Israel defense firms court Turkish customers

An Israel defense company official told "Defense News," "We don't expect an immediate return to the good old days."

In the wake of Israeli Prime Minister Benjamin Netanyahu's apology to his Turkish counterpart Recep Tayyip Erdogan over the flotilla fatalities, Israeli defense systems manufacturers have been trying to renew their lucrative cooperation with the Turkey military. These contacts had yielded hundreds of millions of dollars in procurement and upgrade contracts in the years before relations collapsed.

An article in the US journal "Defense News" entitled "Thaw could restore Turk-Israeli arms trade" quotes an official at a major Israeli defense company who expresses the hope for the renewal of defense cooperation.

The official said, We dont expect an immediate return to the good old days. But we see no reason why cooperation in key defense systems should not resume in line with normalization of political relations. We expect the Turks to understand that their military and local industry largely benefited from Israeli-related programs, and they still can.

He added: Trading flourished during the crisis in bilateral relations. If non-defense trade flourished in bad times, why shouldnt defense trade normalize in better times?

Trade between Israel and Turkey has risen 30% since 2010 despite the crisis caused by the Mavi Marmara deaths, and despite a small fall in 2012. During the decade before the incident, Turkey was an important export market for Israeli defense companies. Israel Military Industries Ltd. (IMI) upgraded 170 Turkish M60A1 tanks, bringing them to a level approaching the Merkava Mark III in a nearly $1 billion deal. Israel Aerospace Industries (IAI) sold the Turkish Air Force advanced UAVs and ground control stations. IAI also upgraded a batch of 54 Turkish F-4 fighter jets.

"Defense News" observed that, "Signs of a political and subsequently defense-related thaw came early this year, when Israels Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) unit Elta supplied Turkey with military equipment in the first such deal since 2010. Elta delivered $100 million worth of electronic equipment for four airborne early warning and control aircraft Boeing is building for the Turkish Air Force."

Nevertheless, Turkish officials have greeted the ostensible rapprochement cautiously, "The apology is a first step for the normalization of political ties, but it is too premature to think this will immediately pave the way for a return of Israeli contenders to the Turkish market, a senior Turkish procurement official told "Defense News." We must first wait and see if the detente will lead to full normalization.

The official added, "We need a stable period of confidence-building measures before we seriously sit down and discuss projects with Israeli suppliers. If normalization happens, we will view Israeli companies like any other foreign company and think that business is business. At the moment, there is too much political contamination in the air.

A board member of a Turkish state-owned defense company said, A direct or indirect nod from Erdogans office would signal a gradual return to normalcy in defense business with Israeli companies. But for that to happen, the thaw must proceed and lead to full restoration of diplomatic ties.

Turkish analyst Ozgur Unluhisarcikli, director of the German Marshall Funds told "Defense News" it would be wrong if one had too high expectations for the Turkish-Israeli reconciliation.

He said, Political realities have pushed both countries toward normalizing relations, toward cooperation. But the two are unlikely to return to their strategic relationship in the foreseeable future. Unlike in the 1990s, they will not become close allies again."

Published by Globes [online], Israel business news - www.globes-online.com - on April 4, 2013

Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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