Transformation of the Turkish Defense Industry: the Story and Rationale of the Great Rise

TRANSFORMATIONCOMMENTARY OF THE TURKISH DEFENSE INDUSTRY: THE STORY AND RATIONALE OF THE GREAT RISE

Transformation of the Turkish Defense Industry: The Story and Rationale of the Great Rise

İSMAİL DEMİR

President of Defense Industry, Turkey ORCID No: 0000-0002-6528-2374

ABSTRACT Tracing the evolution of the Turkish defense industry through five major periods of development, this article draws attention to crucial turning points such as the Cyprus crisis of 1974, the establishment of SAGEB in 1985, the ongoing fight against terrorism, the restructuring of the Turkish political system and the steadfast commitment of the AK Party governments under President Erdoğan to invest in Turkey’s indigenous defense industry. Since the early 2000s, the Turkish defense industry has shifted from a procurement model largely dependent on foreign imports to a far more self-reliant model with a strong research and development foundation and a growing number of exports. Thanks to the commitment, determination and resilience of Turkey’s engineers, technicians, workers and companies, the Turkish defense industry has transformed into a multi-billion-dollar industry characterized by technological depth and global effectiveness.

Keywords: Presidency of Turkish Defense Industry (SSB), Turkish Armed Forces, NATO, security, defense

Insight Turkey 2020 Vol. 22 / No. 3 / pp. 17-40

Recieved Date: 06/08/2020 • Accepted Date: 04/09/2020 • DOI: 10.25253/99.2020223.02

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Introduction torical background of the Turkish defense industry that we, as the Pres- he Turkish defense industry idency of defense industry leans on has a strong historical back- and refers to in summarizing story Tground in essence. Within the of defense industry in Turkey.1 The framework of this background, the featured characteristics of the his- positions and policies to build and torical period of the Turkish defense sustain a robust defense industry have industry until the establishment of always continued from past to present the Defense Industry Development and preserved their existence, even and Support Administration Of- though they were interrupted at times, fice (Savunma Sanayii Geliştirme even when they were pushed back ve Destekleme İdaresi Başkanlığı - visibly and even when they remained SAGEB) under the Ministry of Na- just a dream. Similarly, the history of tional Defense in 1985, will be dis- the Turkish defense industry has wit- cussed in this section. nessed myriads of breakthroughs, at- tempts and never-ending persistence The second section analyzes the de- at the individual level even if these fense industry after 1985 in the con- efforts faltered in continuity at times. text of the corporate transformation of the then Undersecretariat of the Today, as of August 2020, the Turk- defense industry. The third and final ish defense industry shines out as section of the article will examine in an extremely significant example in detail the fundamental characteristics terms of the history of the Republic, of the post-2017 period, i.e. the 5th pe- the understanding of the concept of riod, the main factors of the transfor- the defense industry and its relations mation process, the current situation with other fields, and of the future of and future orientations. This section the defense concept. will include concrete data on the juncture at which the Turkish defense In this context, we will scrutinize the industry has arrived today. transformation of the Turkish defense industry in terms of its objective goals. The main argument advocated in this The defense industry experience of article is the necessity of addressing emerging countries, such as Turkey, the recent rise of the Turkish defense the process of presenting and demon- industry in two different but interre- strating this experience through con- lated periods. The first is the reflec- crete projects and the political ethos tion in the Turkish defense industry represented by this process offer crit- of the great transformation in all di- ical lessons for both leading coun- mensions since 2002, achieved under tries on a global scale in this field and the leadership of the President of the countries eager to rise in this field. Republic of Turkey, Recep Tayyip Er- doğan. Within this reflection, the in- The first section of the article will frastructure of procurement of needs, present a brief summary of the his- the transformation of the industry

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and the formation of sound relations between technology and the defense The defense industry has industry in the field of defense have been built. Thus, opportunities have been acknowledged as increased, capacity has expanded an essential part of the and the defense industry has been Republic’s full-fledged provided with the strong support of an extremely decisive and long-term movement toward projection. industrialization and The second period represents the development transformation of the position and function of the Presidency of defense industry in bureaucratic mechanisms industry has managed to transform as well as government’s expectations the concept of ‘defense industry’ into from the defense industry in address- a full-fledged movement of industrial ing the needs of Turkish security development and a national tech- forces and coping with threats and nology trend by cooperating across challenges to the security of Turkey. a broad spectrum with many other A universal and systematic process fields, from healthcare to energy and of transformation has been under from youth to educational policies. way since 2014, in particular, and As can be inferred from the data pro- following the failed coup in 2016, the vided in detail in the following sec- defense industry was first attached tions, the point we have reached as of to the Turkish Presidency and then 2020 is a concrete indication of this restructured as a ‘Presidency of De- breakthrough. fense Industry.’ In this process, owing to the Presidential Government Sys- tem, the Presidency of defense indus- Historical Context and tries, as a structure, has come to the Background fore as one of the prime institutions at the core of the great transforma- Setting aside the previous histories, tion experienced in political, indus- in the transition to the modern era, trial and military-civilian policies, as the experience gained in the Repub- well as defense strategy and defense lic period mainly dates back to the technology in Turkey. rise of the Ottoman Empire. The key tools and materials of war were During this period, the defense in- almost completely manufactured dustry recovered from being an iso- by using local resources; Tophane-i lated area, and transformed into one Hümayûn [the Imperial Cannon that acts in concert with global trends Foundry] formed the core of the Em- and, at the same time, concentrates pire’s defense industry and reached a on the national needs of our coun- capacity of molding 1,060 cannons try. In the same period, the defense and producing 360 kg of gunpowder

