Turkish newspaper "Zaman" reports that the Turkish Air Force has decided to use Turkish aircraft in intelligence gathering, after Israel withdrew officers who were training Turkish military officers on Heron unmanned aerial vehicles (UAV). The spat comes after last month's boarding of a Turkish flotilla trying to break the Gaza blockade by the IDF in which nine Turks were killed.
In 2004, Turkey contracted to buy ten Herons for $180 million. "Zaman" said that the Israeli firms missed last year's delivery deadline, and that after the Herons were delivered they failed to meet the altitude and flight times detailed in the contract. The paper reported that the Turkish Army will now use UAV's made by local manufacturer Baykar Company in operations, instead of the Heron, manufactured by Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) and Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1).
"Zaman" also says that Israel's has constantly failed to meet the terms of military contracts, including upgrades of M-60 tanks and F-4 Phantom fighter-bombers. It quotes sources as saying that Israeli companies should not expect to win future military contracts in Turkey if the two countries fail to overcome the gap in confidence, and cited the cancellation of a $38 million contract with Elbit System's subsidiary Elop for a LOROP (Long Range Oblique Photography) project, and the cancellation of a $40 million tender for the Harpy II system.
An Israeli defense official said today, "There is a both a Turkish and a customer interest involved here. Both the Ministry of Defense and the Turkish customer should benefit from the deal or be hurt by its cancellation."
He added, "Most of the UAVs have already been supplied and most of the payment received."
There is speculation that the report in "Zaman" is designed to put Elbit, IAI and the Israeli government under pressure.
Zaman also reported about overall defense purchase agreements between Israel and Turkey. According to information provided by Minister of Defense Vecdi Gonul, there are 16 agreements currently in effect between Turkey and Israel regarding military issues including the mutual training of troops and cooperation. Gonul said in a speech after the flotilla crisis that these agreements will not be scrapped and that this single statement had been enough to stir up controversy even inside the ruling party.
"Zaman" added, "The total estimated value of current military projects that Turkey has granted to Israeli companies amounts to $1.8 billion. This figure is more meaningful considering that the two nations have a total annual trade volume of $2.6 billion."
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2010
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