Monthly Report: Review of Turkey’s efforts to sell the T129 ATAK to Pakistan

On his official visit to Turkey in November 24-26, 2017, Pakistan’s Minister of Defence Production (MoDP) Rana Tanveer Hussain stated that a potential Pakistani purchase of T129 ATAK attack helicopters from Turkish Aerospace Industries (TAI) was “90 percent complete” and that Pakistan would be reviewing the available financing options.[1] Reports of Pakistan beginning contractual negotiations for 30 T129s emerged in June 2017.[2] The reported value of the deal is $1.5 billion US.[3] Currently, Pakistan is at the cusp of inking the contract, which – if brought to fruition – would be among Pakistan’s big-ticket defence procurements. Pakistan chose the T129 as its ‘plus one’ attack helicopter to complement the Textron Bell Helicopter AH-1Z Viper, 12 of which were ordered in 2015.[4] The objective, though tentative, was to have the AH-1Z and T129 collectively supplant the Pakistan Army Aviation Corps’ (PAA) aging AH-1F/S Cobra helicopters.

Quwa’s Monthly Report for January 2017 will detail the entirety of the T129 evaluation, selection and – if a deal is inked – procurement process. This report will document the essential details while also analyzing the selection of the T129. Besides the technical merits of the T129 (and the alternative attack helicopters), this report will also examine the economics of the deal – i.e. the cost, the supposed value of the apparent production element and how Pakistan might fare with alternatives. Note, the details regarding the AH-1Z and T129 are tentative due to the current conditions of US-Pakistani defence relations. The information is drawn from open sources, which are referenced/cited in this report. This report’s objective is to both document the facts of the program as well as highlight the operational requirements driving Pakistan’s decisions, relevance to the domestic industry, the contributors to the cost and determine the necessary actions for increasing the T129’s economic value for Pakistan.

The outline of this report is as follows: First, reviewing the PAA’s ‘plus one’ attack helicopter requirement, determining the role of attack helicopters in the Army and examining the potential “hi/lo” combination of the AH-1Z and T129. Second, a technical overview of the T129 detailing its specifications, subsystems, current and future capabilities and armament options. Third, reviewing the prospective Pakistani contract, including a breakdown of the pricing using open-source information. Fourth, a discussion of offsets (as it appears to be a factor in the T129 deal) and an analysis of its economic value to Pakistan.

The Pakistan Army’s ‘Plus-One’ Attack Helicopter Requirement

In 2015 and 2016, the Pakistan Army signed orders for four Russian Helicopters Mi-35M and 12 AH-1Z Vipers from Textron Bell Helicopters, respectively. In 2016, the Pakistan Army also evaluated two other attack helicopter platforms in the TAI T129 and the Changhe Aircraft Industries Corporation (CAIC) Z-10. China had sent three Z-10 to Pakistan, which had been spotted in use through 2016 in various operational environments, including Pakistan’s desert areas. The T129 was evaluated in Pakistan for a shorter period – i.e. several days – in May 2016. Through these evaluations, it was apparent that the PAA was seeking a second dedicated attack helicopter platform to complement the AH-1Z. In fact, the Z-10 and T129 shared the same weight class of maximum take-off-weight (MTOW) of 5,500 kg and 5,000 kg, respectively, both markedly lighter-weight than the MTOW of the 8,390 kg AH-1Z.

Thus, a “hi/lo” combination with the AH-1Z and another aircraft was potentially on the PAA’s roadmap. On 31 January 2018, the PAA Commander – Maj. Gen. Nasir D. Shah – had outlined to the IQPC Military Helicopter Conference in London, UK, that the PAA required “a platform that is suitable for operations in a dusty environment, that can fly in extreme high temperatures while suitably configured, can operate in low visibility, that demonstrates ease of maintenance and logistic support, and where depot-level maintenance can be transferred.”[5] Shah added that the PAA’s current AH-1F/S Cobra fleet, while effective for close air support (CAS) operations, “cannot be employed effectively in high-altitude operations above 8,000 ft.”[6] Based on Shah’s statements, it appears that the PAA requires an attack helicopter for use in all key operational environments, not just the desert – where it would provide CAS for the Pakistan Army’s armour formations – but high-elevation/hot-and-high conditions as well.