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ferences regarding categorization of The airplane factory historical blocs.2 established by the Turkish The 1st Period: 1923-1939 Aviation Association in Throughout the decline and then fol- Ankara, in 1941, is considered lowing the fall of the Ottoman Em- pire, the Turkish Defense Industry the first major initiative of the struggled to keep up with technologi- Turkish aviation industry cal developments in Europe since the 18th century and lost its effectiveness and productivity to a great extent during World War I. For this reason, per month. The Empire’s capacity no significant infrastructure in this for manufacturing warships and the domain was inherited at the onset of level of technology were far beyond the Republic period, and activities those of the European countries. remained limited to a couple of man- Rebuilding a naval fleet of 200 ships ufacturing facilities during and after from scratch in a five-month period, the War of Independence. following its total destruction in the Battle of Leponto, reveals the extent Nevertheless, the defense industry of the manufacturing capacity of the has been acknowledged as an essen- Ottoman shipyards. Undoubtedly, tial part of the Republic’s full-fledged examples from the Ottoman experi- movement toward industrialization ence in terms of land, air and sea are and development. In this direction, too rich and numerous to be con- state support for the development of tained within the scope of this arti- the defense industry was projected cle. Here, we will mainly focus on the in the first planning period. Despite experience of the Republic period, economic and technological difficul- and address the main transformation ties, investments to set the basis of the points after 1985. national defense industry were made in the early years of the Republic. The history of the defense industry Significant initiatives were embarked during the Republican period may upon in the weaponry-ammunition be categorized in different ways. Our and aviation sectors such as the es- institutional approach is to divide the tablishment of the General Director- period that stretches from 1923 to the ate of Military Factories in 1921, in establishment of SAGEB in 1985 into particular. three main historical blocks, where SAGEB represents the first corporate In 1924, small weapons and cannon structure of the Presidency of defense repair shops and cartridge factories industries under the Turkish Presi- were established in Ankara. In the dency. The periods before and after same year, the Gölcük Naval Ship- 1985 will be briefly explained in the yard was set up for the maintenance same fashion, albeit with certain dif- of the Yavuz battle cruiser. With

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The Turkish defense industry carried out intensive work in 2019 to meet the operational needs of the security forces, January 1, 2020. ELMUROD USUBALIEV / AA

completely domestic investments, firms producing weapons for the de- the foundations of Turkey’s first and fense industry. largest private sector defense industry factory were laid down in 1925 by Symbolically, the first period of the Şakir Zümre in Haliç, İstanbul. The history of the Turkish defense indus- activities of the Turkish aviation in- try is believed to be ended in 1950 dustry were initiated through the es- or in the context of years (official tablishment of Tayyare ve Motor Türk application made in 1950 and then A.Ş. (Airplane and Motor Türk Co., becoming member on February 18, or TamTAŞ) in 1926. In the 1930s, 1952) that Turkey became a mem- the Nuri Killigil pistol, mortar and ber of NATO. Many different factors ammunition production facilities in played a role in this, including the İstanbul were some of the first private weakening of economic opportuni-

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ties required to sustain investments period, political preferences coming and initiatives for the defense indus- into play as part of Turkey’s financial try, and the concentration on do- situation, security politics and threat mestic political consolidation with analyses prevailed. changing political priorities. But in fact, it may be assumed that Turkey During the period of 1941-1944, the entered the second period in the first U.S. provided Turkey with combat half of the 1930s as far as the prior- materials worth $95 million within ity and importance given to the de- the frame of the Lend and Lease Law; fense industry and the numbers and in addition, the Military Aid Agree- features of investments made in this ment signed between Turkey and the domain are concerned. Still, at this U.S. in 1945 pledged U.S. military aid point, 1939, the beginning of World to be provided during World War II. War I, may be presumed as a real his- In the post-war period, as part of the torical turning point. That will also Truman Doctrine and the Marshall provide us an opportunity to analyze Plan, U.S. aid furnished the Turkish the picture more reasonably. military with modern weaponry; this increased Turkey’s defense power and Nuri Demirağ had attempted to set aimed to alleviate the negative impact up an aircraft facility in 1936; the of military expenditures on the coun- production of 24 NUD-36 train- try’s economy. ing planes in 1940 and six NUD-38 passenger planes were outstanding The aid provided to Turkey greatly successes of the period. The airplane contributed to the deterrence power factory established by the Turkish of the Turkish Armed Forces (TAF). Aviation Association (Türk Hava Ku- However, ₺400 million allocated rumu - THK) in Ankara, in 1941, is from the budget annually for the considered the first major initiative maintenance of these materials, al- of the Turkish aviation industry. The though no money was paid for them factory started production in 1944, to the U.S., affected the Turkish econ- and produced scores of training air- omy negatively. craft, cargo planes and gliders. The first aircraft engine factory was set up The 2nd Period: 1939-1974 in Ankara, in 1945. In this period, foreign aid and foreign procurement policy emerged as Despite the initiatives to establish a preferred model in the Turkish de- a national defense industry, the in- fense industry within the framework crease in foreign military aids con- of the country’s financial situation, current with the outbreak of World political balances and threat analyses. War II, including donations and aid provided by the UK and the U.S. and Following the start of World War II, Turkey’s entry into NATO stalled the the donation of defense equipment development of its newly emerging surplus by the allied countries pre- defense industry significantly. In this vented the domestic manufacturing

