Mlitary-Industrial aspects of Turkish
defence policy
Rocznik Integracji Europejskiej nr 9, 215-228
2015
RAFAŁ
WIŚNIEWSKI
Uniwersytet im. Adama Mickiewicza w Poznaniu
DOI : 10.14746/rie.2015.9.14
Military-Industrial
aspects
of
Turkish
defence policy
Republic of Turkeyis one of theleading regional powers in theMiddle East North Africa (MENA) region. It isalso considered to be one of the most promising “emerging powers” on theglobal level in both itseconomic potential and political clout(The Mint countries..., 2014).In thecourse of thelastdecadeTurkey has pursuedanactivist for eign policy in its extendedneighbourhood, positioning itself as an important playerin themost importantissues ofinternational relations in theMENA region. This trend has been most recently and starklyillustrated by the ongoingcrisis revolving aroundthe advanceof theso called Islamic State (IS).Turkey’s position andpolicy are widely con sidered to becrucial for the effectiveness ofinternationalcoalition’s efforts atdiminish ing this threat. Allthis developments make Turkish defence and securitypolicy an important factor shaping internationalsecurityin the MENA (Barkey, 2014).
This paper aims to analyse the military-industrial aspects ofTurkish defence policy. Sophisticated and profitable defence industry is ausefultool for state’sforeign and se curity policy. Itnot only supplies armed forces withrequiredweapons and military equipmentbut canalso bring political influence on the international arena through arms transfers and military-industrial cooperation. These realities are not lost onTurkishde cisionmakers. That is whythey have made the nurturing of indigenousdefence-indus trial base a distinct state policy. In the course of this paperdefence industry’s functions in the frameofTurkish defence and security policy will be defined, the condition and structure of that state’s defence &aerospace sectorwill beanalysed and conclusions re garding its future prospects will be presented. This will provide basis for a wider analy sis ofdefence-industrial aspects of Turkish defence and security policy.
1. Roles of defenceindustry inTurkish defence and security policy
In everystate,thedefence industrybasically plays three broad and mutually sup portiveroles: military, politicaland economic.
The military role is theoriginalraison d’etre for the entire defence-industrial base and arguably still is the main driving force behind state support for this sector. Onthe mostbasiclevelit amounts to equipping the national armed forces with weapon sys tems and military equipmentenabling them to achieve tactical, operationaland strate gicmilitaryobjectives assigned to them in both peaceandwar time. This complicated process is comprised ofseveral distinctphases, including research & development of newtechnologies, developmentof finalproducts, production,servicing and decommis sioning of platforms and systems. Companies comprising the defence industry have a role to playineverystep ofthis process.Traditionally focused on R&Dandproduc
tion they are increasingly engaged in training, maintenance, repairs,refurbishment and modernisation ofmilitaryequipment. Thus theirrole in the maintenanceof national military capabilities is steadily growing.
Inthe Turkishcontext, themilitary roleof the defence industryis shaped by three specific factors. First, it hasto support an extensive defenceposture. Turkish armed forces number 510,600 active duty personnel, whichmakes them9th biggestin the world and2ndbiggestin NATO(TheMilitary Balance, 2014,p. 486-492). They main tain a force of 2 504 Main Battle Tanks, 352 combat capable aircraft, 19 principal sur face combatants and 14 submarines (TheMilitary Balance, 2014, p. 146-148). Such a large structure generates a considerable demandfor defence products in almost all categories,including the mostsophisticated combat systems. Second,for more thanahalf century Turkey has been engaged inanarms race with Greece. It has beenonly one as pect of both states’ intenserivalry motivated chieflyby the Cyprus issue andterritorial disputes in theAegean Sea (Defence andSecurity Policy, 2011, p. 245-246). Although in thelasttwodecadesrelationsbetweenTurkey and Greece improved significantly,it can be claimed that theirdefence procurement programsare stillcorrelated toa large degree andshow patterns of interdependence(Dunne, Nikolaidou, Smith,2005).Third, current Turkishmilitarydoctrine of forward defenceand growing aspirations to a re gional power statusplace additionalpremium on power projection capabilities. Since the 1990s Turkey adopted the forward defence doctrinewhich envisioned confronting threats to national security before they reach national borders (Karaosmanoglu, Kibaroglu, 2003, p. 5-8). From the operational standpoint thatputs thepremium on swift jointoperations conducted outsidethe national territory. Moreover, growing re gional and global presence of Turkish citizens and companies, aswell as expanding diplomatic activity, generatedemands for long-distance power projection. This trend can be exemplified by evacuationof Turkish nationals from Libya in 2011 (Turkey
demonstrates..., 2011) or unrealisedplans for naval escorts to accompanyfurtheraid flotillas sailing to Gaza(Erdogan,2011). In this context it is also important to mention ademanding regional security environment in whichTurkish securitypolicymustbe conducted. MENA isone of themostviolent and turbulent regions of the world. Even themost immediate neighbourhoodof Turkey is rife with serious armed conflict en gulfing Iraqand Syria. Coupledwith unresolved crisissurrounding Lan’s nuclear ambi tions and its wider regional policy, it creates a threat-rich security environment which necessitates the maintenance of a robust and effective militaryposture. Consideringall aforementionedfactors, it seemsobvious thatthe demandfor Turkishdefence indus try’s military functionsis strong and will remainso in the foreseeable future.
