TURKISH DEFMIN GONUL'S OCT. 30 VISIT AN

C O N F I D E N T I A L ANKARA 006080 SIPDIS SIPDIS E.O. 12958: DECL: 10/22/2026 TAGS: PREL PGOV MARR TU SUBJECT: TURKISH DEFMIN GONUL'S OCT. 30 VISIT AN OPPORTUNITY TO REGAIN COMPETITIVE EDGE Classified By: Ambassador Ross Wilson, reasons 1.4 (b) and (d). ¶1. (C) SUMMARY: Leadership changes at the Turkish General Staff (TGS),increased PKK terrorism, and growing dissatisfaction with the EU accession process have raised the military's proile in all security areas, including procurement. The US defense industry may reap benefits, with Sikorksy, Lockheed Martin and Boeing (or Bell) looking at potential new contracts. Defense Minister Gonul's Oct. 30-31 US visit, intended to press for greater work share and technology transfer in the JSF program and push for more US action against the PKK, provides an opportunity to reaffirm the US commitment to helping Turkey combat its No. 1 security threat and to remind Turkey of the benefits of industrial cooperation. END SUMMARY. RE-EMERGENCE OF MILITARY ROLE IN PROCUREMENT? -------------- ¶2. (C) Upon taking office on August 30, new TGS Chief of the General Staff (CHOD) GEN Yasar Buyukanit called for military modernization through a reduction in the number of conscripts and an increase in technologically-advanced equipment. This may signal that Turkey will reinvigorate its moribund NATO modernization program and complete the procurement of advanced weaponry which stalled in recent years. Until Sikorsky's finalization of the Seahawk deal -- after more than 18 months of negotiation -- no US firm had won a direct commercial sale since 2002. Defense industry contacts tell us that Buyukanit and his staff have made clear their displeasure with the lack of results produced by SSM (Savunma Sanayi Mustesarligi),the Undersecretariat for Defense Industries, which has control of major FMS and Direct Commercial Sale (DCS) purchases. In one instance, a senior TGS official is reported to have walked out of an SSM presentation, calling it the worst briefing he had received in his 26-year career. SSM - BIG PROMISES BUT FEW RESULTS -------------- ¶3. (C) In 2004, SSM canceled three major tenders (ATAK helicopter, Main Battle Tank and UAV). The ATAK helicopter tender was issued in 1997, awarded to Bell Helicopter, and canceled when negotiations broke down over technology transfer. SSM issued a revised tender in 2005 under strict terms and conditions that required up front contractor government approval of the project, incorporation of significant Turkish components and extensive technology transfer; and placed a significant liability burden on the contractor. These conditions were incorporated into SSM's new standard contract on which US firms have been unwilling to bid. No US firm bid on the ATAK. The two finalists, South Africa's Denel (with 40-60% French content) and Italy's Mangusta, are unacceptable to the TGS officials with whom we have spoken. SSM awarded a revised UAV tender to an Israeli firm in advance of PM Erdogan's spring 2005 visit to Tel Aviv, but later canceled it in favor of an indigenous UAV development program. SSM also decided against foreign purchase of a main battle tank in favor of building its own. ¶4. (C) SSM's power has derived both from Undersecretary Murad Bayar's strong personal relationship with MND Gonul, who treats him like a son, and, through Gonul, with PM Erdogan. It is also based on Bayar's pledge to quickly establish for Turkey an indigenous defense industry capable of competing with Western companies on the global market. Given the still-searing memory of the 1974 US Arms Embargo against Turkey after its invasion of Cyprus, and Turkey's meager defense R&D budget ($300M in 2005),this proposition has been very attractive to the Turkish defense industry, its government sponsors, and the military. Under former CHOD Ozkok, the military supported an SSM-lead on procurement decisions seemingly without question. Defense contractors repeatedly told us that the service chiefs stated their preference for US equipment but lamented that their hands were tied. RUMBLINGS OF DISCONTENT -------------- ¶5. (C) Deputy CHOD GEN Ergin Saygun, in his previous position as Turkish Land Forces Chief of Staff, asked US officials on several occasions about restrictions on FMS purchases, specifically attack helicopters (Boeing's Apache or Bell's Cobra). Saygun's fears may result from 2005 press reports that Congress raised questions about the potential for abuse of weaponry included in an FMS F-16 upgrade package. We have made clear that the US places the same restrictions on equipment bought via FMS or DCS. ¶6. (C) In September 2006, the Turkish Air Force submitted a Letter of Request for 30 new F-16 Block 50 aircraft. In making the request, the Air Force said that it wanted the "fastest delivery and cheapest price." This was the first instance in several years in which the military initiated a procurement request. However, responsibility for the contract has been transferred from the Air Force to SSM, which will focus on local production and price over delivery date. If Lockheed Martin can negotiate offset (local production) requirements and secure signature of a Letter of Agreement (LOA) by January, it can deliver the aircraft in ¶2010. SSM's recent history of multiple-year haggling over contract terms suggests this may be hard. Now that Turkey has decided to buy the F-16s, we should encourage