Turkish government officials project spending some $15 billion over the next 12 years to bring Turkey’s military forces up to NATO standards. This would make Turkey’s arms industry one of the major growth sectors over the next decade. Military industries now employ over 40,000 people directly. Once
Turkish government officials project spending some $15 billion over the next 12 years to bring Turkey’s military forces up to NATO standards. This would make Turkey’s arms industry one of the major growth sectors over the next decade. Military industries now employ over 40,000 people directly. Once current plans to manufacture equipment ranging from armored vehicles to military aircraft become a reality in the late 1980s, the number of people directly and indirectly employed by this sector will be counted in the hundreds of thousands. [1] With arms exports of some $400 million in 1985 and plans to build an arms industry geared to exports, Turkey may become the world's 14th largest arms producer in the next decade. [2]
Funds for this massive outlay will be coming from a newly created “Defense Fund,” in addition to the national budget and foreign aid. The “Defense Fund” will have accumulated some $620 million by the end of 1987, for investments in arms ventures. The fund is eventually expected to generate annual revenues of $1.5 billion. [3]
Turkey’s arms industry, long dominated by military and government-owned enterprises, will soon see private corporations and their foreign partners play a growing role in this lucrative sector. The architect of this plan is Prime Minister Turgut Özal, a former World Bank official and corporate executive who has led the drive to open the Turkish economy to world markets. Hundreds of representatives from Western arms companies, including luminaries such as Alexander Haig, have been lining up to meet with Turkish officials. [4] Turkey will also host two major international arms exhibitions in 1987 with 304 foreign and local firms on hand to present their wares. [5]
The roots of current enterprises can be traced from the transfer to Ankara during the War of Independence of the limited arms manufacturing capability of the Ottoman Empire. In the 1920s and 1930s, the arms industry expanded to meet the internal security requirements of the new state, and later as part of a state-led industrialization surge. Turkey even established the nucleus of an aircraft industry. [6]
Turkey’s entry into the Western military alliance system after World War II brought these developments to a sudden halt. Massive amounts of US arms poured into the country. The embryonic aircraft industry was dismantled in 1959, and plans for the manufacture of up-to-date infantry weapons were postponed. This massive injection of military aid also ended the policy of diversified arms suppliers. Almost all of the front-line equipment of the armed forces was now of US origin. Some Western aid went into military workshops and shipyards to produce spare parts and maintain imported equipment.
The first shock to Turkish confidence in the US came during the 1960 Cuban missile crisis. Washington’s readiness to trade its missiles in Turkey for Soviet missiles in Cuba showed that Turkey was no trusted ally but a mere pawn in the Cold War. Turkish nationalism was even more affronted in 1964, when Lyndon Johnson informed Prime Minister Ismet Inonu that US-supplied arms could not be used to intervene in Cyprus. These blows to the Turkish state’s esteem and the modernization requirements of World War II vintage weapons which no longer sufficed to meet the country’s needs led to the promulgation of a Remodernization Plan (REMOI) in 1970. [7] The plan reflected not only the political decision to expand arms production but also the economic reality that foreign grants and concessionary loans could no longer meet the high-tech, high-cost weaponry needs of the Turkish army.