The aforementioned conditions were included in the examination of the T129 in May 2016. According to TAI, the PAA examined the T129-P6 in a sequence of scenarios. First, the PAA tested the P6’s durability in hot-temperature environments, namely by placing it in a hangar in Quetta overnight in temperatures of at least 48° C. Furthermore, the PAA’s tests resulting TAI not having access to the T129’s ground-support equipment (GSE), hence the helicopter had to operate through the tests as-is. Following its overnight stay in Quetta, the P6 was flown at 14,000 ft at 23° C. Finally, TAI was required to fly the T129 non-stop from Quetta to Multan, i.e. a distance of 480 km.[7] It was based on this performance that the Pakistan Army had reportedly selected the T129 ATAK for its ‘plus-one’ requirement.

Pakistan certainly required a versatile helicopter (from an environment compatibility standpoint), but the issue of quantity is unclear. If the T129 is to be a factor on Pakistan’s ‘Eastern Front’, then 30 helicopters – even with 12-15 AH-1Z – could be a relatively small force for providing robust CAS coverage. Combining its planned AH-64E and Light Combat Helicopter (LCH) fleets, India could operate upwards of 200 attack helicopters in the heavyweight and lightweight classes. Although Pakistan cannot match such a force 1:1, it can plausibly increase its fleet from the projected 45 to in-excess of 50. In any given period, it is unlikely that every single helicopter will be operable, some will be on the ground for scheduled maintenance and, especially if the counterinsurgency (COIN) operations persist, repair. Increasing the fleet number ensures that a minimum required number for conventional operations is in place, and it is difficult to see Pakistan limiting its required minimum to fewer than 40 helicopters.

The option to increase will exist due to the support and maintenance infrastructure required to sustain the AH-1Z and T129 – the infrastructure can be scaled to smoothly add new aircraft of those two types. On the other hand, the reality of high procurement cost and potentially limited long-term utility for CAS – at least as the workhorse asset – could also be an issue. India is not short of fiscal strength, at least when it comes to building effective short-range air defence (SHORAD) capabilities to thwart helicopter usage by Pakistan. Likewise, Pakistan can also emphasize SHORAD for defensibility against attack helicopters. The use of armed drones could also emerge as a CAS option to augment attack helicopters.

Overview of the TAI T129 ATAK

The T129 ATAK is a variant of the AgustaWestland A129 CBT, itself an upgraded variant of the Italian A129 Mangusta. However, the T129 incorporates major changes, such as the inclusion of two Light Helicopter Turbine Engine Company (LHTEC) CTS800 turboshaft engines, each providing a thrust output of 1,361 shp. Besides the engine, the T129 incorporates “new avionics, visionics [electro-optical sensors] and weapons, modified airframe, uprated drive train and new tail rotor.”[8] The changes did not structurally change the platform from being a lightweight platform, but maintaining a MTOW of 5,000 kg, the uprated engines do offer a greater thrust-to-weight ratio. However, the changes did demonstrate the T129’s viability in hot-and-high conditions, a key requirement of the PAA. For Pakistan, this would indicate that the T129 would see use in the Northern Areas and Kashmir, which primarily feature artillery and infantry. In this respect, the T129 would be analogous to India’s LCH, which will also be deployed (thanks to its viability in hot-and-high and high-elevation conditions) in the same environment.

The LHTEC CTS800, while the T129’s key for hot-and-high operations, is also its greatest weakness in the sense that its intellectual property is co-owned by Rolls-Royce and Honeywell, the latter an American company (albeit one with whom Pakistan already engages for the K-8, which uses Honeywell turbofan engines). The CTS800 is bound by the International Traffic in Arms Regulations (ITAR) if acquired from the US, which gives the US the right to block a CTS800 sale to Pakistan. However, this may be a fleeting concern. First, Turkey’s TUSAŞ Engine Industries (TEI) is developing its own 1,400 shp turboshaft engine platform for the T129 and ATAK-2.[9] The TEI turboshaft engine is due to reach fruition by 2025, with the prototype due in 2019.[10][11] If not the TEI turboshaft engine, LHTEC is also developing an ITAR-free civilian version of the engine.[12] Ultimately, the issue of engine availability would delay a Pakistani T129 purchase, not scuttle it. Pakistan’s own fiscal limitations are a likelier risk for scuttling the deal.

