Cablegate: Turkey: Workshare and Tech Transfer Remain Defense

VZCZCXYZ0026
OO RUEHWEB

DE RUEHAK #6159/01 3031355
ZNR UUUUU ZZH
O 301355Z OCT 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9680
INFO RUEKJCS/SECDEF WASHDC//USDP:PDUSDP/ISA:EUR/ISA:NESA/DSCA//
RUEKJCS/JOINT STAFF WASHDC//J-3/J-5// IMMEDIATE

UNCLAS ANKARA 006159

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV MARR TU
SUBJECT: TURKEY: WORKSHARE AND TECH TRANSFER REMAIN DEFENSE
PROCUREMENT PRIORITIES

REF: ANKARA 6080

1. (SBU) SUMMARY: Defense Minister Gonul will raise two
issues during his October 30 Pentagon meetings and also in
Texas with Lockheed Martin on October 31: maximizing
workshare and technology transfer on the Joint Strike Fighter
(JSF) program; and, negotiating workshare or offset work as
part of the purchase package for 30 new F-16s, he told the
Ambassador on October 26. Gonul noted Turkey's preference
for used F-16s over new aircraft to fill the gap while its
current fleet is being upgraded and reiterated a request that
the USG consider such a sale to Turkey. Ambassador dismissed
the used F-16 option as unlikely and urged the GOT to resolve
its workshare requirements directly with Lockheed Martin.
Undersecretary for Defense Industries Murad Bayar said Gonul
would raise Turkey's continued concerns with the licensing
process and would be prepared to discuss US defense industry
concerns about Terms and Conditions contained in the standard
procurement contract. END SUMMARY.

TOP PRIORITY IS JSF
-------------------

2. (SBU) In a meeting to discuss his October 30-31 trip to
the United States, Minister of National Defense (MND) Vecdi
Gonul advised the Ambassador that his top priority is to
resolve Turkey's outstanding issues on the JSF (F-35) program
before signing the multilateral Production, Sustainment and
Follow-On Development (PSFD) MOU. Gonul said Turkey takes
issue with several points in the bilateral supplement to the
PSFD MOU. Technology transfer is critical, Gonul stated.
Turkey "wants a success, not just a toy that it doesn't know
what's inside." Turkey would also like to incorporate a
domestically-developed crypto system that was previously
integrated into Turkey's F-16s, helos and other equipment.
Additionally, Turkish law requires that at least 50% of the
procurement price be contributed in the form of local
production or offset work. Gonul expressed concern over PSFD
wording that suggests that Turkey stands to lose 100% of its
JSF workshare in the event that total production falls below
a certain level and said that Turkey's loss should be
proportionate to the overall production loss, not greater.

CRITICAL GAP IN F-16 FLEET
--------------------------

3. (SBU) The modernization of Turkey's F-16 fleet has left it
with a gap that it hopes to fill with new or, preferably,
used F-16s, Gonul stated. Referring to Turkey's past request
for used F-16s, he expressed dismay that the US had sold used
aircraft to Pakistan and Italy but not to Turkey, and
reiterated the GOT's interest in such a purchase. Ambassador
underscored that we had thoroughly explored that option but
that no used F-16s were available. He expressed doubt that
the circumstances had changed. Barring that possibility,
Gonul said, Turkey is willing to buy 30 new F-16 Block 50
aircraft. Given Turkey's past production of 280 F-16s at
Tusas Aerospace Industries (TAI), however, the GOT would have
difficulty justifying an off-the-shelf purchase of US
aircraft to the Turkish public unless it could demonstrate
that it was not cost-effective to produce all or portions of
such a small number of aircraft in Turkey.

4. (SBU) Bayer described a lab in Eskisehir that produced
mission-support software for the 280 F-16s produced by TAI.
The upgraded F-16s will use different software that will
render obsolete the Eskisehir plant capabilities. Turkey
would like to keep the Eskisehir software facility
competitive by producing software for the upgraded F-16s. To
do so, Turkey would need access to the new F-16 technology.

5. (SBU) Ambassador pointed out that the Turkish Air Force
Command (TAFC) had requested fast delivery of F-16s at the
lowest price; local production would add to both the
production schedule and the cost. Gonul acknowledged that
Turkey could not make an balanced decision absent detail on
the added costs and time and said that if the delay or price
increase is so extensive as to severely limit the utility of
the buy, Turkey would reconsider. He dismissed the TAFC
requirement, stating that the military focuses on its
equipment needs without considering the development of the
defense industry, and suggested that Turkey would be willing
to live with a six-month delay in order to secure local
production. Bayar responded that TAI claimed it would be
able to produce the planes on time and within budget. If
local production of the new F-16s is not possible, Gonul
suggested, perhaps Turkey could do F-16 upgrade work for
aircraft destined for Pakistan or other countries. He also
raised the option of an offset package in lieu of workshare.
Ambassador welcomed Gonul's October 31 visit to Lockheed
Martin in Texas and urged the delegation to work out Turkey's
requirements directly with the company.

US LICENSING PROCESS A CONTINUING FRUSTRATION
---------------------------------------------

6. (SBU) USG licensing requirements will also be on the
agenda for the Pentagon meetings, said Bayar. SSM
appreciated the USG efforts to approve several revised
marketing licenses for Turkey's second purchase of Sikorsky
Seahawks, but others remained outstanding. Bayar said he
plans to address the continued difficulties facing Turkey in
securing appropriate marketing licenses on a timely basis.
Gonul offered the opportunity to discuss the continuing US
defense industry concerns about the Terms and Conditions
contained in SSM's standard contract.

7. (SBU) Gonul said he does not intend to raise specific
issues related to Iraq, the PKK, Afghanistan, NATO or any
other topic, but would be interested in the USG perspective
on the future of Iraq in light of the ongoing Baker
initiative and the recent Holbrooke letter to the President.

Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/

WILSON

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