The US arms embargo following the 1974 Turkish intervention in Cyprus and later the embargo by some Western powers following the 1980 military coup gave greater impetus to these moves. At 850,000, Turkey has the world’s fifth largest peacetime army. Turkish decision-makers saw little choice but to expand the country’s arms industry, to diversify and lessen its dependence on outside sources. [8] The decision to expand the arms industry has led Turkey’s main arms suppliers, West Germany and the US, to channel a good portion of their military aid to the arms industry. This not only allows them to support arms procurement policies adopted by an important ally but also circumvents domestic political debates. (Israel, though, has reportedly exerted pressure on West Germany not to establish a tank factory in Turkey for fear of exports to Arab countries.) [9]
The present government of Turgut Ozal has forcefully pushed policies designed to bring the private sector into this field, continuing a long tradition of state assistance to the bourgeoisie. Law 3238, passed in January 1986, created the Defense Industry Development and Support Administration (DIDA) and established the Defense Fund. Headed by Özal appointee Vahit Erdem and with a board composed of the prime minister, the chief of general staff, the service commanders, a number of cabinet and State Planning Organization officials, DIDA will decide on various proposals and determine arms manufacturing priorities. [10] So far these include modern tracked armored vehicles, a low-level air-defense system, tactical wheeled vehicles, and modernized artillery and communication systems. [11] Alongside its role as a procurement agency, according to Erdem, DIDA will
encourage private Turkish companies and foreign companies to invest in Turkey, to transfer licenses and technology and know-how. When they produce these products, the fund will give the guarantee to buy those products for a certain period of time such as three years or five years. [12]
This effort of the Özal government, however, does not have the full support of the military and civilian bureaucracies. Law 3238 had stipulated that DIDA would acquire the assets of the military foundations set up years earlier to raise funds for military investments. The Air Force Foundation, the Naval Foundation, and the Ground Forces Foundation have total funds conservatively estimated at over $600 million, but so far none have been transferred to DIDA. [13] The state-owned Machinery and Chemical Industries Establishment has also objected to government pronouncements that portions of it be sold off to the private sector. [14]
The public sector accounts for the bulk of Turkey’s military-related production. The military foundations also own a number of enterprises wholly or in part. Beyond their role as political guardians and their involvement in the arms industry, the armed forces also maintain a large presence in the civilian economy through OYAK, a holding company funded by a 10 percent “tax” levied on the salaries of officers. Established just after the 1961 military coup, this enterprise was designed to to safeguard Turkey’s professional military personnel from the vagaries of the country’s crisis-prone economy. OYAK’s investments, worth hundreds of millions of dollars, gave the officer corps a stake in Turkey’s corporate economy.
This presence of the officer corps, separate from the state, is sometimes referred to as the "third sector." Along with this presence, the military brings its traditional view of civilians as undisciplined, bickering and used to easy profits. This led to a General Electric engine for F-16, which TUSAŞ Engine Industries will assemble. March 1986 decree prohibiting private sector production of lethal equipment. [15] The refusal of the military foundations to turn over their assets to DIDA reflects this attitude as well.
Given the country’s military needs and the growing capability of the private sector, the emergence of a Turkish military-industrial complex appears inevitable. The government’s free market policies and the growing financial and industrial capabilities of Turkey’s corporate sector make it difficult to keep the private sector out of this highly lucrative field. Some 50 private corporations have announced plans to enter this sector.
But a vigorous public debate has erupted over Özal’s policies, including his plans for the arms industry. Opposition political leaders question if the state will have to bail out private manufacturers who encounter difficulties in a highly competitive international arms market. Murteza Celikel of the Democratic Left Party charges that the private sector would provide foreign interests with an unacceptably influential role in Turkey’s military decisions. [16] Growing private sector involvement will also have important ramifications for Turkey’s beleaguered labor unions. What would be the consequences of a strike in a factory involved in arms production? What would the military think of demands for higher wages leading to higher costs for products destined for the armed forces?
The profiles presented below of Turkey’s major arms and military equipment producers are necessarily incomplete, owing to the secretive nature of the enterprise as a whole. While the entry of the private sector and its foreign partners into this field has tended to produce more information, that process has its own pitfalls. Advertisements for this or that product present them as ongoing projects on the verge of realization, creating the impression that much more is being done than is actually the case.