The T129’s sensor suite centers on the Aselsan ASELFLIR-300T electro-optical and infrared (EO/IR) turret. The ASELFLIR-300T provides a visual feed to the T129 aircrew in day and night as well as laser-designation of targets of up to 20 km.[13] Laser-designation is in place to guide the Roketsan UMTAS anti-tank guided-missile (ATGM), which has a maximum range of 8,000 m.[14] Aselsan has also developed an improved EO/IR turret, the Common Aperture Targeting System (CATS). The CATS is substantially lighter than the ASELFLIR-300T, i.e. 59 kg to the ASELFLIR-300T’s 95 kg, while also a laser-designation range of 30 km.[15] In addition, the T129 can also be fit with Aselsan’s AVCI helmet-mounted cueing-and-sight (HMCS) system, enabling the T129 aircrew to direct the EO/IR turret through head-movement.[16] The T129’s mission computer, inertial navigation system, multi-function displays, radios, self-protection/countermeasures and identify-friend-and-foe transponders are also manufactured by Aselsan.[17]

The Pakistan ATAK Contract

Tentatively, the Pakistani contract is reportedly set at $1.5 billion US[18] for 30 T129 ATAK attack helicopters.[19] This price would ostensibly include the aircraft along with the requisite ground support equipment (GSE), training, spare parts, air-to-surface munitions and, according to credible reports, coproduction involving Pakistan Aeronautical Complex.[20][21] On the surface, the per-unit-price of each T129 is 80% to the price of the AH-1Z. Pakistan had agreed to buy the latter for $63.5 million US per aircraft.

However, if one removes the 1,000 AGM-114R Hellfire II ATGM from the AH-1Z contract, the per-unit-price of each AH-1Z would be $53.5 million per aircraft. The Hellfire II-R price was determined using a U.K order for 1,000 such missiles (i.e. the exact model) for $150 million in March 2017.[22] If the Pakistan T129 contract (when set at $1.5 bn) does not include munitions (the ATAK’s primary ATGM is the Roketsan UMTAS), then the per-unit-price of the T129 would be near-identical to the AH-1Z (i.e. $50 m to $53.5 m). This would be a relatively high price considering the fact that the T129 is a lighter-weight platform – i.e. MTOW of 5,000 kg compared to the AH-1Z’s MTOW of 8,390 kg.

Logically, it would follow that the technically larger and more capable (e.g. in terms of payload and range) AH-1Z would be costlier to procure. Granted, the LHTEC CTS800 turboshaft engine platform powering the T129 does allude to lower operating costs than the AH-1Z (which uses a variant of the 40+ year old General Electric (GE) T700). Thus, the long-term value of the T129 might be greater, but the higher per-unit price is likely be due to the T129 benefitting from fewer unit-orders than the AH-1Z – i.e. scale. The AH-1Z itself is based on the core design of its predecessor, the AH-1W SuperCobra, with its most significant changes being in the engine (itself a variant of another ubiquitous design in the GE T700), onboard electronics and dynamic components (e.g. new rotor system and transmission). Thus, the AH-1Z’s development overhead already leverages the amortization achieved from manufacturing the AH-1W and, comparatively speaking, the inclusion of marginal changes. This is in addition to the US Marine Corps’ larger order pool.

The following is a more thorough breakdown of the T129’s cost. In 2008, the Turkish Undersecretariat for Defence Industries (SSM) and TAI signed a $3.2 billion contract with AgustaWestland (now Leonardo) for the A129 Mangusta with transfer-of-technology (ToT) along with ownership of the intellectual property and the rights to market the platform.[23] The T129 is a variant of the A129, drawing upon the A129 ABT and the A129 International. If adjusted for inflation, that would be $3.64 billion in 2017. The original contract had included the production of 51 helicopters, rendering the T129’s per-unit-cost at $62.7 million (in 2008). It must be noted that this figure not only includes the helicopters and standard-fare support, such as GSE and training, but the ToT to manufacture the helicopter and its commercial rights. The challenge is to determine the flyaway cost, i.e. not including the cost of acquiring the T129 ToT and Leonardo’s prior research and development (R&D) overhead. Under the total $3.2 billion agreement, there is a $1.2 billion contract between the SSM and AgustaWestland.[24] If $1.2 billion is the overhead (i.e. ToT and R&D), then the flyaway cost for each Turkish Army T129 would be $39.2 million (i.e. $2 billion across 51 aircraft). Thus, Turkey’s T129 purchase would breakdown as follow: $23.53 m (R&D/ToT overhead) + $39.2 m (flyaway).

With the SSM and TAI now moving towards the ATAK-2, an upgraded variant of the T129 – along with an indigenous turboshaft engine and dynamic component (e.g. rotor) suite – then it likely has the incentive to earn-back the $1.2 billion overhead cost. If Pakistan’s 30 T129 units are added to the production total, then it would be $1.2 billion divided across 81 aircraft (i.e. $14.81 m per aircraft). Combining this with the original flyaway cost of $39.2 m, the total price-per-unit (with Pakistan included) would be $54.01 million. This is in the region of the reported $50 m price-per-unit figure for the Pakistani ATAK program. However, this does not account for the prospect of the Pakistani contract also including munitions, which has yet to be completely confirmed considering specific details of this contract offer are scarce.

