Cablegate: R&D Highlights the 18th Turkish/American Defense

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DE RUEHAK #3593/01 1701059
ZNR UUUUU ZZH
P 191059Z JUN 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 6663
INFO RHMFIUU/425ABS IZMIR TU//CC// PRIORITY
RHMFIUU/39ABG INCIRLIK AB TU PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J-3/J-5// PRIORITY
RUEUITH/ODC ANKARA TU PRIORITY
RUEKJCS/SECDEF WASHDC//USDP:PDUSDP/ISA:EUR/ISA:NESA/DSCA// PRIORITY
RHMFISS/HQ USEUCOM VAIHINGEN GE PRIORITY
RUEHAK/USDAO ANKARA TU PRIORITY

UNCLAS ANKARA 003593

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: MARR MASS MCAP PREL TU
SUBJECT: R&D HIGHLIGHTS THE 18TH TURKISH/AMERICAN DEFENSE
INDUSTRIAL COOPERATION MEETING

REF: 2005 ANKARA 1565

1. (SBU) SUMMARY: The 18th Defense Industrial Cooperation
(DIC) meeting and subsequent Defense Industry Day on May
23-24 underscored a continued impasse over the barriers to US
defense industry participation in Turkish defense contracts
but highlighted R&D as a potential area for closer
cooperation. Depot-level maintenance, performance-based
logistics, and defense space cooperation were also addressed.
MND Deputy U/S MG Inak listed Turkey's defense procurement
priorities and challenged both governments to find a way to
work together. DOD Acquisition, Technology and Logistics
(AT&L) Director of Armaments Cooperation Robert Bruce noted
that this was only the second DIC to be followed by an
industry day and encouraged Turkish and US defense industries
to work together, saying that most successful cooperative
development relationships start with industry-to-industry
partnerships. At the DIC, progress was made in identifying
joint research opportunities. During an industry day visit
to the Turkish equivalent of the National Science Foundation,
US Army, Navy and Air Force research specialists identified
several potential opportunities for further exploration. END
SUMMARY.

2. (SBU) Ministry of National Defense (MND) Deputy
Undersecretary for Economic and Technical Affairs MG Omer
Inak opened the 18th DIC meeting on May 23 by reminding the
participants that the genesis of the DIC meetings is the 1980
Defense Economic Cooperation Agreement (DECA), the US "SOFA"
agreement with Turkey, which requires the US to assist Turkey
to develop its industrial base to the best of the US'
ability. He claimed that Turkey has spent over $20B in
defense R&D since the 1970's (Turkish defense R&D was $300M
in 2005) to increase its defense industrial capabilities. As
a result of Turkey's increased industrial base, the
government's procurement priorities have shifted. He stated
that the greatest value of the DIC is in providing a regular
forum for discussion, whether or not we agree on any
particular subject.

TAPPING JOINT RESEARCH OPPORTUNITIES
------------------------------------

3. (SBU) Following up on discussions held at the 2005 DIC
meeting, both sides reiterated their interest in joint R&D
projects. Mr. Bruce noted USG interest in concluding a
Research, Development, Test and Evaluation (RDT&E) umbrella
MOU with Turkey but underscored that the USG requires
concrete project opportunities that have the support of one
of the military services or another DOD agency before
entering into an MOU. He asked for MG Inak's assistance to
identify specific projects. MG Inak stated that, while
Turkey would prefer to sign the MOU first and then identify
project opportunities, he is aware of several potential
projects, including a Turkish Navy project and a Center Of
Excellence for the Defense Against Terrorism
(COE-DAT)-sponsored counter-IED (improvised explosive device)
development program which Turkish Land Forces will lead, with
MND coordination. Dendis added that the US Army is interest
in cooperation on a tactical missile MOU. MG Inak agreed to
consider this idea. Both sides agreed that any project must
benefit both countries.

4. (SBU) Representatives of the Office of Naval
Research-Global and the US Army International Technology
Center-Atlantic (USAIT-Atlantic) outlined opportunities for
scientist exchanges and joint research and listed specific
research areas of interest. USAIT-Atlantic also outlined the
mission of the US Air Force's European Office of Aerospace
Research and Development (EOARD) and noted the possibility of
basic research opportunities with that organization. MG Inak
responded that Turkey is doing a lot in the NATO arena,
investing in EU projects and evaluating several projects with
Asian countries. He offered to forward the USG science and
technical opportunities to Turkish universities and research
centers and requested the establishment of a working group to
identify additional areas of cooperation. BG Birol Erdem,
MND Technical Services Department Chief inquired about
possible research into dual use items. Mr. Bruce offered to
provide MND with a contact at the US Defense Threat Reduction
Agency, which handles this issue.

