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Cablegate: Turkey Requests Exim Facility Extension to Support

This record is a partial extract of the original cable. The full text of the original cable is not available.

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

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