Nonetheless, if Pakistan is agreeing to sustain a sizable portion of Turkey’s overhead costs, then it poses the question – ‘is Pakistan getting more than just the helicopters?’ After all, Pakistan did (and continues to) have the option of the CAIC Z-10, and the Z-10 would not be the first less-than-ideal system Pakistan would have opted for on account of cost-savings and supply-channel security. In the case where the Z-10 simply cannot operate in its core operational environments, Pakistan could simply wait. This is not ideal, but Pakistan is accustomed to waiting for a solution it can access when others are not available, especially due to high cost. Thus, it follows that Pakistan is acquiring pieces in addition to the T129. Based on Maj. Gen Shah’s recent statements, MRO is essential. However, there have also been credible indications of Pakistan acquiring the infrastructure and rights for manufacturing T129 components and/or undertaking final assembly.[25] Interestingly, the notion of Pakistan potentially taking on coproduction work with TAI for the T129 is not recent, it extends to 2013 when reports emerged of TAI marketing the T129 to Pakistan.[26][27]

This was raised as a potential means through Turkey could make the T129 more tenable for Pakistan and its relatively tight fiscal conditions. The general idea of parts manufacturing at PAC would be to enable a portion of the T129’s cost to be spent within Pakistan, there by saving on foreign/hard-currency outflow. This could be joined with an offset element wherein TAI would procure parts from PAC, further reducing the hard-currency outflow of the T129 program. However, while offsets and ToT could reduce the hard-currency outflow and, to an extent, reduce expenditure in the program, the T129 would still – if examined as a complete program – be a big-ticket expensive and hard-currency consumer.

The Prospect of Offsets

Offsets can be understood as “a range of industrial and commercial compensation practices required as a condition of the purchase of defense articles and/or defence services.”[28] Simply put, the goal of an offset package is to make a big-ticket arms purchase more tenable – be it politically (for electoral consumption) or economically (so as to manage hard-currency outflows, sustain employment and work in the defence industry, which in Pakistan’s case, is largely in the public sector). Offsets can manifest in numerous forms, such as co-production involving the purchaser’s industry in the sale; the seller contracting manufacturing or maintenance work to the purchaser’s industry; investment by the seller in the purchaser’s economy; investing in the purchasing country; and countertrade, such as bartering (i.e. exchanging goods and services of equivalent value), counter-purchasing (i.e. the arms exporter agreeing to purchase goods from the buyer’s industries as part of the arms sale contract) and buy-back (i.e. the arms exporter purchasing goods and services from the very sites or facilities it originally sold under a ToT arrangement).[29]

These forms need not be exclusive of one another, the seller can form an offset package involving several of these forms. Indonesia’s $1.14 billion US purchase for 11 Sukhoi Su-35 Flanker-E will involve a Russian offset amounting to 85% of the contract value. Russia will counter-purchase $570 million in Indonesian goods while also investing $400 million in Indonesia’s MRO industry.[30] On the surface, an offset package – especially one involving multiple inputs that could, in theory, bring a return of 85% in hard-currency flows from a purchase – could make a defence purchase tenable. In fact, India has been using offsets as a means to channel overseas investment and work to its defence industry, with Boeing contracting subassemblies production work to India’s Tata Advanced Systems following New Delhi’s AH-64E and C-17 purchases.[31] In effect, offsets seemingly provide the ability to pair arms imports with domestic industry growth, an attractive prospect for those countries that might perceive a trade-off between domestic development and industry growth to arms procurement.

However, offsets are not necessarily panaceas.[32] To put it simply, there are many risks laden within what may seem to be an attractive offset package. For example, while Russia’s investment in Indonesia’s MRO base is attractive in terms of both foreign direct investment (FDI) and immediate hard-currency savings, one must be cognizant of the purpose of FDI for the investor. However, the profit accrued from Indonesia’s MRO base will likely be sent to Russia, i.e. serve as a hard-currency outflow for Indonesia. Indonesia is a major attractor of FDI (registering $32.24 billion in 2017)[33], while maintaining foreign-exchange reserves of $125 billion.[34] This Su-35 deal might work for Indonesia, which has a healthy foreign-exchange reserve to support the cost of FDI, but Pakistan’s FDI has been in the range of $1 billion to 2.7 billion per year from 2014 through 2017.[35] Furthermore, Pakistan’s foreign-exchange reserves stand at $19.64 billion, but are declining.[36] Thus, Pakistan’s orientation would be to attract foreign currency, and facilitating foreign ownership of an industry that can accrue such gains must be treaded carefully.

