Türkiye Domestic Arms Industry

Since the early 2000s, Türkiye's domestic production of its military requirements have increased from a mere 20 percent to 65 percent by 2020. Furthermore, it has also started to create substantial export revenues in recent years. State companies such as ASELSAN, Turkish Aerospace Industries (TAI), and ROKETSAN continue to make sizeable investments in innovative technologies.

Ankara’s rationale for Türkiye’s wider effort to domestically source defense systems was to mitigate potential (and previously felt) challenges to both modernizing its armed forces and ensuring a stable supply-chain in times of crisis or international tension. This sentiment was summarized by Turkish’s Defence Minister, Fikri Isik: “Some countries that we consider as friends have the habit of limiting, enforcing an embargo even when we face the slightest problem. That is why we have the aim to have all the critical technologies, developing them and becoming one of the few countries that does so.” Considering the substantial upfront investment made in bringing the systems to fruition, it would be natural to consider them a long-term effort, one that could accrue improvements.

Between 2018-22, Türkiye’s global share in arms trade rose from 0.6 percent to 1.1 percent, making the country the 12th biggest arms exporter globally. Türkiye’s defence industry has been growing at its fastest pace for almost two decades, and two recently released reports reveal what level the country’s arms industry has reached.

The Top 100 Defense Companies List 2022 – the annual listing by the global news website Defense News – has three Turkish companies in the top 100. While Aselsan was 49th on the list, Turkish Aerospace Industries (TAI) was 67th, and Roketsan was placed 86th. In 2020, the list had seven Turkish companies. Although fewer companies are listed in the Top 100 now, Türkiye’s arms exports grew sharply within three years. While defence exports were $2.28 billion in 2020, they rose to $4.3 billion in 2022.

And a report on international arms transfers in 2022, prepared by the Sweden-based SIPRI institute, shows that Türkiye’s arms exports increased by 69 percent in the four-year period 2018-2022 compared to 2013-2017. Türkiye’s global share in arms trade rose from 0.6 percent to 1.1 percent in 2018-22, making the country the 12th biggest arms exporter globally. Additionally, imports dropped by 49 percent when the two periods were compared.

Türkiye’s February 2018 military offensive against a Kurdish militia in Syria's Afrin enclave showcased the growing prowess of the Turkish armaments industry. In recent years, Turkish President Recep Tayyip Erdogan sought to dramatically reduce his country’s dependency on imported arms. “Almost all of the armored carriers (operating) in Afrin are domestically produced. I thank our friends who produced them,” said Erdogan 21 February 2018 at a meeting at his presidential palace. The Turkish military, alongside allied Syrian rebels, is seeking to seize Afrin, a Kurdish enclave, from the control of a Kurdish militia that Ankara accuses of being a terrorist group linked to an insurgency inside Türkiye. Erdogan went on to blame the deaths of Turkish soldiers fighting in Afrin on the failure of countries to sell Türkiye sophisticated weapons, including armed drones.

In 2017 Erdogan issued a presidential decree putting Türkiye’s armament industry directly under his control. The government poured billions of dollars' worth of investments into expanding the defense industry. Further investments are on the way. “A total of 55 projects worth $9.4 billion were evaluated,” according to a presidential statement in January 2018 at a meeting of Türkiye’s Undersecretariat for Defense Industries.

“In the past there was no money, but now there is a lot of money slushing around, and the AKP has the vision to realize this project. This is a success story of the AKP,” said political analyst Atilla Yesilada of Global Source Partners, referring to the ruling party. “We used to procure 80 percent of our (armament) needs from abroad; now we are producing our own rifles, simple drones, armored vehicles. It saves foreign currency, it develops an industry which has some export potential and reduces foreign dependency.”

Trimming foreign dependency on imported weapons was a key priority of the Turkish government. The Afrin operation has served as a reminder to Ankara of the vulnerability of such dependency. Germany blocked a key upgrade of Turkish-owned, German-made Leopard tanks because of their use in the Afrin operation.

Along with developing strategic arms independence, Ankara has an eye on the lucrative international arms market. Analysts suggest Türkiye is unlikely to try and compete with the world's major players, but rather will try and find a niche. Türkiye is very flexible, ready to accept proposals for technology transfer joint production, also at a cheaper price, than the normal market prices. Türkiye's arms industry is emerging as a new exporter that can provide, more efficient, low cost, battle tested, and less problematic for arms buyers.

Bridging the technology gap is a priority for Ankara. It has made technology transfers a key demand for purchases of sophisticated weapons, particularly its efforts to buy a surface-to-air missile system. Several bids, including from the United States, of its Patriot missile system broke down in part because of disputes over technology transfers. Such failings are reasons given by Ankara for its controversial decision to buy an S-400 missile system from Russia.

In Türkiye, the main industrial groups are family run enterprises with publicly recognised senior figures. Since the mid-1980s, Türkiye has engaged in a wide-ranging program to develop a modern defense industry based on cooperation with firms in other countries. Previously, Türkiye's economic and industrial capacity was insufficient to produce weapons as sophisticated as those of Western Europe. In the early years of the republic, the government sponsored a number of arms factories intended primarily to supply basic infantry weapons and ammunition. After World War II, Türkiye's efforts to bring its military establishment up to modern standards depended almost totally on military assistance and credits from its NATO partners.

