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Turkey May Revise $2.5 Billion Corvette Contract

Aug. 13, 2013 - 06:04PM   |  
By BURAK EGE BEKDIL   |   Comments
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ANKARA — Turkey’s procurement authorities, under orders from Prime Minister Recep Tayyip Erdogan, may revise a contract for the production of six corvettes, officials said.

“Under new deliberations we may rethink this contract and revise negotiations,” an official said, without elaborating on the reasons.

The Turkish government in January signed the contract, dubbed “national ship” or Milgem in its Turkish acronym, with the Istanbul-based shipyard RMK Marine, owned by Turkey’s biggest industrial conglomerate, Koc Holding.

Defense News reported July 8 that Koc Holding’s defense business could be a casualty of a row between the country’s prime minister and one of its top executives after a month of civil unrest that has battered the Turkish government. The report quoted an analyst as saying, “It should come as no surprise if the government decided to thoroughly scrutinize all Koc-related contracts, including defense deals.”

The story also said that some of these RMK and Otokar contracts may face revisions and some future deals could change.

In one incident during month-long demonstrations in June, protesters tried to escape police tear gas and pepper spray by taking refuge in a posh Istanbul hotel, Divan, owned by Koc. Hotel management admitted the protesters to its lobby, which quickly turned into a makeshift first aid room.

The police fired more tear gas and pepper spray into the hotel lobby although it is illegal to fire these chemicals into indoor spaces. It was reported that Ali Koc, a board member and third generation family members had ordered the hotel to help the protesters.

On June 16, an angry Erdogan said in a public rally: “We know which hotel owners helped terrorists [protesters]. It is a crime to abet terrorists. And those crimes will not remain unpunished.”

The Milgem contract is worth $2.5 billion. The corvettes are the smallest warships in the Turkish Navy’s inventory. Turkey plans to use the experience gained in the Milgem project to design, develop and construct its first national frigate, the TF-2000, in the 2020s.

Earlier, RMK Marine had won a contract to build four search-and-rescue ships for the Turkish Coast Guard.

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