Pakistan maintains an official offset policy in its procurement requirements, necessitating that in contracts valued at more than $15 million, “all foreign suppliers … entering into a contract with [the] Ministry of Defence Production for [the] supply of defence goods [and] services for the Armed Forces of Pakistan shall be mandated/obliged to sign … an ‘Offset Contract’”[37] Pakistan requires the seller to provide offsets equal to 30% of the total contract value within three years.[38] Since the offset policy was instituted in 2014, it is unlikely that it has accrued significant activity, Pakistan has signed for few big-ticket defence items since then. For example, it is unclear if this policy affected the order of eight new air-independent propulsion-powered submarines from China. Savunma Teknolojileri Mühendislik A.Ş. (STM) of Turkey is executing the Agosta 90B submarine upgrade program at Karachi Shipyard & Engineering Works (KSEW), so this could plausibly have an offset element in that STM is sub-contracting the integration work to KSEW.

Being the newer entrant in the defence industry, it appears that Turkey is leveraging offsets to secure its in-roads, not just in Pakistan but markets in Southeast Asia, the Middle East and Central Asia as well.[39] In terms of the Pakistani ATAK program, the clearest indication of an offset package came during the visit of TAI’s General Manager Temel Kotil to Pakistan in May 2017. Alan Warnes, a journalist with direct contact with the Pakistan Air Force (PAF) leadership, reported that Kotil invited PAC to manufacture components for the T129 provided Pakistan orders the helicopter.[40] Other news reports had gone as far as suggesting that PAC could also undertake final-assembly of T129s.[41] Given the apparent nearness in price (combining the flyaway and overhead costs) of Pakistan’s T129 order to that of Turkey’s, there are grounds to argue (along with the supporting news reports) that the Pakistani purchase can also include production facilities.

In implementation, an offsets package could impact one or both the following areas of a Pakistani ATAK program: First, the acquisition or procurement side, which could entail subassemblies manufacturing at PAC. This would result in a portion of the procurement purchase being spent within Pakistan and, in turn, contributing to local employment and wider economic activity. Second, the after-procurement support of the T129, such as spare parts manufacturing and MRO. To achieve either (or both) the deal would require the procurement of the requisite production facilities, which could partly explain why Pakistan is likely to help Turkey amortize the ATAK’s overhead to a relatively significant extent. In terms of offsets specifically, Turkey would engage in countertrade through buy-back, i.e. procuring the parts manufactured by the PAC plant which TAI will have been paid to build. Other comparable instances of such work could occur through other Turkish vendors supporting the ATAK, such as Aselsan and Roketsan in electronics and munitions.

However, seeing that Pakistan is likely sustaining the overhead of the T129, then the ToT for undertaking parts manufacturing PAC is coming at an extra cost. In other words, the ability to undertake T129-related production work is coming at an extra cost, the benefit of re-exporting parts to Turkey will partly ‘offset’ that cost. This raises the concern that the overall cost of the Pakistani T129 program could potentially be lower if the ToT for parts manufacturing at PAC is not included (e.g. $45 m without to $50 m with ToT). Moreover, Pakistan incurs the risk (if not outright acceptance) that the net-cost of the helicopters with ToT and offsets will still be higher than the cost of simply importing the machines (e.g. $45 m without to $48 m with ToT and offsets). Granted, if Turkey sticks to the 30% offset requirement, then the net-foreign-currency outflow from Pakistan could be $1.05 billion instead of $1.5 billion. However, that would account for the issue of foreign-exchange reserves, the total cost of the program (whether it be spent in Pakistan or outside) would be $1.5 billion. Thus, Pakistan’s T129 acquisition will be an expense, though with some meaningful benefit in terms of workshare and ToT for the Pakistani defence industry.

Pakistan is looking to use the T129 as a means to both meet its attack helicopter requirements and open its defence industry to helicopter-related manufacturing work. However, the latter is ancillary. Ultimately, the purpose appears to bring a suitable attack helicopter while reducing the foreign-exchange loss using domestic workshare and countertrade. It must also be noted that the ToT might not be commercial in its scope. Having been repeatedly affected by arms embargoes, Pakistan has an incentive is raising a support base for the T129 so that it can sustain the fleet with minimal reliance on abroad. The sunk cost of ToT is to be repaid by preventing the purchase of another system in lieu of T129 spare parts and support (or to avoid purchasing these parts at an inflated price).