Defence industry’s political role concerns primarily state’s standing in interna tional politics. Arms exportsare not only profitable commercialundertaking but can alsobe usedto exercise political influence. Not many states in theworld are able to de velop and manufacture themost sophisticatedweapon systems. Those whocan, attain alevel of independence in pursuance of their foreign and defence policy, as they can equip and operate their armed forces on theirown, without constrains imposed byafor eign supplier. At the same time exports of such products can complement polit ico-military alliancesand “buy” political influence in importing states. Prestigeshould also not beexcludedas amotive for state action. Domestic industry’s ability to develop
andproduce advanced, high-technology weapon systems (suchas, for example: combat aircraft, air defence systems, large surfacewarships and submarines) is a widely-reco gnisedsymbol oftechnological and industrial prowess and canbe turned intoanattrib ute of greatpower status.
Robust defence-industrial basecarries important value in the contextof foreign pol icy currently pursued by Turkey. During adecade ofrule by the Justice and Develop ment Party (AKP) Ankarahas aspired togrowing independence and even assertiveness in its foreign relations. Traditionally close ties to the West (and especiallyUnited States) have not been severed.However, Turkishgovernment expressed propensity for breaking with their allies’stance whenit believed thatto be suitable for national inter ests.This shift has been widely interpreted through such conceptsas “strategic depth” and “zero problems with neighbours” authored andpromoted by Ahmet Davutoglu (firstforeign minister and now prime minister inAKP cabinets). Notwithstanding con troversies surrounding this concepts’ validity and the true extent of theirimplementa tion, it istruethat Turkish foreign policy has lessenedits alignmentwiththegeneral stance of NATO/EUand USA and morevigorously charted its owncourse (Strategic
Survey,2013,p. 143-151; Ozkan,2014). This trendwas clearly visible in the run-up to theIraq Warin2003, when Turkeyrefused to allowitsterritory to be used as a base for the attack. During following years Ankarahas all but terminatedits informal alliance with Israel, surprised the Westthrough a jointdiplomaticinitiativewithBrazil tosolve the Iranian nuclear crisis and only reluctantlyjoined the efforts of US-led coalition aimed at defeating the so-called Islamic State. Implications ofthis shift for mili tary-industrial policy are quite profound. Traditionally Turkish armed forces have reliedon American and West European suppliers for its armaments and military equip ment. Turkish defence industryhas closelycollaborated withUS and other NATOpart ners onimportant programmes through licence production and technology transfer (a good example isthe rise of Turkish Aerospace Industriesthanks to final assemblyof F-16 fighters, see later on in the paper). However,as already explained, such an ar rangement created opportunities forWestern governments to influence Turkish foreign and security policy by for example withholding thetransfer of important technologies or components. It is worthto mention at this pointthat USgovernment hasacquired a notoriousreputationfor exercising control over exported military kitfor both political and commercial ends (Sislin, 1994).Consideringthesecircumstances,it is hardlysur prising that government of Turkey adopted the view that development of national de- fence-industrial base canhelpbuild foundationsfor more independent foreign policy.
