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Fiscal Constraints May Curb Turkey's Ambitions for Centennial Projects

May. 4, 2014 - 01:24PM   |  
By BURAK EGE BEKDIL   |   Comments
Too Ambitious? Turkey plans to spend $750 million for the Hurkus basic trainer plane. Experts wonder whether Ankara will be able to fulfill its defense acquisition plans.
Too Ambitious? Turkey plans to spend $750 million for the Hurkus basic trainer plane. Experts wonder whether Ankara will be able to fulfill its defense acquisition plans. (Turkish Aerospace Industries)
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Big Spending Plans Through 2023

This list of programs illustrates nearly $70 billion worth of spending until 2023, excluding relatively small programs and others the government may launch in the future. Programs include:
■$16 billion for 100 F-35 new generation fighters.
■$10 billion to develop what will become the first indigenous Turkish fighter, the TF-X. Production will likely cost another $20 billion. If everything goes as planned, Turkey’s fighter budget will be around $50 billion in the next 10 years.
■$4.5 billion to upgrade F-16s.
■$4 billion for new submarines.
■$3.5 billion for utility helicopters.
■$3.5 billion for the long-range air and anti-missile defense system.
■$3 billion for attack helicopters.
■$2.5 billion for the planned indigenous new generation main battle tank, the Altay.
■$2.5 billion for corvettes under the MILGEM program.
■$2.4 billion for the aerial warning and control aircraft.
■$1.5 billion for the local development of helicopters.
■$1.5 billion for the A400M heavy lift aircraft.
■$1 billion for indigenous satellites.
■$1 billion for a satellite launching center.
■$1 billion for the landing platform dock ship.
■$1 billion for locally developed frigates.
■$1 billion for new armored vehicles.
■$1 billion for electronic warfare systems.
■$1 billion for drones and electro-optical systems.
■$750 million for the locally developed basic trainer, the Hurkus.
■An unknown number of billions for a locally developed infantry rifle. ■

More

ANKARA — Turkish officials have ambitions to celebrate the republic’s centennial in 2023 with dozens of high-profile armament programs they hope will have been successfully concluded by then.

But financing all of these grand projects could be a problem.

“I think the Turks have in recent years launched too many and too ambitious programs, which they may soon have to realize that they may have to prioritize,” one London-based Turkey specialist said.

The Turkish economy posted growth rates of 5 percent or more in the 10 years prior to 2013, when the growth rate stood at 4 percent. In that period, the per capita gross national product tripled to around $10,000, but economists agree there are signs of a slowdown.

“The next decade will not be as bright as the past,” said one investment banker in London.

A senior procurement official denied that some programs may have to be suspended or scrapped due to financing problems.

“Our projections are realistic. I see no reason why this [need to prioritize] should happen,” he said.

But one Finance Ministry official said: “If there is a future need to spend less public money, then defense procurement would not be exempted.”

Turkey annually spends US $3.5 billion to $4 billion every year on new equipment, upgrades and maintenance. But the defense programs launched over the past few years may force Turkey to spend an average of $6 billion to $7 billion annually.

“When you look at all the programs launched with a view of completion by the year 2023 or before, you see that there is a clear lack of budget discipline,” one industry executive said. “It’s like Ankara has launched whatever comes to mind without really checking if there will be available financing for all.”

A Western company official said that “at some point, the Turks would realize they don’t have the money for everything they want to buy or build themselves.”

The procurement official said loans would help ease the financing burden.

“We are not talking about cash payment for every item on your list,” the official said. “The payments typically [are] spread over long years.” ■

Email: bbekdil@defensenews.com.

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