ANKARA — Turkey's plans to restructure its defense industry have
been suspended.
Officials said a Defense Ministry project to consolidate the defense
industry into a single state-owned structure has encountered significant
resistance. At the same time, they said, the government has shelved another
plan to create a single defense procurement mechanism in an effort to
prevent infighting between the military-dominated Defense Ministry and the
Defense Industries Undersecretariat, known by its Turkish acronym SSM.
SSM directed a group to work with the General Staff to present an
operational plan for the consolidation of the defense industry, Middle East Newsline reported. But
officials said the group has been split between government and military
representatives and failed to draft a preliminary report.
"There are several snags," a senior official told the Ankara-based
Turkish Daily News. "The working group failed to produce a White Paper."
As a result, the Defense Industry Executive Committee did not discuss
the defense industry plan during its last meeting on June 22. Officials said
the committee would probably not discuss the issue for the rest of the year.
SSM launched the defense industry consolidation plan in February 2005 in
wake of an agreement for the merger of Tusas Aerospace Industries, the
nation's second largest defense contractor, with parent company Turkish
Aircraft Industries.
In January 2005, Tusas acquired the 49 percent stake held by Lockheed
Martin and General Electric. SSM then proposed the creation of the Turkish
Defense Industry Holding Inc., which would be owned by the government and
military. The plan called for the holding company to maintain a majority
share in Aselsan, Havelsan, MKEK, Roketsan and TAI.
Under the plan, the holding company would be owned by SSM and the
Foundation to Strengthen the Turkish Armed Forces. The military foundation
maintains a partial or complete stake in more than 15 defense contractors.
Officials said the government also shelved a plan to create a single
procurement agency that would have merged SSM and the Defense Ministry's
procurement department. The ministry's procurement department has been under
the influence of the General Staff.
Over the last three years, the government has removed projects from the
Defense Ministry and transferred them to SSM. One such project was the
acquisition of an advanced submarine.