Sophisticated defence-industrial base can contribute to attainment of regional power statusin severalways. First, as already explained, itisdone throughsupplying state’s armedforces. Secondly, throughexports, whichcanform apartofa widerpolit ico-militarycooperation between states.AsTurkey hasexpanded itscommercial inter actions throughout the MENA region, and further away in Africa, Caucasus, Central and South Asia, defence sector has also followedthis geographical trajectory. It is worth pointingoutthat main importers of Turkish defence products in a decade to 2013 have been: Pakistan, Malaysia, Iraq and Georgia (SIPRI). Naturally, the success of Turkishcompanies in those states is ancumulative effect of manyfactors (both com mercial and political) but thegeographical distributionof important contractsdoes
cor-respond to main geopolitical vectors of interest ofTurkish foreignpolicy. In this context the exampleof Azerbaijanisillustrative.Due to itsunresolvedconflict with Ar menia,Baku is investing heavily in itsmilitary anddevelops its own defence-industrial base.Turkish defence companies are veryactivein this market and have been able to scoreseveral important successes (Gyurosi, 2014). This activity needs to be viewed in thewider contextof close political ties between Turkey and Azerbaijan. Finally, the benefitsof prestige stemming from successfuldevelopment of advancedweapon sys tems must notbe overlookedinTurkish context.Such expressions oftechnological and industrialprowess are valuable for anemerging power aspiring to join theranks of ma jordeveloped economies. Thisexplains the presenceof highest-ranking government figures during official presentations of newmilitary hardware.
Defence industrymust be viewed not only as a supportbase for the armed forces and a complement to foreign policy, but alsoasanimportant sector of the national economy. The scaleof revenues andemployment it provides are sources of defence industry’s
economic role. Companies operating in thissector typicallygenerate significantprof its, investheavilyin (amongother things) development of advanced technologies and employ large numbers of skilled workers. Throughallthese channelsthey contribute to economic growth, industrial andtechnological development, as well as social welfare. Such benefits cannot be overlooked in any circumstances,and especially at the time of global economy’s problematiccondition, as currently experienced. It canevenbe ar guedthat currently, for stateswhichdo not face animminent military threat, economic role of thedefence industry is asimportant, orperhaps even more important than the militaryone. Many weapon development programmeshave been judgedto be aimed more at sustainingtheindustrial base and employment in it than at militarycapabilities’ generation.
To asses defence sector’s significance for the Turkish economy some data on its scale andperformance need to bepresented.Each yearTurkish Defense and Aerospace Industry ManufacturersAssociationcompiles data on the performance of the sector (it includes also civilaerospace industry). According to those statistics in year 2013 the turnover of Turkish aerospace and defence sector amounted to 5.076 bn $ (that is the fourth consecutive year of healthy growth, the turnover grew cumulatively by 66% since2009).Not surprisinglythe highest turnover per employee hasbeen recorderin thedefenceaerospace subsector (168,715$). The value ofexports reached1.569 bl $ (it amounts to an84%increase compared to year 2010). At the same timeR&D-R&Tex penditure amounted to 926 m$ (increase ofca. 39% compared to2010 level) which was anequivalent of 18% of the generated turnover. Turkishaerospace and defence sector employed 32,368peoplein 2013. The Weapons-Ammo Rocket& Missiles subsector hadthe biggest shareof this workforce(ca. 25%of thetotal), followed closely by the Air-Space platforms subsector with ca. 24.8% of the total (Defence Turkey, 2014, p. 12-18). These data paint a pictureof Turkish defence and aerospaceindustry as asiz able and dynamic sector of the economywith substantial growth potential. It is also worth to rememberthat defence industryin general is a high-tech sector, whose activity is conductive to the goalof building an “knowledge-basedeconomy.” Defence and aerospace sector’s substantial R&D expenditure areimportant in the context of Tur key’s evolutionfrom a middle-income to a developed economy.
2. Turkey as an actor on the international arms market
In orderto characterize Turkey’s position as an actoron the international arms mar ket three factorsneed to be considered: valueofbotharms imports and exports, their re spective structures and position of key Turkish defence companies in the global industry.
Analysis of value and structure of Turkish defence imports and exports isbased on data from SIPRI arms transfersdatabase (SIPRI). Firstly, it must be notedthat these data do notcorrespond with export figures published by theTurkish Defense and Aero space Industry Manufacturers Association. Methodological differences account for these discrepancies.1SIPRI dataset has been chosen for the this paper in order to illus trate longterm structural featuresinTurkishinternational arms trade(forthe decade be tween 2003-2013). Intheperiodunder consideration Turkey hasimported 7.485 bl $ worth(by TIVvalue) of arms and military equipment. Fourbiggest suppliers (account ing for 85% of deliveries) were United States (ca. 30% of the total), Germany (ca. 27%), Republic of Korea(ca. 18%) andIsrael (ca. 9%). Data on imports’ composition byweapon category show that ships and aircraft accounted for 41% of imports by value, while artilleryandarmoured vehicles comprised another 35%. In thedecadeun derconsideration Turkeyhasexported defenceproductsworth560 m$ (by TIV value). Fourbiggest recipients accounted for ca. 59% of thetotal. Those states were: Pakistan (ca. 27%oftotal exports value), Malaysia (ca. 16%), Iraq(ca. 12%) and Georgia(10%). When it comes to exports’divisionby weaponcategory,armouredvehicles andartillery accounted for ca. 77% of the total,with ships comprisinganother 22%.
