US embassy cable - 05ANKARA2529

S E C R E T SECTION 01 OF 02 ANKARA 002529 
 
SIPDIS 
 
STATE PLEASE PASS TO EUR/SE 
 
E.O. 12958: DECL: 04/29/2015 
TAGS: PREL, PGOV, MASS, TU 
SUBJECT: TURKEY APPROVES BILLION DOLLAR F-16 UPGRADE 
PACKAGE BUT BROADER DEFENSE COOPERATION STALLED 
 
REF: A. ANKARA 2024 
 
     B. ANKARA 1588 
     C. ANKARA 1557 
 
Classified By: Ambassador Eric S. Edelman, reasons 1.5 (b) and (d). 
 
 
1. (S) SUMMARY: Turkey's signature of a one billion dollar 
Foreign Military Sale (FMS) F-16 aircraft upgrade package 
with Lockheed Martin Aero as the prime USG contractor 
provided the pretext for Minister of National Defense Vecdi 
Gonul to publicly reinforce the importance of the US/TU 
bilateral relationship in general and defense industrial 
cooperation in specific.  During a joint April 26 press 
conference with the Ambassador and at a pre-meeting, Gonul 
emphasized the importance of the bilateral relationship to 
Turkey and acknowledged Government of Turkey (GOT) 
responsibility to communicate that to the public.  Ambassador 
highlighted the recent offer of a classified communication 
link between the US Central Command's operation in Iraq and 
the Turkish General Staff (TGS) as US recognition of the 
importance of the coalition effort in Iraq to Turkey and 
another US step to combat the PKK.  While noting US 
appreciation for the F-16 modernization package, Ambassador 
requested a separate meeting to discuss widespread US defense 
industry concerns about participating in the Turkish defense 
market.  END SUMMARY. 
 
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FIRST US DEFENSE INDUSTRY WIN IN YEARS 
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2.  (C) Minister of National Defense Vecdi Gonul organized a 
joint press conference with the Ambassador and the local 
Lockheed Martin (LM) Aero representative to trumpet the 
$1.098B agreement for the USG through LM to upgrade 117 Block 
30s, 40s and 50s.  DefMin Gonul's efforts to publicize this 
good news story were a welcome response to repeated US 
requests for the GOT to publicly acknowledge the importance 
of the bilateral relationship.  However, while the agreement 
was a positive step to strengthen our bilateral defense 
cooperation relationship, it came only after significant 
negotiation by the TU Undersecretariat for Defense Industries 
(SSM) and LM Aero over a separate contract to meet a 60% 
direct offset requirement, and at a time when other US 
defense contractors are re-evaluating the merits of 
participation in the Turkish market.  This is the first 
significant FMS agreement won by a US defense contractor 
since Boeing won a bid for an Air Early Warning and Control 
System (AEW&C) in 2002.  There have been no significant 
direct commerical sale contracts won by a US firm since 2002. 
 In 2004 three direct commercial tenders (UAVs, Main Battle 
Tanks, ATAK Helicopter) were canceled.  The UAV tender was 
re-issued in 2004 and the US contender, General Atomics, lost 
to an Israeli firm in part due to its inability to meet the 
tender's onerous terms and conditions (T&Cs) imposed by SSM. 
 
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ONGOING US DEFENSE INDUSTRY FRUSTRATIONS 
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3. (C) The ATAK Helicopter tender, reissued in February 2005, 
was issued under strict new "standard" Terms and Conditions 
that would prohibit US firms from participating (reftels). 
Following Bell Helicopter's withdrawal from the competition 
and Boeing's threat to do likewise, SSM Aviation Department 
Head Sedat Guldogan notified Deputy PolMilCouns on April 26 
that SSM has decided to issue a revised tender in the coming 
weeks that softens some of the liability clauses and to 
extend the bid submission deadline from June to Fall 2005. 
However, given the extent of problems with the initial 
tender, Boeing's Ankara representative is skeptical that the 
revision will meet all of Boeing's concerns and allow the 
company to bid.  At the same time, Sikorsky has been involved 
in lengthy and difficult negotiations with SSM over a $400 
million proposal for 12 additional Seahawk helicopters. 
Beyond the onerous terms of each individual tender, local US 
defense industry and Embassy representatives agree that SSM 
approaches every deal as a win/lose proposal, pressing for 
further concessions from the companies even after a contract 
is signed, and viewing any concession on their part as a 
loss.  At a meeting before the press conference, DefMin Gonul 
agreed to arrangement of a subsequent meeting to discuss 
these issues with the Ambassador. 
 
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US ACTION AGAINST THE PKK 
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4. (S) Also at the meeting with Gonul, the Ambassador, 
recalling the constant barrage of negative Turkish press 
accusing the US of doing nothing to combat the PKK, 
highlighted another positive development in the bilateral 
relationship -- the US offer of a TGS link into the US 
Central Command's CENTRIX (Combined Enterprise Regional 
Information Exchange System), a hard-wired computer system in 
which coalition partners can share data, and the addition of 
a list of PKK High Value Targets provided by TGS to CENTRIX 
to aid Multi-National Force - Iraq (MNF-I) forces to identify 
and detain them if encountered during normal MNF-I 
operations.  In raising the issue, the Ambassador underscored 
that it is inaccurate and unreasonable for the GOT to say 
that the US has done nothing to combat the PKK.  While 
accepting that more could be done, he urged that the 
government acknowledge those positive steps the US has taken. 
 
 
EDELMAN