ANKARA, Turkey — Amid a political controversy over allegations of nepotism, Turkey’s top tank factory has been transferred to a Turkish-Qatari private venture.

The factory, established in 1975 and located in the Sakarya province of northwest Turkey, was transferred by a presidential decree to BMC, a joint Turkish-Qatari venture that manufactures armored vehicles.

BMC’s Turkish partner, Ethem Sancak, is a senior member of President Recep Tayyip Erdoğan’s ruling Justice and Development Party, where he serves on the president’s executive board. He is also known to be one of Erdoğan’s closest confidants.

In the face of criticism and protests from opposition parties and labor unions, Erdoğan is denying the transfer constitutes a case of privatization and claims the deal doesn’t grant BMC ownership of the tank unit, but merely a right to manage and operate it. He also said the factory, under private management, would create thousands of new jobs.

Workers staged a protest in Sakarya on Jan. 19, and their union, Türk Harb-İş, said it would resist the privatization. Earlier, on Jan. 4, Defence Minister Hulusi Akar, formerly chief of the military’s General Staff, visited the factory and pledged that the rights of the workers would not be affected by the transfer.

Akar also said the deal does not represent the sale of the factory to a private buyer. “It means we are only transferring production rights. There is no sale. There is definitely no firing of personnel. Our goal is to increase the productivity of the plant, to upgrade its technology and enable it produce strategic goods. Our goal is to make use of domestic and foreign technological potential rapidly,” he said.

Akar added that the factory, while under new management, would target exports to friendly and allied countries.

Under the deal, BMC will make an initial investment of $40 million to $50 million to modernize the production unit. BMC plans to convert the military factory into a mass production unit for the Altay, Turkey’s first indigenous, new-generation main battle tank. The plant will be under lease to BMC for a period of 25 years, according to the deal. The lease price for the factory has not been made public.

In 2018, BMC won a multibillion-dollar deal from the Turkish government for the mass production of the Altay. It was designed to replace the Army’s German-made Leopard tanks and the aging American-made M60 tanks. Under the Altay program, Turkey will order an initial batch of 250 units, eventually receiving a total of 1,000 tanks. Turkey also hopes to export the Altay to countries in the Middle East and Asia.

Since the factory opened as part of the Turkish Land Forces Command, it produced equipment such as howitzers, ammunition carriers, day-and-night binoculars, tracks for tanks, and other military carriers. It has also operated as the main unit for tank repairs and maintenance, and it undertook upgrade programs for Leopard 1 and Leopard 2 tanks.

Under the Altay program, Turkey will order an initial batch of 250 units, eventually receiving a total of 1,000 tanks. (Otokar)
Under the Altay program, Turkey will order an initial batch of 250 units, eventually receiving a total of 1,000 tanks. (Otokar)

Industry experts say the Altay program, despite strong political support from the Erdoğan government, may face snags if foreign governments block technology needed for the mass production of the Turkish tank. BMC has been negotiating with German companies in hopes of securing know-how for the power pack, including the engine and the transmission for the Altay. Germany has not given the go-ahead to support the Turkish tank program due to political reasons.

In 2016, the German company Rheinmetall formed an international partnership with BMC and Malaysia’s Etika, under the corporate name RBSS, hoping to be a part of the Turkish program and with a view to future exports to Asian countries.

In 2014, Sancak acquired BMC from the Turkish government’s Savings and Deposit Insurance Fund for $300 million. The company’s former owner had gone into bankruptcy. It was the first time speculation about favoritism for Sancak became a public debate. Allegations gained ground after the Erdoğan government awarded the serial production contract to BMC, despite the Altay having been designed and developed by Otokar, a rival of BMC.

Analysts say German involvement in the program could cause further controversy following the factory’s transfer to a member of Turkey’s ruling political party.

“There has been increasing political reluctance to support the Turkish tank program due to Turkey’s widening democratic deficit over the past years. Berlin would be less eager to take part in a program that now smells worse and shadier,” a London-based Turkey specialist said.