1 As explained by its authors: “[...] SIPRI has developed a unique system to measure the volume of international transfers of major conventional weapons using a common unit, the trend-indicator value (TIV). The TIV is based on the known unit production costs of a core set of weapons and is in tended to represent the transfer of military resources rather than the financial value of the transfer. [...] SIPRI calculates the volume of transfers to, from and between all parties using the TIV and the num ber of weapon systems or subsystems delivered in a given year. This data is intended to provide a com mon unit to allow the measurement if trends in the flow of arms to particular countries and regions over time. Therefore, the main priority is to ensure that the TIV system remains consistent over time, and that any changes introduced are backdated. [...] SIPRI TIV figures do not represent sales prices for arms transfers. They should therefore not be directly compared with gross domestic product (GDP), military expenditure, sales values or the financial value of export licences in an attempt to measure the economic burden of arms imports or the economic benefits of exports. They are best used as the raw data for calculating trends in international arms transfers over periods of time, global percentages for suppliers and recipients, and percentages for the volume of transfers to or from particular states.”
(SIPRI).
Data compiledby theTurkishDefense and Aerospace Industry ManufacturersAs sociation present an interesting picture concerningtheshift in geographicalpatterns of Turkish defenceexports (itshould once againbe notedthatthese data are compiled us ing different methodologythen SIPRI’sTIV tables leading to large discrepancies in valueofexports between these two datasets). According tothis source, in year 2011 Turkeyexporteddefenceproductsworth1.089 bl$.Theirdistribution between Europe and Outside Europerecipientswas 64%:36%. However, only twoyearslater 1.569 bl$
ofTurkishexports has been shared bya ratio of21 % :79%to Outside Europe category’s favour (Defence Turkey, 2014, p. 14-15).
Analysis ofdata presentedabove pointsto severalconclusions regarding Turkey’s position inthe internationalarms marketandconditionof its defence industry.First, Turkeystillis a net importer of defencearticles.By using SIPRI’s TIV calculation the general balance of imports to exports in the period of2003-2013 amountsto a deficit of 6.925 bl$. Naturally, TIV data do notreflectthe actualbalanceof payments andcon tract value of goods bought andsold. However, they showthe underlying pattern of militaryresources’ transfer. Thismeans thatdespite intensiveeffortsat increasing the level of self-sufficiency in arms production, Turkey is still heavily dependenton im ports of defence articles. This trend is evenmore evidentwhen productstructure ofim portsistaken into consideration.Aircraft and shipsaccount formore than 40% of their value.Both areamong the mosttechnology intensive and highvalue added products traded on the internationalarms market. Moreover,not many producers can offerso phisticated systemsofthis kind. Ontheother side, Turkish exports are comprised in large majority of land systems,such as armouredvehicles andartillery pieces. While these products can generate substantial revenue and require advanced technologies, they are generally less sophisticated than air andnaval platformsand thus are easier to manufacture (this increasesthenumber of suppliers on theglobalmarket) and produce less added value.
The geographical distributionof both suppliers and recipientsisalso telling. Turkey clearly stillrelies heavily on its traditional Western suppliers, with USand Germany sharing57% of Turkish imports in 2003-2013 between them.On the other hand newly emergingplayers on the internationaldefence market (like Republic of Korea and Is rael) alsoattainstrong position on the Turkish market.It must however be notedthat in recent years military-industrial cooperation between Turkey and Israel soured dueto general deterioration ofrelationsbetween these two states. Meanwhile, Turkish exports reach primarily customers in South/South-EastAsia, Middle East and Caucasus. The shiftin trade in favour of partnersfrom outside Europe recorder by theTurkish Defense andAerospaceIndustry Manufacturers Association between2011 and 2013 isespe ciallytelling (Defence Turkey, 2014,p. 15).This trend canbe seen as favourable for Turkish defence industry, consideringthat largepart ofexports to Europe and USA con sists of sub systems, machine molds, components and software, as well as fromoffset based goodsandservices (Defence Turkey, 2014, p. 15). At the same time customers from parts of Asia,Middle East and Caucasusaremore likely to buy completesystems whichgeneratemore revenue for theexporter and does notfoster the development of potentialcompetitors.