That said, assuming the T129 is essential to Pakistan’s defence requirements, it would be prudent to shift the added cost of the ToT into a long-term revenue generator. One risk with ToT is that while it allows the purchaser to undertake production for the system, the system’s fleeting long-term value (e.g. it would be replaced by a newer system) could force the ToT into obsolescence. For the seller – i.e. TAI – this is not an issue as it will gradually advance itself and transition to the new system (i.e. ATAK-2), but for Pakistan, it may remain static. This position comes from the reality that despite learning to manufacture an imported system, one has not built the necessary R&D basis to pursue homegrown advancement and innovation.

It is plainly evident in Pakistan this is the case, from Pakistan Ordnance Factories (POF) still manufacturing 1960s-era Heckler & Koch (HK) G-3 battle rifles to Heavy Industries Taxila (HIT) not seemingly progressing from M113-based armoured personnel carrier (APC) designs. The straightforward ToT purchase of T129s, while potentially addressing operational requirements on the surface, would not resolve underlying R&D deficiencies. In effect, Pakistan would be left with the prospect of re-setting its facilities to a new foreign designed system using ToT without ever transitioning to a domestic design built using domestic inputs in the form of locally built manufacturing equipment or jigs, aerostructures, dynamic components, etc.

Ideally, the Pakistani T129 contract would – or at least ought to – include an amount for investing in TAI’s ATAK-2 with the aim of developing a portion of its inputs in Pakistan. With reportedly $1.5 billion on the table, the amount available linking to a collaborative program could be minimal at best, thus translating into a low percentage of potential Pakistani input. If the apparent urgency of the T129s is negotiable (i.e. Pakistan can stage attack helicopter procurement through the long-term), then shifting the funding to a formal partnership in the ATAK-2 could be more prudent. Under the ATAK-2, Turkey is aiming to develop its own engine, airframe and dynamic components.[42] There will be the cost of a later induction period as well as higher overall costs (owing to a new R&D overhead atop of the T129’s overhead), but the result of developing a genuine industry base in Pakistan through which enough competency exists to undertake a wider array of helicopter-related design and production would offset that cost through the long-term.

Conclusion

The Pakistan Army’s ‘plus-one’ attack helicopter requirement, which could result in the purchase of the TAI T129, stands at the cross-roads of Pakistan’s procurement methodology. It exemplifies the push for an import with transfer-of-technology for the purpose of local sustainment, largely directed for guarding against sanctions which could affect the supply of spare parts. However, by virtue of a TAI offset package, it could also be the start of connecting Pakistan’s defence industry – specifically PAC in this case – to the supply-channels of other and larger aviation vendors. Unfortunately, it is difficult to reconcile a near-term need with the long-term aspiration for defence industry-driven economic activity, for viability in the latter area necessitates underlying development efforts to independently succeed.

Procuring ToT off-the-shelf might help Pakistan sustain its T129 fleet domestically, but as with the HK G-3 and M113 before, it need not generate the requisite domestic expertise and infrastructure to spur new design work. ToT would become a recurring necessity and will continue bringing a cost-premium each time Pakistan seeks to expand work. Turkey’s scale for sustaining development overheads will generally be lesser than that of China, which could predispose Ankara for the prospect of partnering with Pakistan (and others) to bring its programs to fruition. In this respect, it may be prudent for Pakistan to stage its ‘plus-one’ for the long-term and partner with TAI on the ATAK-2, but with the aim of concurrently raising genuine helicopter design, development and production capacity in Pakistan. Partnering would mean the sharing of development cost, production responsibility and intellectual property. Pakistan could consider linking the latter to equipping itself with ingredients to advance its own industry, which can manifest in TAI assisting PAC et. al with relevant human capital development, co-developing production equipment and building competency in helicopter development (especially of dynamic components).

[1]  Sena Guler. “Pakistan looks for helicopters, naval ships from Turkey.” Anadolu Agency. 25 November 2017. URL: http://aa.com.tr/en/asia-pacific/pakistan-looks-for-helicopters-naval-ships-from-turkey/979403 (Last Accessed: 12 January 2018).

[2] Alan Warnes. “Pakistan on verge of ordering TAI T129 ATAK.” Mönch Verlagsgesellschaft mbH. 22 June 2017. URL: http://www.monch.com/mpg/news/air/1746-pakatak.html (Last Accessed: 12 January 2018).

[3] “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: 12 January 2018).