We have divided the organizations profiled into four broad categories -- military facilities, the “third sector,” the public sector and the private sector. There is much interpenetration between all of these which, we have tried to specify where appropriate. [17]
Primarily designed to overhaul weapons and other equipment, the 10 facilities attached to the army now manufacture spare parts and machinery. The Heavy Maintenance Factories located in Kayseri and Arifiye have been heavily involved in the modernization of Turkey’s 3,000 M-48 tanks. [18] (In February 1987, the US okayed the export of some M-48s to Tunisia.) A Zeiss license (West German) allows the Arifiye plant to produce optical equipment; West Germany has provided assistance for a track manufacturing facility at Arifiye. A factory in Kayseri produces all parachutes using specialized textiles obtained from local private sector enterprises.
The army maintains a facility in Ankara to overhaul helicopters. It started to assemble UH-1 helicopters, delivering an initial batch of 15 helicopters in late 1985; Bell Helicopter is transferring more machinery for the assembly of these aircraft. [19] The Air Force overhaul complex in Kayseri concentrates on fuselages, while the one in Eskişehir overhauls aircraft engines. These are able to maintain all aircraft in Turkey’s inventory, and have also upgraded older aircraft such as the F-100s. They reportedly also provide maintenance to unspecified foreign air forces. Taşkizak shipyard, located on Istanbul’s Golden Horn, dates back to 1455. The yard built Turkey’s first steamboat in 1828 and the first submarine for the Ottoman navy in 1886. It ceased military production after World War I, and was only reactivated as a naval yard in 1941. With some 4,000 employees, it builds landing ships, patrol boats, military tankers and transports of up to 10,000 tons. Among its more important projects is building 12 Doğan class fast patrol craft armed with US Harpoon missiles. It exported 14 German-designed SAR-33 fast patrol boats to Libya. Libya also ordered 30 locally designed landing craft, and over 20 have been delivered. [20] Other customers reportedly include Qatar, Bahrain and Saudi Arabia.
The Golcük naval yard was established in 1924. With 6,000 employees, it can construct ships of up to 30,000 tons, including frigates and U-209 submarines. Both are of West German design but include US electronics and weapons. [21] The Golcük yard also incorporates an electronics factory which produces early-warning and fire-control devices. It overhauls ships for the Turkish and allied navies.
The Military Electronics Industries (ASELSAN) was established near Ankara in 1975. The Ground Forces Foundation owns 70 percent of its shares, with the rest divided between the other military foundations, the Police Foundation, the State Postal Authority and OYAK. Employing approximately 3,000 people, it produces tactical communication equipment, encryption equipment, scramblers and digital message devices. It holds licenses from Phillips (Netherlands) and Litton (US), and recently reached a licensing agreement with Teledyne. ASELSAN has also developed some of its own products: wireless communication equipment, telephone scramblers, field telephones, electronic exchanges and a laser-operated range finder. It is involved in the F-16, Stinger and Maverick programs and will bid on the military’s low-level air defense requirements as part of a joint venture with Raytheon and Contraves (Switzerland). ASELSAN communication equipment was utilized to modernize Leopard tanks from West Germany. ASELSAN’s exports for 1986 were projected at $25.7 million, up from $12.5 million in 1985. [22]
The Ground Forces Foundation owns 83.5 percent of the shares of the Military Battery Industry (ASPILSAN). The PETLAS Tire Company was established to produce tires for the F-16 project as well as for other air force and civilian aircraft. Production is to start in late 1987, with exports planned. A major shareholder is the Air Force Foundation. The Sivas Textile Industry (SIDAS), owned mostly by the Air Force Foundation, has yet to start production due to problems with its foreign partners. The Electric Industry (IŞBIR), majority owned by the Ground Forces Foundation, provides military and civilian electrical equipment.
