US embassy cable - 05ANKARA4517

UNCLAS SECTION 01 OF 02 ANKARA 004517 
 
SIPDIS 
 
STATE FOR EUR/SE, PM/RSAT, PM/DTTC AND EB/ODF 
 
E.O. 12958: N/A 
TAGS: MASS, MARR, PREL, EFIN, TU, EXIM 
SUBJECT: TURKEY REQUESTS EXIM FACILITY EXTENSION TO SUPPORT 
SEAHAWK PURCHASE 
 
REF: A. ANKARA 3617 
     B. ANKARA 2890 
 
SENSITIVE BUT UNCLASSIFIED 
 
1. (SBU) SUMMARY: The Turkish Treasury on July 26 submitted a 
letter of request to EXIM Bank for the extension of an 
existing $1.366B facility to finance Turkey's purchase of a 
second batch of Sikorsky Seahawk Helicopters.  Sale of the 
helos is conditional on extension of the EXIM facility. 
Turkey's purchase of these helicopters will strengthen its 
ability to monitor its coastal areas for terrorist and other 
illegal activity and will more closely tie the Turkish Armed 
Forces to Sikorsky helicopters.  This purchase constitutes a 
rare bright spot in an increasingly trouble US-Turkish 
military procurement relationship and was promoted by Prime 
Minister Erdogan and Defense Minister Gonul during a June 
visit to Washington.  Post strongly supports extension of the 
EXIM facility to allow the sale to go forward.  Please see 
action request at para. 5. END SUMMARY. 
 
2. (U) Turkey's Undersecretariat for Defense Industries 
(Savunma Sanayi Mustesarligi - SSM) signed a $390M contract 
on June 24 for the purchase of 12 Sikorsky Seahawk 
Helicopters -- with an option to order an additional 5 by 
2007, and for the retro-fitting of 7 Seahawks belonging to 
the Turkish Navy.  However, the sale is contingent on the 
extension of the remaining balance of a 1990 EXIM facility 
granted in recognition of the strategic cooperation between 
Turkey and the US following the first Gulf War, and which 
Turkey used to acquire over 100 helicopters.  The facility 
has been extended twice, once to purchase Blackhawks which 
Turkey used during its two commands of the International 
Security Assistance Force (ISAF) in Afghanistan, and again in 
2002 for the purchase of these 12 Seahawk helicopters. 
Negotiations on that sale took several years, resulting in 
the current need to again extend the facility.  Sikorsky 
representatives report that Turkish Treasury sent a request 
for the extension to EXIM on July 26.  If granted, the 
Seahawk sale will exhaust the remainder of the facility. 
 
3. (U) Purchase of the Seahawks by Turkey will help 
strengthen the country's ability to monitor its coasts, the 
Turkish Straits and surrounding seas for terrorist and other 
illegal activity.  Specifically, the addition of these helos 
will increase Turkey's capabilities to: patrol the Black, 
Aegean and Mediterranean seas and the Turkish Straight as 
part of the international Proliferation Security Initiative 
(PSI); aggressively pursue vessels engaged in illegal 
trafficking (drugs, weapons, persons) through the Black Sea 
Harmony; participate in NATO's Operation Active Endeavor 
(OAE), a post-Sept. 11 anti-terrorism naval activity to hunt 
down suspect vessels in the Mediterranean, and in Exercise 
Reliant Mermaid, a joint Turkey/Israel/US navigation safety 
exercise.  These helicopters can also be employed to patrol 
strategic energy corridors around Ceyhan, the terminus of the 
Baku-Tbilisi-Ceyhan and Kirkuk-Ceyhan pipelines. 
 
4. (SBU) From a defense cooperation standpoint, Turkey's 
purchase of the Seahawks would serve to further entrench US 
firms in the Turkish market.  Turkey's cancellation of three 
major tenders in 2004, Lockheed Martin's difficulties 
negotiating an F-16 upgrade package signed in April, Boeing's 
problems negotiating the Critical Design Review (CDR) for its 
Airborne Early Warning and Control (AEW&C) system in Turkey 
and the extremely onerous terms and conditions in the attack 
helicopter tender issued in February (ref c), have combined 
to alienate many US defense firms from Turkey.  Recognizing 
the importance of the sale to the defense relationship, PM 
Erdogan signed an MOU commiting Turkey to the deal before 
heading to Washington for his meeting with President Bush in 
early June, then subsequently toured the Sikorsky factory in 
Connecticut.  A major Seahawk purchase by Turkey would 
further tie the Turkish Armed Forces to Sikorksky products 
and may have a bearing on Sikorsky's standing in the 
competition for a tender issued in July for the purchase of 
52 helicopters for Turkey's Forestry Service.  (Note: 
Sikorsky is the only American company to express interest in 
this competition.  End note.)  Sikorsky has also indicated 
its interest in participating in a utility helicopter tender 
expected to be issued in the coming months. 
 
5. (SBU) Comment: The Sikorsky sale comes at a critical time 
in the US/Turkish defense cooperation relationship.  SSM has 
made clear that the sale is contingent on the EXIM facility 
extension.  The success of this deal could have a positive 
impact on Sikorsky's future participation in the market and 
may positively influence other US firms to remain in the 
market.  Post strongly supports this sale and requests the 
Department to weigh in with EXIM in favor of extending the 
facility to cover the transaction.  End Comment. 
MCELDOWNEY