Finally, the analysis of state’s position on the global armsmarket should take into account international position of itsmain defence companies. The Top 100 defence companies ranking (which applies the criterion ofdefence revenue) compiled by DefenseNews magazine is among the most prestigious and popular measures of promi nence in the global defence sector (DefenseNews,2014). The 2014 editionof therank ing includes two Turkish companies: Aselsan and Turkish Aerospace Industries. Aselsan has been classified as the67.biggest defence companyin theworld (it hasad vancedfromthe74.position in theprevious edition of the ranking) with 2013 defence
revenue ofslightly over1 bl$ (whichgrew 16% compared with2012). The company has beenestablished in 1975 by Land Forces Foundation (thecurrent Turkish Armed ForcesFoundation is stillthe biggestshareholder). Its main areas of activity are mili tary and civilian communicationsystems, military electronics (including, radar, elec tro-optical sensor systems, command &control, as well as electronic warfare systems, fire control systems) andair defencesystems(Aselsan).Throughoutthe yearsit hasbe come a leadingsupplier of communication equipment and defence electronics for the Turkish Armed Forces. In recent yearsithasadopted astrategy of regional expansionin search for new markets and opportunities for industrialcooperation. In 2014 ithas es tablishedAselsan MiddleEast, a joint venture with JordanianKingAbdullahII Design andDevelopment Bureau (KADDB). Thisnew entity issupposed tohelpAselsan to ac cess Jordanian and otherMENA markets (Bekdil, 2014a). In 2013 Aselsan opened a plant in Kazakhstan, a joint project with Kazakhstan Engineering aimed chiefly at meeting theneeds ofKazakh armed forces (Bekdil, 2014b). It is alsodeveloping close collaboration with Azeri defence industry with joint production meant to supply Azerbaijan’s armedforces (News.Az, 2014).
Turkish Aerospace Industries occupies 80th position intheDefenseNewsranking (inprevious editionit achieved 85th position) withdefence revenue of little less than 790 m$ (a 13,7% growth from 2012 level) (DefenseNews, 2014). The companyhas beenestablishedin its current form in2005 through a merger ofTurkish Aircraft Indus triesCorporation (TUSAS - establishedby Turkish government in 1973) and TUSAS Aerospace Industries, Inc. (TAI - a joint venture with US companiescreated in 1984 to licence manufacture F-16fighters). Currently it is practically completely state-owned. TAI has emerged as a primarysupplier of aerospace systems forTurkish Armed Forces anda partner of choice for joint manufacturingprogrammes accompanyingacquisition of major air systems from foreignmanufacturers. Licenceproduction of F-16 fighters ranks among themost prominent programmes realised by TAI to date. In total 308 air crafthave been assembled(262 for Turkey and 46 for Egypt). Moreover, TAI has con ducted modernizationprogrammes for Jordanian and PakistaniF-16s(TAI). Currently TAI is an important partner in the F-35 Joint Strike Fighter programme. Itwill produce (among other elements)central fuselageand operate one of heavyengine maintenance facilities for this type of aircraft (Mehta, 2014).TAI is also responsible for such impor tantprogrammes as: GOKTURK-2(first Turkish military intelligence satellite),T-129 ATAK attack helicopter (in cooperation withAgustaWestland), Hurkus trainingair craft (firstaircraft completely developed in Turkey) orANKA Medium Altitude High EnduranceUnmanned Aerial Vehicle. It will also conduct conceptual work on future jet trainer andnext generation fighter aircraft for the Turkish Air Force (TAI).
Both leadingTurkishdefencecompanies show certain similarities.They havebeen establishedby the stateto foster technological competencies and lessen the dependence ofnational armedforcesonforeign equipment. Despite starting withmanufacturing of rather simple products,oroutrightlicenseproduction, they have been able to develop sophisticated research and engineeringcapabilities oftheirown.Currently they arenot only leading suppliers for the Turkish Armed Forces but alsoactive playerson the global arms market, notonly sellingcomplete productsbutalsoenteringintoindustrial partnerships with foreigncompanies. Whatismost important for the future ofTurkish
defence industry, both Aselsan and TAI operate in the high-value added, advanced technology sub-sectors, whichguaranteehigh returns and significant development po tential.
3.Assessmentof futureprospectsfor Turkish defenceindustrythrough SWOT analysis
Whentryingto assess the future condition of Turkish defence industry one must take intoaccount both internal (strengths and weaknesses)and external (opportunities and threats) factors.
