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Turkish Firms May Lose Contracts After Egypt Ouster

Jul. 14, 2013 - 04:34PM   |  
By BURAK EGE BEKDIL   |   Comments
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ANKARA — Turkey’s emerging strategic alliance with Egypt’s Islamist administration has come to an abrupt halt, and Turkish officials and industry fear losing future contracts as Ankara becomes a vocal opponent of those who carried out the ouster in Cairo.

Turkish Prime Minister Recep Tayyip Erdogan on July 5 condemned the military intervention that toppled Egyptian President Mohammed Morsi, and chastised the West for failing to brand the action a coup.

“No matter where they are ... coups are bad,” Erdogan said in televised remarks. “Coups are clearly enemies of democracy.”

Erdogan also lashed out at the West for shying away from calling the military intervention a coup, and welcomed the African Union’s decision to suspend Egypt over the Army’s takeover.

Egypt’s Foreign Ministry on July 9 summoned Turkey’s ambassador to Cairo, Huseyin Avni Botsali, to “express the Egyptian government’s concerns over Turkish interference in Egypt’s internal affairs.”

An Arab diplomat here said he expected “difficult times” in Turkish-Egyptian relations, which could disrupt economic relations unless the two nations pursue a pragmatic line.

“Apparently, Erdogan is deeply annoyed by the military intervention and he does not hide it. I don’t think he could easily switch to a friendly track with Cairo before democracy is fully restored,” the diplomat said.

Morsi belongs to the Muslim Brotherhood movement, which Erdogan views as a major ideological ally in the region.

Only six weeks before the ouster, Turkey in May granted Egypt a US $250 million loan to finance Turkish-Egyptian joint defense projects. The loan, the first of its kind, was intended to boost defense cooperation and Turkish exports of defense equipment.

“The Turkish industry, with the help of a looming alliance between Erdogan and Morsi, has been meticulously penetrating the Egyptian market since the fall of [former Egyptian President Hosni] Mubarak, especially after Morsi won the presidential elections in June 2012,” a London-based Turkey specialist said. “With Egypt’s new rulers now carefully noting down Erdogan’s hostile statements, I would think future contracts are being seriously jeopardized.”

One procurement official familiar with defense exports said: “This is going to be a period of political uncertainty both in Egypt and in Turkish-Egyptian relations. It is true that the political relations with Egypt worked as a lubricant for defense deals, although the Turkish industry at the same time successfully produced what the Egyptian Army needed. Honestly, I am not sure how we will progress under the circumstances.”

An aviation company executive said he hoped negotiations for deals would progress as normal, although he expressed suspicion. “Egypt was a looming market for a wide range of Turkish defense systems,” he said. “It is difficult to judge how much of their interest in the Turkish industry was politically motivated. We hope [Turkey’s] political relations with the new regime don’t turn tense.”

Egypt had expressed interest in buying the new Anka medium-altitude, long-endurance UAV built by Turkish Aerospace Industries. The potential sale of six to 10 Anka systems to Egypt was discussed during Erdogan’s visit to Cairo in November.

Before that, Ankara had approved the sale to Egypt of six multirole tactical platform-20 fast-intervention craft produced by the privately owned Yonca-Onuk shipyards. Under this deal, three boats would be constructed in Istanbul and the others in Egypt’s Alexandria shipyard under Turkish license.

A defense industry source said other contracts with Egypt could include various models of armored vehicles, corvettes, basic trainer aircraft and, in the longer run, attack helicopters, which Turkey is building with the Italian-British AgustaWestland, as well as utility helicopters TAI will jointly produce with US-based Sikorsky.

Although some Turkish businessmen voiced optimism after the ouster, the Turkish-Egyptian trade in general could be a victim of Egypt’s political instability. Zuhal Mansfield, chairwoman of the Turkish-Egyptian Business Council, said, “Ongoing projects with Egypt, civilian or otherwise, will continue.”

About 250 Turkish companies have a portfolio of $2 billion in investments in Egypt and $4 billion in exports. These figures exclude defense business.

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