After the imposition of the limited embargo by the United States in 1975, Türkiye launched a series of projects to reduce its dependence on imports of major military items. Initial results took the form of a broader range of domestically produced light weapons and artillery and the development of an electronics industry oriented toward battlefield communications and the requirements of military aircraft.

In 1985 new legislation centralized efforts to launch an up-to-date arms industry under a new agency -- the Defense Industry Development and Support Administration (later the Ministry of National Defense Undersecretariat for Defense Industries, known as SSM) with its own source of capital, the Defense Industry Support Fund. The fund does not depend on national defense budget appropriations but receives earmarked revenues directly--10 percent of taxes on fuel, 5 percent of individual and corporate income taxes, and taxes on alcohol and tobacco. Most of the major projects encouraged by SSM have been international joint ventures and coproduction enterprises. In most cases, the foreign partner must agree to an offset provision, that is, a commitment to purchase some part of the resulting production, or components or other goods manufactured in Türkiye.

By the mid-1990s the Turkish defense industry employed about 50,000 individuals at 110 firms, many of them state owned. About 1,000 additional firms participate in defense business as subcontractors. The largest producer of weaponry in Türkiye, with about 12,000 employees, was Makina ve Kimya Endüstrisi Kurumu (MKEK), controlled by the Ministry of Industry and Trade. MKEK meets the requirements of the Turkish armed forces for light arms (including the M-3 and MG-3 rifles and a machine gun of German design), ammunition, and explosives. It also produces antiaircraft and antitank guns.

Communications equipment and electronic warfare systems for the Turkish military are produced by ASELSAN Military Electronics Industries, a state-owned company whose dominant shareholder is OYAK. ASELSAN manufactures under license a United States-designed family of manpack and vehicular battlefield radios and voice scramblers. It supplies the inertial navigation systems and fire control for the TÜSAS F-16 project and produces components for the Stinger missile program.

In 2010 the Turkish defense sector achieved a US$2.73 Billion (TL4.1 Billion) turnover and a US$634 Million (excluding US$219 Million worth of civil aviation exports) exports. All estimates showed that the export of defense items from Türkiye would grow further in 2011. In its 2011-2016 Strategic Plan, the SSM targetted an increase in the existing defense export figure to US$2 billion by 2016 and Land Platforms sector would undertake important role in achieving this goal. Realizing 12% (US$327.6 Million) of the turnover and 19% (US$114.1 Million) of the exports in 2010, Land Platforms sector was likely one of the strongest sectors of the Turkish defense Industry. Turkish defense companies were prominent in the manufacture ofwheeled and tracked armored vehicles, and are seeking new businesses to double their current export figures, with the Middle East, Far East, Africa and Central Asia identified as privileged markets for locally produced armored vehicles.

The effort to create a modern defense industry on a narrow technological base was risky for Turkish defense planners. However, it appears to have been successful in enabling Türkiye to rely on domestic sources to meet an increasing portion of its advanced equipment needs. The results have included reductions in costs and in the demand for foreign exchange, as well as the opening of foreign markets, mainly through offset provisions. As of the mid-1990s, the anticipated development of a Middle Eastern market for finished products did not appear to have occurred, based on available arms export data. A broader goal was to set new standards for quality and productivity in Turkish industry generally and thus increase the country's competitiveness through the lead established by the defense industry.

The Undersecretariat for defense Industries has made significant achievements in building the blocks for a modern national defense industry in Türkiye, with notable results in certain vital areas. As a result of considerable dedication and efforts, key defense industry institutions have been established to meet the requirements of the Turkish Armed Forces locally, each filling an important void in its field. The local content ratio, the extent to which requirements are met locally, rose to 44.2% in 2008 and Turkish defense industry has reached the phase where the groundwork has been laid for system integration capability and defense products can be developed locally.

In the next phase SSM aimed to reduce external dependence in critical subsystems/components/technologies determined in line with the requirements of the Turkish Armed Forces. In order to optimize the resources allocated to improve the technological infrastructure needed for the systems projects that involve procurement by means of indigenous local production, and hence increase local content ratio, worthwhile R&D projects have been determined and prioritized in the Defense R&D Road Map. The Road Map consists of R&D Projects that are compatible with the needs and objectives of main system projects, and that strengthen collaboration among the industry, small and medium enterprises, universities and research organizations.

F. Stephen Larrabee notes that "Turkish defense programs often have an unrealistically ambitious scope. As a result, during competition, the programs are often scaled back, causing delays in the procurement process and frustration to U.S. contractors who have to revise their bids, often several times. In addition, the Turks often make unrealistic demands for technology transfers, causing major delays. US contractors also complained about a lack of coordination between end-users and the procurement office. As a result, Türkiye has earned a reputation as a difficult and unpredictable client. U.S. contractors, exhausted after investing large amounts of resources, time, and effort, often find that the initial parameters and rules have been changed in midstream. In May 2004, for instance, Türkiye shelved a $4-billion tank coproduction plan and halted $3 billion in attack-helicopter and aerial-vehicle projects. Decisions like this made US contractors very skittish about bidding on Turkish programs."