Turkishdefence sector can rely on twocrucial strengths: a rich and diversifiedof fer, as wellas healthy investment in research& development. Currently Turkish de fencemanufacturers can offerawide range of products inmajority of themost popular categories of weapon systems traded on the international market. They havebuilt an ex pertiseandgained respectability in armoured vehicles, small arms and defence elec tronics sectors. Moreover,they are constantly developing new products and expanding into new fields. Someof the most prominent examples are Altay Main Battle Tank, Tulpar Infantry FightingVehicle, T129 ATAK attack helicopter, ANKA Middle Alti tude Long Endurance Unmanned Air Vehicle, SOM air-launched cruise missile or MILGEM corvette. Successful completionof allthese programmes requiresmastering of advanced skills relatedtoproject management,integration of complex systems, es tablishment and maintenance ofsupply chains, as well as post-delivery servicing and support. This in turn, allows Turkish companies to widen theiroffer beyond tradi tional fields of expertise into more complex and technologically advanced items. Moreover,they strengthentheircapabilities for delivery of complete systems instead of components or single platforms. In general,Turkish defence sector isable to offer a di versity of productssuitedtothe needs of a widerange of customers withdifferent tech nological needs and financial resources at their disposal.
This expansion ofproductrange hasbeenfuelled,to a largeextent, by high level of R&D spending. It has already been mentionedthat in 2013 Turkishdefence and aero space sector has spentca. 1 bl$ on R&D/R&T (Defence Turkey, 2014, p. 15-16). Indus tryexpenditure are complementedby generous state funding for defence technologies’ development. It comes mainly in the form of military-relatedR&D expenditure of the Scientific and Technological Research Council of Turkey (TUBITAK). In 2012 it has devoted 328.5 m Turkish lira (ca. 164.25 m$) for these purposes. Estimates of TUBITAK’smilitary-related expenditure for 2014 amounted to 390 mL (ca. 156 m$) (Yentiirk,2014, p. 7).If sustained,such a levelof R&D spending canallow for contin ued development of new and innovative products.
Despite aforementioned strengths and rapid pace oftechnological development Turkish defence sector exhibits severalweaknesses which maypose obstacles toits further development.As already mentioned,Turkishcompaniesproved tobe relatively successful in developing weapon systems of growing technological sophistication. However, it is truethat theystill, by andlarge, lag behind leadingglobal manufacturers in terms of innovativeness.The new air-launchedcruise missile (SOM) providesan ex
ample. By all means it isa modem and sophisticated weapon,howeveritdoes not dra maticallydiffer in its performance and capabilities from similar designsof American, West European, Russian orChinese producers, developed duringthe lasttwo decades (Hypki, 2014). Similarlythe newMain BattleTank-Altay, despitepromising tomeet all requirements ofa potential modembattlefield,has been developed incooperation withSouth Korean industrialpartners and largely utilises “indigenised” subsystems of foreign manufacturers, provenover time in different vehicles (army-technology.com',
21stCentury Asian Arms Race,2014). Naturally, those factsdo not negatethe scale of Turkish industry’sachievement insharply narrowing the technological gapseparating itfromgloballeaders in arms production. However,itdoes show thatthisgapstill ex ists. Inmost cases Turkish designs do notinclude genuinely innovative features or concepts but rather creatively follow established trends inweapon engineering. If Turkey wants torealise its ambitions to become one of the leading players on the global defence market it willhave to eliminatethis technological lag. Another poten tially troubling issuesis, thealready mentioned,product structure ofTurkisharms ex ports. It hasa large share of armoured vehicles, artillery piecesand small arms,with definitely smaller representation of complexand sophisticated air and naval systems. While thefirst category ofitemsis also profitable and demanded on the global mar ket,it occupies lowerlevels of thevaluechain.Justas economies as a whole, defence sectors developthrough undertaking manufacturing of higher value-added products. CurrentlyTurkish defence industryis on itsway up inthe valuechain,howeveritwill take some time beforeitsmoreadvancedproductsmature and attract first export cus tomers.
