Turkey's attack helicopter saga far from over-may buy US copters

Turkish Daily News ^ | Monday, April 2, 2007 | ÜMİT ENGİNSOY

[sukhoi-30mki]

Turkey's helicopter gunship saga far from over

Monday, April 2, 2007

Strangely, Italian-British AgustaWestland's victory in Turkish bid may lead to purchase of US choppers

ÜMİT ENGİNSOY ANKARA/WASHINGTON- Turkish Daily News

National Defense Minister Vecdi Gönül says Friday's selection of the Italian-British AgustaWestland as winner of Turkey's multibillion-dollar attack helicopter tender comes as an historic decision, putting an end to a 12-year uncertainty over the Army's key modernization program.

But leading defense analysts and industry sources say that it is too early to reach this judgment, because U.S. manufacturers may eventually prove to be theunexpected but actual beneficiaries of the move.

The Defense Industry Executive Committee, whose members include the prime minister, the chief of the General Staff and the national defense minister, selected AgustaWestland, maker of the A-129 Mangusta International, over South Africa's Denel, maker of the CSH-2 Rooivalk. The two companies were short-listed last summer.

After the committee meeting, Gonul said the program was worth $2.7 billion for 90 platforms. But the initial phase for 30 helicopters is expected to costaround $1.2 billion.

He said that Turkey's Tusas Aerospace Industries (TAI) would be the local prime contractor, and jointly manufacture the platforms with AgustaWestland. The planned Turkish attack helicopter has already been dubbed T-129.

A large price difference between the two bids was a critical factor leading to the committee's decision favoring AgustaWestland, Gönül said.

AgustaWestland was created in 2000 with the merger of the helicopter subsidiaries of Italy's Finmeccanica and Britain's GKN.

Army has another choice:

But Turkey's Army, the gunships' end-user, and the top military command represented by Chief of the Turkish General Staff Gen.Yaşar Büyükanıt in the committee, have long had concerns over the options offered by both AgustaWestland and Denel.

Prime Minister Recep Tayyip Erdoğan's civilian government and the Undersecretariat for Defense Industries (SSM), Turkey's procurement agency, firstsought to finalize the attack helicopter decision at a previous Defense Industry Executive Industry meeting in early December, but the Army's opposition stopped an announcement at the time.

Defense analysts and industry sources say that the Army is still cool to the Italian-British solution, but this time the military apparently agreed to AgustaWestland's selection. So what happened in the meantime?

"The answer is related to AgustaWestland's proposed delivery schedule," said one Turkish industry source familiar with the program. "The company offers todeliver the first helicopter five years after the contract's signing. So if the contract is finalized next year, the first gunship will become operational in 2013 in the best case."

But the Army views attack helicopters as an urgent requirement. It presently operates seven AH-1W Super Cobra choppers, manufactured by the U.S. BellHelicopter Textron, and some other earlier versions of the Cobra family. At a time when worrying developments in the Middle East threaten Turkey, the military wants to add new gunships into its inventory as soon as possible.

"Many officers in the Army favor Boeing's (AH-64D) Apache (Longbow), the world's most advanced attack helicopter which is also combat-proven," said one defense analyst. "And they want to have it really soon."

Top U.S. attack helicopter manufacturers, including Boeing, maker of the U.S. Army's Apache, and Bell Helicopter, maker of the U.S. Marine Command's AH-1Z, failed to bid for SSM's gunship tender because of a dispute over the Turkish procurement agency's terms and conditions. They said that under U.S. law they were unable to meet some of SSM's strict requirements for participation.

But Boeing still has a standing offer to sell the AH-64D to Turkey under an alternative U.S. Foreign Military Sales scheme.

New Army move likely:

"The Army will now complain over AgustaWestland's delivery schedule, and likely call for the procurement of up to 20 U.S.-made attack helicopters in the short term as a stop-gap solution until 2013 or 2015," said the Turkish industry source.

"And following Friday's reconciliation at the committee meeting, the civilian government would probably agree to this request of the military," said the source. "So although it looks pretty strange, the acquisition of U.S. attack helicopters is likelier than it was last week, thanks to AgustaWestland's selection."

One U.S. industry source said that some Turkish officials had recently asked for price and availability information from Boeing and Bell Helicopter Textron.

"If those U.S.-made attack helicopters arrive as a stop-gap solution, the requirement will change again, and the AgustaWestland deal's fate will be seen onlyin time," said the defense analyst. "And don't forget that there are elections in Turkey later this year."

Turkey originally launched its ambitious attack helicopter program in 1995, and selected Bell Helicopter Textron's AH-1Z in 2000. But after five years of inconclusive contract talks replete with disputes over pricing and technology transfer, Turkey cancelled the negotiations in 2005 and instead launched a new tender.

Tank competition:

After Friday's committee meeting, Gönül also announced that Otokar, a subsidiary of the industry conglomerate Koç Holding, was selected to develop a new Turkish main battle tank in a program that eventually should cost more than $10 billion over the next few decades.

Otokar had been in a fierce competition with another Turkish partnership of FNSS and BMC.

Under this program, Otokar is planned to design, develop and manufacture a prototype of what officials call "Turkey's national tank."

"We will spend nearly $500 million for this initial phase of the project," Gönül said.

"It's also too early to talk about the success of the tank program, which is a very long-term project," the defense analyst said. "Previous experience shows thatthings change a lot in Turkey's in such long-term programs."