The General Directorate of Military Factories, established in 1920 when Ottoman munitions and small arms factories were moved to Ankara, became the Machinery and Chemical Industries Establishment (MKE) in 1950. Civilian bureaucrats took over the enterprise from direct military management. MKE insured that a portion of the US military aid during the 1950s went into the country’s arms industry. Today, MKE’s 20 factories and 20,000 workers meet Turkey’s small arms needs and produce much of the ammunition employed by the army and the navy. The enterprise also manufactures ordnance for the air force, including air-to-ground FFAR rockets under a US license and 105mm tank guns under a Royal Ordnance Factories (Britain) license. A new anti-aircraft gun factory currently produces 20mm automatic weapons and in late 1988 will manufacture 35mm guns, licensed by Oerlikon (Switzerland). This venture represents the first use of DIDA funds. MKE is also a partner in the European consortium which will manufacture Stinger ground-to-air missiles and Maverick air-to-ground missiles. MKE is modernizing its gas mask factory. In 1990, MKE will start manufacturing a modern artillery rocket system. MARL (West Germany) and MLRS (US) are the two contending systems; a final choice will be made in 1987. MKE will also participate in various phases of the tracked armored vehicle to be built in Turkey and will modernize the army’s inventory of tubed artillery. [23]
MKE has developed its own products, such as a 105mm tank round, which allowed it to beat out competition from Belgium and Spain and win a multi-million dollar contract to establish a factory in Egypt. [24] Both Saudi Arabia and the UAE are considering imports of the firm’s 120mm rifled mortar. Figures on production levels and exports are extremely difficult to come by; such documents as the annual balance sheet were classified until 1984. MKE is making a healthy profit and accounts for much of Turkey’s arms exports -- mostly ammunition destined for NATO allies, although recipients include Latin American, African and Middle Eastern countries. [25]
MKE also includes six civilian factories, ranging from a textile machinery plant to a factory for construction and excavation machinery. These factories and a steel mill and extensive chemical works allow MKE to provide much of the machine tools and chemicals needed for arms production.
TUSAŞ involves joint ventures with foreign firms, Turkish corporations, the third sector and public sector enterprises. This multi-billion-dollar venture will form the basis for expanding the Turkish aeronautical industry after a hiatus of nearly 30 years. The project will receive an annual injection of $250 million from the US.
Established by government decree in June 1973, TUSAŞ concretized plans for a national aircraft industry following the 1983 decision to proceed with the $4.2 billion F-16 program. [26] In May 1984, TUSAŞ was made a shareholder company with the Ministry of Defense as sole owner. In November 1985, 55 percent of the shares were allocated to DIDA, with the Air Force Foundation receiving the balance. In May 1984, TUSAŞ Aerospace Industries (TAI), a $134 million company, was established as a joint venture with General Dynamics (42 percent) and General Electric (7 percent). TUSAŞ has a 49 percent share, with the remaining two percent held by the Air Force Foundation and the Turkish Air League.
The Mürted aircraft factory near Ankara, fully operational in early 1987, will manufacture aft and center fuselages and wing sections, and will undertake final assembly and testing of the F-16s. Half of the parts produced at Mürted will be sold to General Dynamics as part of an offset arrangement.
Engines for the F-16 will be manufactured by TUSAŞ Engine Industries (TEI), established in January 1985 in Eskişehir as a joint venture with General Electric (49 percent) and TUSAŞ (49 percent) as main shareholders and the Turkish Air Force Foundation and Air League as smaller shareholders. The first Turkish-assembled engine will be delivered to Mürted in September 1987.
The hundreds of trained engineers and thousands of skilled workers as well as the machinery and facilities involved in these projects represent a sizeable investment and will allow Turkey to assemble other aircraft and join international consortia as a serious partner. Once the F-16 project is completed, the facility will either embark on the construction of an advanced version of the F-16 or take part in the consortium to manufacture Europe’s EFA fighter aircraft. [27] Mürted will continue manufacturing spare parts for the F-16 and will overhaul and upgrade aircraft for other countries. TUSAŞ will also produce a modern transport aircraft to replace Turkey’s aging fleet.