Finally, in its defence-industrial policy Turkeyfaces similar dilemmaasmost other states with substantial defence sector. It concerns the properbalance of consolida tionand competition inthe national defence-industrial base. In the lasttwo decades consolidation (both horizontal and vertical) in search of economies of scale and complementaritieshas been a growingtrendin the industry. In bothUnited States and Western Europe smaller defencecompanies mergedinto ever largernational and multi nationalcorporations. The logic behind this processwas thatlarge contractors will be better suited forintegrationof complex systemsand competition on the global market. Many countries, not present in the ranks of leading global arms manufacturers butaim ing topreserve and develop their defence-industrial base, havefollowed the trend. Such approachis alsoevidentin Turkey, where several subsectors of thedomestic marketare practically dominatedby single contractors. For example TAI is a partner of choicein mostaerospace programmes, while Aselsan isresponsible for most defence electronics deliveries for the Turkish Armed Forces. Naturally, such arrangements should be counted among factors which contributed to those companies’ spectacular develop ment. However, the global trend towards defence industry consolidation has raised worries concerning diminishing competition onnational markets. Inthe US a de facto
oligopoly of several big defencecorporations has been blamed fordelays and costover runs ina range of important weapons programmes (Clark, 1999). Inthe Turkish con text, questions canbe raised whetherthe reliance on “suppliers of choice” in some subsectors may potentiallylead to overpricing,delaysandsubstandard quality of prod ucts and services. It must,howeverbe noted that in some subsectors of theTurkish de
fence industry (especially armoured vehicles) there is fierce competition among many suppliers(Gyurosi, 2013). Thereare no easy anduniversally applicableanswers tothe consolidation/competition conundrum andTurkey will havetofind itsown way in this respect.
Three substantialopportunities which can guarantee continued riseand develop ment of the Turkish defence industry can be identified. First,support for thedomestic industryis an important element of Turkish procurement and wider defence policy. Thisapproach hasbeen institutionalised in theform of theUndersecretariat for Defence Industries (SSM), established underthe Ministryof National Defence in 1985. Its mis sion is to“constitute a modemdefence industry inTurkey and to achievethe modern izationof theTurkish Armed Forces. Inorder to attain this objective, the main principle applied by SSM isto meet military requirements through domestic suppliersin the most technically and economically feasibleway possible.” (SSM) The SSM has overseen procurement policy’sevolution from foreign acquisitionbefore 1990, through co-pro-ductionin the1990s to domestic development in the XXIst Century (Donaldson, 2013, p. 21). This process has been greatly aided by the DefenceIndustry Support Fund, which in 2012 had ca. 1.2 bl$ at its disposal (Yenturk, 2014,p.4). The employment of such powerful tools attests to Turkish state’s determination in development of itsdo mestic defence-industrial base.
Inforeseeable future,Turkishdefence sector canalso count on healthy demand for its products on both domestic and exportmarket. Turkish defence expenditure are hardly transparent. However,analysis by SIPRI concludes thatwhen all items contrib uting todefence expenditure in Turkey (and not included in the official budget of the Ministry of National Defence) are being counted, thisstate has one of the highestmili taryburdens among the44countries in Europe coveredby theSIPRI Military Expendi ture Database (onthe level of 2.3% of GDP) (Yenturk, 2014,p. 12-13). Moreover, research has showed that the level ofmilitary expenditure in Turkeyhad historically beendecoupled from political business cycle (Sezgin, 2010). Allthissuggestsa strong commitmentto maintenance of high defenceexpenditure, allowing extensive procure ment ofnew equipment. Whenconsideringexportopportunities it isworthnotingthat in 2013Middle East and North Africa were responsible for 11.1% of plannedglobal de fence expenditurewithAsia and Australasia recording anevenhigher share of20.6%
(Military Balance, 2014, p. 23). This augurs well, considering main directions ofTurk ish defence exports. Finally, forthcoming big-item modernisationprogrammes of the Turkish armed forces offer further opportunities for defence-industrialcooperation in theform of technology transfer and co-productionfor Turkish companies. Asalready mentioned,the requirement for extensive industrial cooperationtoaccompany foreign acquisition of weapon systems is an important feature of official Turkish policy. Local companies’ participation insuch prominent programmes as T-129 attackhelicopteror Joint Strike Fighter are prominentexamples.