Gonul and Bayar to conclude the deal quickly. ¶7. (C) Sikorsky's local Amcit representative said he senses a positive change in SSM. The agency earlier dismissed a Sikorsky pitch to consider a strategic partnership that would include Sikorsky production of a utility helicopter for the military and fire services in exchange for Turkish production of an International Black Hawk. SSM disinterest in this proposal led Sikorsky to submit a non-compliant bid on the utility helicopter tender and to award primary International Black Hawk production to Poland. SSM recently asked Sikorsky to revisit the concept. Bayar and SSM Aviation Department Head Sedat Guldogan will visit Sikorsky in Connecticut on Nov. 1, following the Washington meetings and a visit to Lockheed Martin in Texas. JSF - GIVE US MORE -------------- ¶8. (C) The stated purposes for Gonul's visit are to: 1) convince the USG to relax technology transfer restrictions and allow Turkey to receive a greater share of the Joint Strike Fighter (JSF) production; and, 2) convince Lockheed Martin to give Turkey between $5-$6 billion in offset or co-production -- including software and other high-tech components. The latter request is based on a projected expenditure of an equivalent amount by Turkey for 100-120 F-35 aircraft for which it has no funding and has requested financial assistance. SSM and MND regularly tell us that as a strategic bilateral and NATO partner, they expect to receive technology on a level on par with the UK and Israel. To suggest it has other options, SSM continues to extol the Eurocopter and insist that it has not decided whether to buy it, JSF, or a combination of the two. Our military contacts, however, tell us that TGS has a clear preference for JSF. MILITARY STRETCHED TO THE LIMITS -------------- ¶9. (C) Turkey believes its military forces and resources are stretched. Some 200,000 plus troops are stationed in southeastern Turkey to combat PKK terrorists. Turkish forces participate in EUFOR and KFOR in the Balkans, ISAF in Afghanistan -- where Turkey twice led ISAF, is sharing a two-year joint command of Kabul Central with France and Italy, and is preparing to open its first PRT on November 9, ¶2006. For UNIFIL, Turkey has pledged over 900 troops, one Frigate, a Personnel Transport Ship and a Tank Landing Craft (in addition to opening select Turkish sea and airports for maintenance, repair, logistical support and UNIFIL personnel transit). Turkey has rejected a SACEUR request for additional troops in Afghanistan and a request from the UN Armistice Commission in Korea for one additional officer. DCHOD Saygun, however, has informally inquired about the potential for US approval to contribute one battalion of US-origin howitzers to Afghanistan. IMPACT OF CIVIL-MILITARY STRAIN -------------- ¶10. (C) The defense procurement issue is playing out against the backdrop of an increasingly and publicly confrontational civil-military relationship. Key factors include increased PKK attacks -- more than 600 Turkish civilians and military, as well as foreigners have been killed so far this year, on top of 37,000 over the last two decades; continued stumbling on Turkey's EU accession path; and presidential and parliamentary elections in 2007 that the current AKP government will likely dominate. PM Erdogan himself is said to have eyes on the presidency, but military resistance to a candidate whose wife wears a headscarf may lead the party to nominate a less "Islamic-looking" candidate. Speculation often focuses on MND Gonul, who has a good relations with the Prime Minister and the military (and whose wife doesn't wear a headscarf). Buyukanit and his service chiefs have used the media frequently in the two months since taking office to remind the public of the military's role in protecting Ataturk's secular and democratic order against fundamentalist and separatist threats. IN IRAQ FOR THE LONG HAUL? -------------- ¶11. (C) Questions about US intent on Iraq may be on Gonul's mind as he comes to the US. Many here worry that the US is not in Iraq for the long haul. The government fears the breakup of Iraq along ethnic lines, allowing the creation of an independent Kurdistan that includes Kirkuk. This, people here believe, would exacerbate Turkey's Kurdish problem and PKK terrorism, possibly threatening Turkey's unity, and leave Iraq's Turkmen minority in limbo. The Turkish government and military welcomed the August 28 appointment of Gen (ret) Joseph Ralston as Special Envoy to Counter the PKK. They remain skeptical, however, about our willingness to take real steps to prevent the PKK from using northern Iraq as a base of operation. The call for a Turkish cross-border operation remains just below the surface. They watch developments on Kirkuk closely, and tell us that "As Kirkuk goes, so goes Diyarbakir (in southeastern Turkey)." ¶12. (C) COMMENT: Gonul's visit provides an opportunity to reinforce US appreciation for Turkey's contributions to GWOT and our commitment to ensure a stable, democratic, unified Iraq that does not export terrorism to any country. It is also a chance to emphasize that, as a regional power with growing international stature, Turkey needs a NATO and US-compatible military with state-of-the-art technology. Defense procurement is not an area where the second largest NATO military should compromise. Visit Ankara's Classified Web Site at http://www.state.sgov.gov/p/eur/ankara/ WILSON