total nearly $3 billion US (note: the T129 deal is thought to be worth $1.5 billion US).[5]

Turkey would effectively assume its position as Pakistan’s second-largest defence supplier, second to the Chinese (which is the leading supplier by a significant margin). There are various potential outcomes, but for this Quwa Premium article, the focus will be on discussing Turkey’s steps to reach this position. While discussing Turkey’s steps (i.e. building and marketing its product portfolio), this article will also answer a number of underlying questions surrounding Turkey’s sales to Pakistan, notably its provision of credit and how Turkey’s current economic woes could impact its near and long-term efforts to drive exports.

Fiscal Strength, Transfer-of-Technology & Indigenous Development

Although offsets played a role in facilitating the Turkish defence industry’s growth, especially in the role of a defence exporter, the fuel for Turkey’s advancements has been its fiscal strength. Buoyed by a strong economy through the 2000s and 2010s, the Turkish Armed Forces (TSK) and Turkish Undersecretariat for Defence Industries (SSM) were able to fiscally back big-ticket defence procurements, especially from the U.S. and Western Europe. Of course, many of these acquisitions carried offsets and transfer-of-technology (ToT), but they would not have been possible to undertake – especially to the scale Turkey was generally able to achieve (e.g. 270 F-16C/D) – without fiscal capacity, which in turn was fed by a strong economy.

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[1] The full copy of the AKP’s elections manifesto can be found on Gunes, accessible via the following URL: http://gunes.com/akparti-secim-beyannamesi-tam-metni.pdf (page 211). Last Accessed: 04 June 2018).

[2] Interview with Dr. İsmail Demir, Undersecretary of Defence Industries (SSM). 09 May 2018. Statements are in Turkish. URL: https://youtu.be/oAYODDYJJGA?t=6m30s (Last Accessed: 13 May 2018).

[3]  “Defense Industry Focuses on Quality and Quantity to Step-up Turkey’s Exports.” Defence Turkey. 30 September 2016. URL: https://web.archive.org/web/20161121203521/http://www.defenceturkey.com/index2.php?p=article&i=2424#.WkSZTN-nGUk (Last Accessed: 28 December 2017)

[4]  Göksel Yıldırım. “MILGEM’s $1 billion export journey.” Anadolu Agency. 11 May 2017. URL: http://aa.com.tr/tr/ekonomi/milgemin-1-milyar-dolarlik-ihracat-yolculugu/815910 (Last Accessed: 28 December 2017).

[5] “Pakistan Prime Minister Abbasi to fly with T129 ATAK helicopter.” Kokpit Aero. 22 October 2017. URL: http://www.kokpit.aero/pakistan-basbakani-atak-helikopteriyle-ucacak (Last Accessed: 21 December 2017).