ANKARA, Turkey — Rolls-Royce and Turkey’s defense procurement agency have signed a letter of intent to finalize negotiations by July 31 on an engine program that will power the TF-X, Turkey’s indigenous fighter jet in the making.

Selecting an engine is presently viewed as the most critical stage of the TF-X program. “The choice of engine will shape up various other parameters in the next stages of the program,” a Turkish aerospace official noted.

The letter was signed by Undersecretariat for Defence Industries (SSM) chief Ismail Demir and British Minister for Defence Procurement Guto Bebb along the sidelines of Turkish President Recep Tayyip Erdogan’s state visit to Britain on May 15.

Under the plan, the engine for the TF-X would be developed and co-produced in Turkey.

A senior Turkish procurement official familiar with the project said Rolls-Royce and SSM would thrive to sort out several differences until the deadline.

“There are several outstanding issues … we must resolve before moving onto another stage,” the official said. “We will seek to find common ground on disputed issues like export licenses, restrictions, technology transfers and know-how, local work share, intellectual property rights, and development costs.”

Turkish officials say the idea is to rely on foreign technology in order to build, in the longer term, an indigenous engine that will power the TF-X.

In October 2016, Rolls-Royce offered a joint production partnership to Turkey with a view to powering planned Turkish platforms and potential sales to third parties. The British company’s proposal involved a production unit in Turkey to manufacture engines for the TF-X, as well as for helicopters, tanks and missiles.

A year before that, in October 2015, a memorandum of understanding was signed between Turkey and Rolls-Royce for technological know-how and a production unit. Under the plan, Rolls-Royce would launch an advanced manufacturing and technology center in Turkey ― the company’s eighth such unit worldwide.

Earlier this year the Turkish government earmarked an initial investment of 4.817 billion Turkish liras (U.S. $1.041 billion) on the conceptual design phase of the TF-X program. The investment plan has been taken under a government incentive scheme.

Turkey wants to build the TF-X with know-how from BAE Systems. In January 2017, Britain and Turkey signed a deal worth more than £100 million (U.S. $133 million) to develop the Turkish fighter jet.

Burak Ege Bekdil is the Turkey correspondent for Defense News.

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