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