TELETAŞ, slated to become one of Europe’s largest telecommunications plants, has licenses to produce equipment ranging from circuit boards to electronic teleprinters and telephone multi-channel networks. TELETAŞ is holding talks with Western firms for joint arms ventures and will bid on the low-level air defense project. [28]
The Turkish Electronics Industry and Trade Corporation (TESTAŞ), founded in 1976, manufactures electronic components and related equipment. The enterprise has two factories in Ankara and Aydin and holds licenses from Japanese, French and Italian firms to produce circuit boards and transistors. Some equipment is designed within the enterprise and some deliveries have been made to the military.
Koç Holding, Turkey’s largest corporation with assets estimated at $2.5 billion, has sold mainly automotive products to the military for some time. Koç’s Otokar now plans to produce military cross-country vehicles under license with Land Rover (Britain). Koç will submit a joint bid with Ford Aerospace to produce the Chaparral ground-to-air missile for the low-level air defense project. [29]
Ercan Holding’s MANAŞ, with a license from the West German MAN corporation, last year opened a factory to produce diesel engines for civilian and military requirements. A new truck factory in Ankara will supply heavy trucks to the military. [30] Should the military choose the MARL artillery rocket system, MANAŞ would receive the contract to build the transport vehicle. It will also bid to build armored vehicles.
Otomarsan, which manufactures Mercedes-Benz buses in Turkey, is also entering this sector. A new factory in Akşehir will manufacture a range of wheeled vehicles for the military. Otomarsan, which has exported thousands of buses to the Middle East and Africa, will also market these vehicles abroad.
Alarko is building the engine testing facilities for the F-16 and is negotiating to convert some of Turkey’s M-47 tanks into recovery and bridge-laying vehicles. Kutlutaş, Gama and a number of other firms have formed a joint venture with Westinghouse to manufacture radars for the F-16. [31] Former Secretary of State Haig played a leading role in the agreement between Turkey's ENKA and United Technologies for the assembly of Sikorsky Black Hawk helicopters. [32]
The Ibrahim Ors enterprise has been manufacturing mine-layers, military bridges, and air force ground support equipment such as bomb loaders and bomb trucks since 1952. METIS builds hardened shelters for aircraft and other specialized construction requirements. Private firms are also involved as subcontractors. Asmaş, for example, manufactures optical equipment and engine containers for the M-48 Tank modernization project. Emek Holding produces launchers for anti-tank rockets manufactured by MKE. Kale Bodur is manufacturing the carriages for MKE’s 20mm anti-aircraft gun; Gama has a contract for portions of the firing system. [33]
Some of the numerous corporations which are now planning to enter this field have gone beyond exploratory talks and preliminary contacts in their endeavors. Eczacibaşi is preparing one of its pipe manufacturing plants to produce gun barrels, while Profilo is entering the aviation field. Inge has submitted proposals to build parts for the F-16 project. Sabanci Holding, perhaps Turkey’s largest industrial and financial group, is also showing interest in foreign offers of joint arms ventures after initial skepticism on the profitability of this sector.
[1] “Defense and Economics in Turkey,” NATO’s Sixteen Nations, August 1986.
[2] This is up from $160 million in 1982. For a listing of Turkish arms export figures going back to 1978, see MERI Report: Turkey (London: Croom Helm, 1985), p. 125. For 1985 figures and future projections see Middle East Business and Banking, May 1986, pp. 17-19; Ebanewsletter, February 7, 1986, p. III.
[3] Manfred Sadlowski, “Turkish Armed Forces Receive Major Funding,” Military Technology, June 1986, p. 6; also see Cumhuriyet, December 24, 1986.
[4] French and British politicians with dozens of representatives from their arms industries in tow have become a regular feature at Ankara’s Esenboğa airport. Smaller groups from Brazil to Singapore have also paid visits. See Nokta, September 14, 1986, pp. 12-19; Yeni Gündem, April 21-27, 1986, pp. 8-13.
