Turkey is unlikely to cancel arms deals with Israel because of the fighting in Gaza, according to Leader Capital Markets analyst Yoav Burgan. Commenting on reported remarks by a senior executive in Israel's defense industries to the effect that Operation Cast Lead may undermine cooperation with the Turkish military and even lead to existing deals being cancelled, Burgan writes that, on the basis of past experience, such fears are overdone. This is especially so given that the army enjoys supreme status in Turkey, and wants Israeli defense systems, he says.
Burgan notes that Israeli defense company Elbit Systems (Nasdaq: ESLT; TASE: ESLT) is involved in three large projects in Turkey: upgrading Turkey's M-60 tanks, a project worth $780 million of which Elbit's share is $183 million; a joint UAV deal with IAI, worth some $200 million; and an IMINT systems deal for the Turkish air force jointly with IAI, worth $141 million, of which Elbit Systems unit El-Op's share is $87 million.
"We believe there is a low probability of the latest joint Elbit-IAI deal in Turkey being cancelled, and that there is no substantial risk to Elbit's orders backlog, which has begun growing again, and currently stands at the high level of some $5 billion (at the end of the third quarter it totaled $4.9 billion.
Published by Globes [online], Israel business news - www.globes.co.il - on January 14, 2009
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