[4] News Release. Defence Security Cooperation Agency. 06 April 2015. URL: http://www.dsca.mil/major-arms-sales/pakistan-ah-1z-viper-attack-helicopters-and-agm-114r-hellfire-ii-missiles (Last Accessed: 12 January 2018).

[5] Gareth Jennings. “Pakistan evaluating new attack helicopter options.” Jane’s Defence Weekly. 31 January 2018. URL: http://www.janes.com/article/77493/pakistan-evaluating-new-attack-helicopter-options (Last Accessed: 31 January 2018).

[6] Ibid.

[7] “TAI T129 ATAK at the Himalayas.” MSI Turkish Defence Review. November 2016. Issue 31.

[8] Promotional Material. “T129 Attack Helicopter: T129 ATAK Advanced Attack and Tactical Reconnaissance Helicopter.” Turkish Aerospace Industries. URL: https://web.archive.org/web/20171112213127/https://www.tai.com.tr/en/project/atak (Last Accessed: 21 January 2018).

[9] “TEU, to Improve Turkey’s First National turboshaft engine.” Hurriyet. 08 February 2017. URL: http://www.hurriyet.com.tr/tei-turkiyenin-ilk-milli-turbosaft-motorunu-g-40359503 (Last Accessed: 21 January 2018).

[10] Ibid.

[11] Kerry Herschelman. “TEI to develop Turkey’s first indigenous turboshaft engine.” Jane’s Defence Weekly. 10 February 2017. URL: https://web.archive.org/web/20170215224812/http://www.janes.com/article/67642/tei-to-develop-turkey-s-first-indigenous-turboshaft-engine

[12] Dominic Perry. “LHTEC aims for Turkish assembly of CTS800 engine.” Flight Global. 13 May 2016. URL: https://www.flightglobal.com/news/articles/lhtec-aims-for-turkish-assembly-of-cts800-engine-425330/ (Last Accessed: 21 January 2018).

[13] Promotional Material. ASELFLIR-300. Aselsan. URL: http://www.aselsan.com.tr/en-us/press-room/Brochures/Electro-Optic-Systems/ASELFLIR300T_ENG.pdf

[14] Promotional Material. UMTAS. Roketsan. URL: http://www.roketsan.com.tr/en/urunler-hizmetler/hassas-gudumlu-fuzeler/umtas-uzun-menzilli-anti-tank-fuzesi/

[15] Promotional Material. CATS. Aselsan. URL: http://www.aselsan.com.tr/en-us/press-room/Brochures/Electro-Optic-Systems/CATS_ENG.pdf

[16] Promotional Material. AVCI. Aselsan. URL: http://www.aselsan.com.tr/en-us/press-room/Brochures/Navigation-and-Avionic-Systems/AVCI_ENG.pdf

[17] Promotional Material. “Avionic Systems & Integration Capabilities.” Aselsan URL: http://www.aselsan.com.tr/en-us/press-room/Brochures/Navigation-and-Avionic-Systems/AVIONIC_SYSTEMS_INTEGRATION_CAPABILITIES_ENG.pdf

[18] “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 January 2018).

[19] Alan Warnes. “Pakistan on verge of ordering TAI T129 ATAK.” Mönch Verlagsgesellschaft mbH. 22 June 2017. URL: http://www.monch.com/mpg/news/air/1746-pakatak.html (Last Accessed: 21 January 2018).

[20] Tony Osborne. “Turkish Aerospace Industries T129 Hunts for Export Orders.” Aviation Week. 21 June 2017. URL: http://aviationweek.com/paris-air-show-2017/turkish-aerospace-industries-t129-hunts-export-orders (Last Accessed: 21 January 2018).

[21] Alan Warnes. 01 June 2017. Twitter. URL: https://twitter.com/warnesyworld/status/870358168710369281 Last accessed: 21 January 2018.

[22] Jane Edwards. “State Dept Clears $150M Hellfire II Missile Sale to UK.” GovConWire. 17 March 2017. URL: https://www.govconwire.com/2017/03/state-dept-clears-150m-hellfire-ii-missile-sale-to-uk/ (Last Accessed: 21 January 2018).

[23] Burak Bekdil. “Turkey keen on attack helicopter program despite snags.” Hurriyet Daily News. 14 November 2013. URL: http://www.hurriyetdailynews.com/turkey-keen-on-attack-helicopter-program-despite-snags-57882 (Last Accessed: 21 January 2018).

