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Turkey boosts military production to improve economy

Discussion in 'Turkish Defence Forum' started by usernameless, Feb 10, 2014.

  1. usernameless

    usernameless SENIOR MEMBER

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    Turkey boosts military production to improve economy, 4 February 2014

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    According to recently released data by the Turkey Exporters Assembly (TIM), domestic defence production increased from 10 percent to 50 percent while military exports rose from $600 million in 2008 to $1.4 billion in 2013.

    The sector's 2014 objective is to reach $2 billion, with a 44 percent rise, Latif Aral Alis, head of the country's Defence and Aerospace Industry Exporters' Association (SSI) said in a statement on January 11th.

    "Turkey has become a country that is able to manufacture and export a large part of its defence equipment such as helicopters, unmanned aerial vehicles, warships, training aircraft and missile guidance systems," Alis said.

    Half of the defence industry products are "produced in the country," Prime Minister Recep Tayyip Erdogan said earlier this year during an official visit to Malaysia.

    Meantime, the defence producers aimed at boosting exports to as high as $25 billion by 2023, the centennial of the foundation of the Turkish Republic, according to SSI.

    Sinan Ulgen, chairman of the Istanbul-based Centre for Economics and Foreign Policy Studies (EDAM) and a visiting scholar at Carnegie Europe in Brussels, said this trend is an indication of the importance policy-makers have attached to the development of a domestic military industry and its potential benefits.

    "It is believed that such a development would help Turkish industry to benefit from technological spill over from military led research and production," Ulgen told SES Türkiye.

    "It is also estimated that such a development would allow Turkey to reduce its current account deficit by developing a new and important export base. It is also an indication of the government's objective to decrease its reliance on foreign suppliers to overcome some of the deficits in Turkey's strategic capabilities in the areas of air and missile defences," Ulgen added.

    Sait Yilmaz, director of the National Security and Foreign Policy Research Centre at Istanbul Aydın University, agreed that increasing defence production can be linked to economic development.

    "Ankara makes an effort to develop its defence industry up to a certain level to better co-operate with the owners of well-developed technologies," Yilmaz told SES Türkiye.

    Defence expenditures are 2.3 percent of its GDP, which is less than the global average of 2.5 percent.

    Yilmaz also said that although Ankara aimed to have a self-sufficient defence posture, it was also aware that international co-operation was a must in obtaining advanced technology.

    Gareth Jenkins, of the Silk Road Studies Program's Turkey Initiative, said he is sceptical about the announced figures in the defence industry.

    Speaking to SES Türkiye, Jenkins said that the official data could be "a little misleading" as a lot of the indigenisation has been of basic components or involved local manufacturing under foreign license.

    "There is no doubt that the local defence industry is much more developed than it was 10 years ago," Jenkins said. "However, it would be a mistake to assume that Turkey is on its way to become a major defence industry manufacturer and exporter."

    He said one of the problems is the state's limited research and development budget.

    Nihat Ergun, former minister of technology, had announced that the federal budget allocation to research and development doubled in the last 11 years, reaching almost 1 percent.

    Jenkins said another problem in front of the defence industry is the country's economies of scale as there is an element of exaggeration to it.

    "For example, Erdogan recently gave a speech about Turkey producing its own jet fighter. He used the same rhetoric about what Turkey touts as its indigenous unmanned aerial vehicle, Anka. In practice, the Anka is assembled in Turkey from parts imported from abroad. Similarly, even if Turkey was able to manufacture a jet fighter that was equal in terms of technology and capabilities to those being made by other countries with long-established defence industries, it would probably be so expensive that nobody would want to buy it," Jenkins said.

    "The Turkish Armed Forces also face a similar conundrum. There are political reasons for wanting to source from Turkish manufacturers, not least because it frees Turkey from its military procurement effectively being hostage to its bilateral political ties with a foreign supplier," he added.

    "But there is usually an economic cost in that -- because of Turkey's limited [research and development] budgets and economies of scale -- the Turkish Armed Forces can usually buy the same quality from abroad at a much cheaper cost," Jenkins said.