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ECONOMICS > Israel abandons block on sales to Turkish AWACS

Burak Bekdil

Israeli Defense Ministry drops efforts to pressure a local firm into canceling its delivery of electronic systems for Turkish military, due US pressure and concerns over corporate reputation

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Israel has agreed to send electronic support systems for aerial early warning and control systems that Turkey has purchased from Boeing for $1.6 billion. REUTERS photo

Israel has agreed to send electronic support systems for aerial early warning and control systems that Turkey has purchased from Boeing for $1.6 billion. REUTERS photo

A clampdown by the Israeli Ministry of Defense (MoD) on the delivery of subsystems for the high-profile, $1.6 billion U.S. Peace Eagle program for the Turkish Air Force (TAF) has been removed, after it was deemed counter-productive for Israeli interests.

Elta, the Israeli maker of the Electronic Support Measures (ESM) systems for the aerial early warning and control (AEW&C) aircraft that Turkey will buy from Boeing, had been lobbying since autumn 2011 for the removal of the MoD licensing block preventing the delivery of the systems to Turkey. Elta is a subcontractor of Boeing in this long-delayed program. 

“The Israelis wanted to punish Turkey with the ‘hold,’ and eventually came to the conclusion that this would only harm their own interests,” a top Turkish defense procurement official said. “At stake was the corporate reputation of Israeli weapons makers.” 

Defense industry sources said that fulfilling contractual obligations under previously signed deals was a critical “sine qua non” for Israeli defense companies and the MoD, “unless the system is technologically critical and heading for a hostile country.” The ESM is a passive, purely defensive system that does not enhance the attack capabilities (firepower) of the TAF.

The AEW&C system as a whole can be used offensively to direct fighters to their target locations, or defensively in order to counter attacks by enemy forces, both in the air and on the ground. However, defense analysts agree that the ESM is a defensive sub-system.

Clampdowns cause huge losses

In the case of a “critical system,” the Israeli MoD in December 2011 refused to allow Elta and Elbit, another Israeli defense company, to complete deliveries of previously authorized long-range aerial photography systems to the TAF. This move cost Elta $55 million in lost revenue, and Elbit reported a $90 million loss.

The clampdown on the Boeing-led program was also embarrassing for the U.S., as the ban marked the first Israeli government decision to force a U.S. weapons-maker to fail to fulfill its contractual commitments to a third country governmental buyer – and at a time when the program itself faced major delays. 

The Peace Eagle (AEW&C) program faces delays of nearly seven years due to technical faults. The MoD’s hold could have caused further delays, although Boeing had the option to turn to U.S., French or Italian manufacturers to acquire a similar ESM system for the Turkish aircraft. 

“All that prompted U.S. corporate and political pressure on Israel to drop a ban which, more than harming Turkey’s interests, would harm Israeli and American corporate interests,” said one defense source familiar with the AEW&C program. Further delays would put off Turkey’s payments to Boeing. One option for Boeing would be to declare “force majeure,” kick Elta out of a prestigious and lucrative contract and seek a new partner, the source said. 

Not only that, defense analysts in Washington and Ankara warned at the time of the clampdown that a contractual failure would have longer-term implications for the U.S.-Israeli defense trade. From a security viewpoint, extra delays due to Israeli reluctance to deliver the ESM systems would threaten to hamper a high-priority U.S.-Turkish program, with operational implications for NATO. 

Not enough for Ankara

In 2002, Turkey’s Undersecretariat for Defense Industries, the procurement agency, ordered from Boeing four 737-700 AEW&C aircraft, ground radar and control systems, plus ground control segments for mission crew training, mission support and maintenance support. 

Under the agreement, the four aircraft were supposed to be delivered in 2006. But the integration of the planes took much longer. Elta is building the EMS systems for four aircraft under a subcontract worth more than $100 million.

The 737 Boeing AEW&C aircraft are to be used as part of Turkey’s NATO capabilities. An airborne early warning and control system is an airborne radar system designed to detect aircraft, ships and vehicles at long ranges and control and command the battle space in an air engagement by directing fighter and attack aircraft strikes. Used at a high altitude, the radars on the aircraft allow the operators to distinguish between friendly and hostile aircraft hundreds of miles away. 

Does the removal of the ban illustrate a fresh Israeli effort to restore Israel’s badly damaged relations with its one time ally Turkey? Ankara thinks it may reflect an Israeli intention to that effect, but more likely not. 

“They [the Israeli government] know very well that the damage is too big to restore by just fulfilling contractual obligations in a defense deal,” said one senior Turkish diplomat. “They eventually did the right thing and we won’t be applauding.”

February/22/2013

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