[5] The International Defense Equipment and Avionics Exhibition (IDEA 87), held at Etimeğsut airbase near Ankara, is expected to become one of the major aviation exhibits in the world and will specifically target the Middle East. See Nokta, August 31, 1986, p. 44. The other exhibit will be held in Izmir. See Ebanewsletter, August 6, 1986.
[6] See Air International’s July 1985 and October 1985 issues. Polish engineers granted asylum in Turkey during World War II played an important role in the design of some of these aircraft.
[7] The REMOI plan has now been superseded and the modernization of the armed forces is proceeding based on REMO II.
[8] The decision to buy 40 Tornado aircraft is one indication of this. For more on this and Turkey’s rapprochement with Europe, see Middle East Economic Digest, November 30, 1985 and April 30, 1986; and Cumhuriyet, April 17, 1986.
[9] The Defense and Economic Cooperation Agreement signed in 1980 with the US included provisions for the transfer of arms technology. On Israeli objections, see Yeni Gündem, April 21-27, 1986, p. 12.
[10] See the informative interview with Vahit Erdem and a full translation of Law 3238 in NATO’s Sixteen Nations, August 1986.
[11] The tracked armored vehicles project is now a three-way competition between the US FMS Corporation (M-2 Bradley), Britain’s GKN Defence (Warrior) and West Germany’s Krauss Maffei (ACV Puma). According to Erdem, once local requirements are met, production will continue for the export market. See Middle East Economic Digest, September 13, 1986, p. 41.
[12] NATO’s Sixteen Nations, August 1986, p. 138.
[13] The Naval Foundation dates back to 1909, and was reactivated in the early 1960s. The Land Forces Foundation was established in 1974 and the Air Force Foundation started in 1970. All are nationwide organizations. The Naval Foundation has some 157 branches in Turkey, with 14 honorary branches in Western Europe. The foundations also have shares in a variety of civilian public sector enterprises.
[14] Nokta, September 14, 1986, p. 16.
[15] Official Gazette, March 3, 1986. This means that when a corporation such as Koç Holding receives a contract to manufacture ground-to-air missiles, the warhead would be manufactured jointly with a state-owned enterprise. See Ebanewsletter, March 4, 1986.
[16] A concise rendition of opposition views is in Yeni Gündem, April 21-27, 1986, pp. 12-14; and Nokta, September 14, 1986, p. 18-19.
[17] Unless noted otherwise, the information in these profiles is from the following sources: Nokta, September 14, 1986; Yeni Gündem, April 21-27, 1986; and NATO’s Sixteen Nations, August 1986. We have omitted Havelsan from our list. Active in the avionics field, it has reportedly encountered difficulties with its foreign partners and its current status is uncertain.
[18] Military Technology, November 1986, pp. 46-62.
[19] Middle East Economic Digest, September 7, 1985, p. 44.
[20] Jane’s Fighting Ships, 1985-1986, (London, 1986).
[21] Military Technology, December 1985, pp. 31-37.
[22] Ebanewsletter, July 31, 1986, August 1, 1986 and March 7, 1986.
[23] Middle East Business and Banking, May 1986, pp. 17-19; Military Technology, October 1986, p. 264.
[24] Ebanewsletter, September 5, 1986.
[25] Middle East Economic Digest, May 31, 1986, p. 26; Ebanewsletter, September 3, 1986, p. VI.
[26] Military Technology, June 1986, pp. 170-173; Middle East Economic Digest, March 8, 1986, p. 33.
[27] Military Technology, June 1986, pp. 92-98.
[28] Ebanewsletter, September 18, 1986, p. 4.
[29] For more on private sector involvement in the arms industry, see Ebanewsletter, September 18, 1986, p. II and November 9, 1986, p. III.
[30] Nokta, November 23, 1986, p. 39.
[31] Middle East Economic Digest, March 15, 1986, p. 35; Ebanewsletter, January 9, 1986, p. II.
[32] Ebanewsletter, October 10, 1986, p. IX.
[33] Ebanewsletter, November 9, 1986, p. III.