[24] Alan Warnes. “TAI Exhibits Attack Helicopter and Anka UAV.” Aviation International News (AIN) Online. 13 July 2014. URL: https://www.ainonline.com/aviation-news/aerospace/2014-07-13/tai-exhibits-attack-helicopter-and-anka-uav (Last Accessed: 21 January 2018).

[25] Tony Osborne. “Turkish Aerospace Industries T129 Hunts for Export Orders.” Aviation Week. 21 June 2017. URL: http://aviationweek.com/paris-air-show-2017/turkish-aerospace-industries-t129-hunts-export-orders (Last Accessed: 21 January 2018).

[26] Burak Bekdil. “Turkey keen on attack helicopter program despite snags.” Hurriyet Daily News. 14 November 2013. URL: http://www.hurriyetdailynews.com/turkey-keen-on-attack-helicopter-program-despite-snags-57882 (Last Accessed: 21 January 2018).

[27] Alan Warnes. 01 June 2017. Twitter. URL: hhttps://twitter.com/warnesyworld/status/870358168710369281 Last accessed: 21 January 2018.

[28] Stephen Martin. “Countertrade and Offsets: An Overview of the Theory and Evidence.” The Economics of Offsets: Defence Procurement and Countertrade. Routledge. 2007. p.31

[29] Ibid.

[30] Bradley Wood. “Indonesia’s Su-35 countertrade deal: Worth its weight in jet fighters?” The Jakarta Post. 27 September 2017. Accessed: 04 December 2017. URL: http://www.thejakartapost.com/academia/2017/09/27/indonesias-su-35-countertrade-deal-worth-its-weight-in-jet-fighters.html (Last Accessed: 17 January 2018)

[31] “Boeing, TATA Joint Venture Establishes Aerospace Facility in Hyderabad.” Boeing. 18 June 2016. URL: http://www.boeing.co.in/news-and-media-room/news-releases/2016/june/boeing-tata-joint-venture-establishes-aerospace-facility.page (Last Accessed: 21 January 2018).

[32] This is discussed in-depth in the Quwa Premium article, “Pakistan’s Defence Industry: Constructing a Domestic Marketplace & Examining Offsets.” 12 December 2017. URL: https://quwa.org/2017/12/12/pakistans-defence-industry-constructing-a-domestic-marketplace-examining-offsets/

[33] “Indonesia says it attracted more foreign direct investment in 2017.” Reuters (via Nasdaq). 30 January 2018. URL: http://www.nasdaq.com/article/indonesia-says-it-attracted-more-foreign-direct-investment-in-2017-20180130-00369 (Last Accessed: 30 January 2018).

[34] “Foreign Exchange Reserves Indonesia Fall in November 2017.” Indonesia Investments. 09 December 2017. URL: https://www.indonesia-investments.com/news/todays-headlines/foreign-exchange-reserves-indonesia-fall-in-november-2017/item8403? (Last Accessed: 30 January 2018).

[35] “Summary of Foreign Investment in Pakistan.” State Bank of Pakistan. URL:  http://www.sbp.org.pk/ecodata/NetinflowSummary.pdf (Last Accessed: 30 January 2018).

[36] “Forex reserves fall to $19.640bln.” The News International. 26 January 2018. URL: https://www.thenews.com.pk/print/272957-forex-reserves-fall-to-19-640bln (Last Accessed: 30 January 2018).

[37] “Defence Offset Policy.” Directorate General Defence Purchase (DGDP) Pakistan. Accessed: 03 December 2017. URL: http://www.dgdp.gov.pk/documents/defoffsetpolicy.pdf

[38] Ibid.

[39] “Professional Radio Stations Transfer of Technology for Kazakhstan.” Aselsan. 25 November 2016. Accessed: 04 December 2017. URL: http://www.aselsan.com.tr/en-us/press-room/news/Pages/kaeimza_20161125.aspx (Last Accessed: 24 January 2018).

[40]   Alan Warnes. 01 June 2017. Twitter. URL: hhttps://twitter.com/warnesyworld/status/870358168710369281 Last accessed: 21 January 2018.

[41]  Tony Osborne. “Turkish Aerospace Industries T129 Hunts for Export Orders.” Aviation Week. 21 June 2017. URL: http://aviationweek.com/paris-air-show-2017/turkish-aerospace-industries-t129-hunts-export-orders (Last Accessed: 21 January 2018).

[42] “ATAK helicopter comes to ‘heavy brother’.” Anadolu Agency. 03 October 2017. URL: http://aa.com.tr/tr/turkiye/atak-helikopterine-agir-abi-geliyor/925920 (Last Accessed: 21 January 2018).