5. (SBU) The Turkish side suggested two additional areas for
cooperation -- the certification of military aircraft and the

certification of all Turkish-manufactured weapons systems.
According to MND, Turkey plans to establish military aviation
and defense system certification authorities and would like
US consultation assistance. Col Dendis requested additional
specifics in order to identify the appropriate DOD office for
these tasks. Regarding the certification of military
aircraft, he also recommended MND contact or visit the US
Federal Aviation Administration for information on commercial
aviation air-worthiness certifications, as well as applicable
US military facilities. Regarding NATO certification for
ammunition, Mr. Bruce recommended that MND work with NAMSA
and NATO HQ on specific procedures for Turkish ammunition
manufacturing companies.

DEFENSE COOPERATION -PROBLEM OR OPPORTUNITY?
--------------------------------------------

6. (SBU) MG Inak said Turkey's primary goal is 100% Turkish
production of armaments. Absent Turkey's ability to
indigenously produce an item, it will opt for co-production
with a foreign firm. Only as a last resort will Turkey buy a
foreign defense item outright. A Turkish company will be the
prime contractor but will be "free" to choose its
sub-contractors, according to Inak, who added that he would
like US/Turkish defense industry cooperation to be a model
for Turkey's cooperation with other countries. Mr. Bruce
responded that the most successful cooperation begins with
industry and moves to government -- not the other way around
-- and highlighted the importance of the May 24 Defense
Industry Day for US and Turkish firms to connect with each
other.

7. (SBU) Undersecretariat for Defense Industries (SSM)
Aviation Department Head Sedat Guldogan led a discussion
entitled "Problems and Restrictions in Turkish Industrial
Cooperation," which he said reflected the US view of the
situation, noting that Turkey views defense cooperation as an
"opportunity." Guldogan enumerated Turkey's defense industry
priorities, reflected in SSM's new standard contract, as
follows: 1) up front foreign government commitment to the
project, 2) use of Turkish industry to realize the project,
3) sustainment of workshare, 4) Turkey's sovereign right to
use of the finished armaments "as required."

8. (SBU) Guldogan denied that Turkey requires "unlimited
usage rights for transferred technical data." When asked for
his definition of "technology transfer", Guldogan
differentiated between design source codes, which he
considered "technology," and the technical data packages
required for the installation of TU-origin equipment onto a
US platform, which he suggested were less sensitive and did
not constitute "technology transfer." Regarding Turkey's
requirement for approval to modify a foreign-origin platform,
Guldogan said that any restriction on modifications for
Turkey's use of an item after purchase "is unacceptable."
Addressing contractor liability for force majeure actions,
Guldogan insisted that a foreign contractor should bear the
responsibility for its government's decisions and should
resolve with its government any damages resulting from that
government's actions. According to Guldogan, Turkey is
bearing the liability for problems which occur up until
actual production begins. Therefore it is fair to ask the
contractor to bear any subsequent liability.

US EXPORT CONTROLS AN UNACCEPTABLE SECURITY RISK
--------------------------------------------- ---

9. (SBU) According to Guldogan, absent an easing of USG
restrictions on foreign manufacturing, using and improving
US-origin equipment, Turkey will consider doing business with
the US "an unacceptable security risk." He complained of
difficulty identifying "the right address" in the US
government to discuss the export licensing process and said
that the USG and US firms each lay blame for export license
restrictions (provisos) on each other, leaving Turkey unsure
where to turn. Noting that Turkey is working on an
indigenous UAV and will look for international partners and
that SSM will issue in June a tender for a surveillance
satellite, Guldogan suggested that these programs will be
closed to American firms unless the export license issue is
"resolved." Mr. Bruce offered to connect SSM with export
licensing experts to discuss the USG process. He also
requested detail on specific restrictions placed on recently
approved licenses in order to determine if the restrictions

are USG-origin or industry-specific.

10. (SBU) Guldogan also expressed frustration over US
contractors' differing definitions of a show stopper term or
condition (T&C), saying that a show stopper for one company
is not a problem for another company. Inak added that Turkey
is willing to review those T&Cs that don't meet USG
regulations but, in his view, most of the US company concerns
are based on business decision.

DECLARATION OF PRINCIPLES
-------------------------

11. (SBU) To clear the way ahead for industrial cooperation,
Guldogan suggested drafting a bilateral "Declaration of
Principles" to pledge the efforts of both governments to
expedite the export licensing process; avoid "irrational"
restrictions; define and increase areas of collaboration; and
increase the level of inter-operability. Mr. Bruce responded
that any such document would be, at most, an expression of
our governments' goodwill for cooperation -- not a
legally-binding document. A "Declaration of Principles" is
unnecessary, he emphasized.