Further development of the Turkish defence industry potentiallyfaces twomajor
threats,tied to its primaryengines ofgrowth -domestic demandand exportopportuni ties. TheconditionofTurkish economy in coming yearsseems to beuncertain. Slowing growth, risinginflationand considerable current account deficit contribute to a pros pect for a slowdown (Reuters, 2014; EC, 2014). Although Turkeyhardlyfaces an
im-minent economic and fiscal crisis, somefiscal tightening in thecoming yearscannotbe ruledout. Rapideconomic growth in the lastdecade createduniquely favourable condi tions for an ambitious military modernisation programmeand the accompanying ex pansion of the defence-industrial base. It has alreadybeen pointed out thatthelevel of defence expenditure in Turkey seemsto be decoupled from political business cycles. Significant cuts seemnot to be on thehorizon yet, especially given a tumults external security environment. However,the possibilityof futurereductions cannot be entirely ruledout, consideringthe economic conditions and significant weakening of the mili tary’s political influence.When considering Turkishdefence industry’s export expan sionstrategyitmustbe noted that contemporaryinternational arms market isextremely competitive. In the face of shrinkingdomesticmarkets traditional champions from US andWestern Europe pursue export deals ever more energetically. At the same time, Turkey is just one of several“emerging economies” strivingtobreakintotheranks of major arms exporters. Such states as Brazil, South Africa, Israel or South Korea (to namejust afew) aredeterminedto increase their market share. It hasalready been men tionedthat Turkishdefence industry enjoys a favourable position on thegrowing de fence market in theMENA region.However,suchimportantregional players asSaudi Arabia,United Arab Emirates or Jordan invest heavily in developmentof theirownde- fence-industrial base (Saab,2014). It is a generaltrendthat states whichhave histori callybeen dependant on imports of defence materiel areraising their expectations vis-a-vissuppliersconcerning defence-industrialcooperationandassistancein devel opment of indigenousdefence industry. Asaconsequence Turkish companies will face an uphillstrugglein their exportexpansion.
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Itisbeyonddoubt that Republic of Turkeyperceivesitsdefence industry as an im portant tool of wider defence and security policy.Importantmilitary, political and eco nomic functions performed by thissector seem toguarantee that robustfinancial, legal and institutionalframework ofstate support will bemaintained. If current trends pre vail,Turkey will be able to meetan ever growing share of itsarmed forces’ equipment needs on its own.Thiswill increase roomfor Ankaratoconduct independentforeign and security policy andbestow itwithgrowing prestige and recognition ofmajor power status. All these benefits will be especially valuable in the context of challenging and complex security environmentfaced by Turkey in itsimmediate neighbourhood. At the same timeitseemshighly probablethat Turkish companies will increase their footprint on the global arms market, increasingmarket share as well as participation inmultina tionalprogrammes and accompanyingsupply chains. This can strengthen both Turkish internationalpolitical standing and its economy.However, Turkey will not be ableto escape challengesanddilemmasfaced by many other statesstriving to maintain and de veloptheirdefence industry,such as: proper attitude to consolidation, fierce competi tion on the globalmarketor sustainability of current fiscal conditions. Whateverthe final result it seems certain thatdefence-industrialpolicy will remain closely integrated withthe overall security policy of Turkey.
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Summary
This paper aims to analyse the military-industrial aspects of Turkish defence policy. A so phisticated and profitable defence industry is a useful tool for a state’s foreign and security pol icy. It not only supplies the armed forces with the necessary weapons and military equipment, but can also bring political influence on the international arena through arms transfers and mili tary-industrial cooperation. These realities are not lost on Turkish decision makers. That is why they have made the nurturing of an indigenous defence-industrial base a distinct state policy. In this paper, the defence industry’s functions in the framework of Turkish defence and security policy are defined, the condition and structure of Turkish defence and aerospace sector is ana lysed and conclusions regarding its future prospects are presented. This provides the basis for a wider analysis of the defence-industrial aspects of Turkish defence and security policy.
Key words: defence economics, defence industry, security policy of Turkey, international arms trade
Aspekty wojskowo-przemysłowe tureckiej polityki obronnej Streszczenie
Artykuł stanowi analizę aspektów wojskowo-przemysłowych tureckiej polityki obronnej. Zaawansowany i zyskowny przemysł obronny stanowi użyteczne narzędzie polityki zagranicz nej i bezpieczeństwa państwa. Nie tylko zaopatruje siły zbrojne w potrzebne uzbrojenie i sprzęt wojskowy, ale może również być źródłem wpływów na arenie międzynarodowej za pośrednic twem transferów uzbrojenia i współpracy wojskowo-przemysłowej. Tureccy decydenci dosko
nale zdają sobie sprawę z tych uwarunkowań. Z tego też względu uczynili rozwój własnej bazy obronno-przemysłowej przedmiotem jasno zarysowanej polityki. W artykule zdefiniowano funkcje przemysłu obronnego w ramach tureckiej polityki bezpieczeństwa i obronnej. Poddano również analizie stan i strukturę sektora lotniczo-zbrojeniowego tego państwa oraz przedstawio no wnioski odnośnie perspektyw jego dalszego rozwoju. Stanowi to bazę dla szerszej analizy wojskowo-przemysłowych aspektów polityki bezpieczeństwa i obronnej Turcji.
Słowa kluczowe: Ekonomika obronności, przemysł obronny, polityka bezpieczeństwa Turcji, międzynarodowy handel uzbrojeniem