WORKSHARE DRIVING TURKISH JSF PARTICIPATION
-------------------------------------------

12. (SBU) The Joint Strike Fighter (JSF) project will be a
priority for Turkey over the next decade, according to
Guldogan. He stated that, at the JSF meeting in Norway, the
US had suggested it would consider a relaxation of technology
transfer restrictions for this project, which he hopes is
true. Turkey has pledged $175M in JSF investments and has
high expectations for its participation in the project,
including $5-$6B in workshare in "technically-intensive"
areas such as the mission control systems (Note: Guldogan
said TurkQreceived positive signals about work in this
area), weapons integration and the air vehicle. The PM, MND
and Chief of the General Staff will meet on June 27 to
determine whether Turkey will commit to JSF. Their decision
will be based in great part on Turkey's quality and level of
workshare, according to Guldogan. He claimed disappointment
with the $2.4B in workshare opportunities offered to-date by
Lockheed Martin (LM) and its partners. (Note: We understad
that LM has outlined a potential $5.4B in workshare, which
could rise with the sale of additional aircraft.)

13. (SBU) Guldogan acknowledged that Turkey does not have
financing lined up to buy 100 aircraft and is looking for
international credit or another source of funding. He said
Turkey is in discussions with Italy and the Netherlands for
the joint establishment of a European logistics center and
requested US support for this project.

14. (SBU) Mr. Bruce stated that JSF has been a "best value"
program from its inception. All partners were aware of and
agreed to those terms. He noted AT&L receipt of Turkey's
letter requesting high-tech JSF workshare and said the issue
is being studied and may be discussed in upcoming final JSF
negotiations. He urged Turkish industry to continue its
contacts with LM on the workshare issue.

DEFENSE SPACE COOPERATION STYMIED
---------------------------------

15. (SBU) SAF/IA International Program Analyst Aris Yortzidis
outlined project opportunities in those areas where Turkey is
seeking cooperation under the umbrella space cooperation MOU
(Note: signed on November 9, 2005 on the margins of the High
Level Defense Group meeting). He emphasized that the US is
ready to initiate a cooperative relationship with Turkey in
the space area but is waiting for a White Paper from the
Turkish Air Force that was promised in January 2006 but has
not been delivered. He underscored that no cooperation can
begin until the US Air Force receives this non-paper defining
the areas Turkey would like to explore, as well as the
technologies and capabilities Turkey can contribute to
cooperation projects. When pressed, Turkish Air Force
representatives suggested it might be ready in June, 2006 but
provided no detail on its content.

COMPETITION KEY TO PARTICIPATION IN US DEFENSE PROJECTS
--------------------------------------------- ----------

16. (SBU) In response to an MND request for information on
foreign involvement in US Military Depot Level Maintenance,
Elizabeth Bieri, Staff Officer for the US Army Deputy Chief
of Staff for Logistics explained the US Army Depot Level
Maintenance process. She emphasized that US Title 10
restrictions limit the ability of foreign companies to
participate and underscored that any foreign award will be
made on a "best value" basis. She and Mr. Bruce, who
outlined the Performance-Based Logistics (PBL) system
concept, emphasized the importance of competitive bids in US
military programs and urged that Turkish companies actively
pursue opportunities and demonstrate their price/value
leadership in those areas where they believe they hold a
competitive edge. Guldogan said the PBL concept is new to
Turkey and will be a challenge. He expressed concern over
the implementation of PBL on the JSF program and requested
DOD to provide any PBL-specific wording that Turkey should
include in its JSF sub-contractor agreements.

SECOND ANNUAL INDUSTRY DAY
--------------------------

17. (SBU) To ensure that Turkish companies received the same
message presented to the Turkish MND regarding the need for
Turkey to be aggressive and competitive and to demonstrate
"best value" in any bid on USG military projects,
representatives of Turkish and US defense firms were invited
to the second annual Defense Industry Day on May 24 to
receive briefings by Mr. Bruce, Ms. Biere and the DOD
research specialists on depot level maintenance,
performance-based logistics and USG research opportunities.
At every opportunity the US briefers stressed the need for
Turkish companies to take the lead to identify US partners
and to investigate USG program opportunities.
18. (SBU) Also on May 24, USG personnel visited TUBITAK,
Turkey's equivalent of the US National Science Foundation
(NSF), and reviewed the programs of two of TUBITAK's 15
Istanbul and Ankara-based research institutes. TUBITAK VP
Professor Dr. Omer Anlagan expressed an interest in working
with the USG and noted that TUBITAK and the US NSF have
conducted 40 joint projects under an exchange of letters.
TUBITAK had participated in past bilateral projects under a
US/Turkey research agreement that had expired in 2004.
TUBITAK institutes work on such projects as IED, remote
sensing, cryptologic, small satellite, genetic engineering,
fire arms identification and other sensitive technologies.
US research representatives pledged to follow up with several
of TUBITAK's Istanbul-based institutes to conduct a further
review of missile development and other research projects.

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