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of defense products; after World War II, efforts to develop the defense in- It should be taken into dustry slowed down with the effect of increasing foreign aid. Due to the account that the historical decrease in the domestic orders of the transformation after 1985 TAF, military factories lost their pro- corresponds to a rich ductivity and became a burden on the national budget. process with ups and downs that cannot be compacted For all these reasons, the military factories were transferred to the into a single period General Directorate of the Machin- ery and Chemical Industry Corpo- ration (Makina ve Kimya Endüstrisi expenditures, and brought national Kurumu - MKEK), which was estab- defense infrastructure investments to lished in 1950 as a state-owned enter- the agenda for the first time. prise. The THK-produced THK-5A small cargo aircraft and export of the Efforts to develop the defense indus- ambulance version of the aircraft to try increased again with the estab- Denmark was transferred to MKEK, lishment of the Department of Tech- and the factory was converted to a nical Services under the Ministry of textile factory in 1968. National Defense in 1970. The same emphasis and themes were included Alongside the indirect negative im- in the 3rd Five-Year Development pact of military aid on the develop- Plan (1973-1977). This plan, for the ment of indigenous defense industry, first time, systematically stressed the a provision of the military aid agree- importance of industrialization in the ment stated that the materials pro- field of national defense and stated vided as part of the military aid ‘can- that a systematic connection would not be used beyond their intended be established between providing, purpose’ and this provision set great in sufficient measure, the tools and obstacles in the path of Turkey’s ef- equipment required by the national forts to protect its national interests. defense services and national industrialization efforts. Efforts to develop the weapons, means and tools needed by the TAF The 3rd Period: 1974-1985 were reinforced on the agenda with During the Cyprus crisis in 1974, the establishment of the research and the need to use defense equipment development department in 1954 un- acquired from Turkey’s allies arose. der the Ministry of National Defense. However, the obstacles set by the U.S. The 2nd Five-Year Development Plan and some of the other allies clearly (1968-1972) emphasized, under the revealed the drawbacks of absolute heading of “other expenditures,” the dependence on other countries in rapidly increasing national defense meeting defense needs.

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posed against Turkey because of the In the 1980s ‘meeting the Cyprus Peace Operation grew stronger with the establishment of Air, needs of the TAF’ naturally Naval and Land Forces Foundations became the main determinant in 1970, 1972, and 1974, respectively. and defense industry products Among the priority areas, defense enterprises such as Turkish Aero- were not offered to foreign space (TUSAŞ-1973), ASELSAN markets and had not turned (1975), later on ASPİLSAN (1981) and HAVELSAN (1982) were estab- into an effective instrument in lished with state funds. It should be foreign policy noted that there was a certain degree of continuity in the steps taken in the context of institutional structures, and that new corporate structures, The situation set the basis for deter- companies and joint ventures came mining policies necessary for the to the fore from time to time in areas formation of an infrastructure for a where needs were recognized. modern defense industry in Turkey. Initial steps were taken in this di- In this direction, the General Direc- rection via licensed production. The torate of Defense Equipment Enter- production of G-3 and G-4 rifles by prises was established in 1983. The MKEK, with licenses purchased from Directorate was a state-owned legal Germany, is a concrete example of entity autonomous in its activities this policy. and its objectives were to meet all the needs of and fully equip the TAF The foremost result of this period was by producing and rapidly moderniz- the rise of national public conscious- ing all kinds of ammunition, combat ness about the need for indigenous weapons and tools, equipment, ma- and national defense systems as a re- chinery, devices and systems, spare sult of the Cyprus Peace Operation. parts, raw materials, pharmaceuticals Such awareness helped Turkey take and pharmaceutical raw materials rapid steps, and state institutions necessary for production, mainte- responded to calls in this direction nance and repair; and to perform and positively. The actual steps taken after supply major renovation works. 1970 have been the subject of many discussions in terms of capacity, re- Despite these developments, how- sources and abilities; however, they ever, it was understood that the are extremely valuable initiatives and available resources and supply poli- have historic importance. cies would not be sufficient to close the TAF’s defense equipment deficit, Both the national awareness that which had been accumulating and arose in this period and the national growing since the 1950s. The th5 Five- reaction to the arms embargo im- Year Development Plan (1985-1989)

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highlighted that this need must be in the founding law of SAGEB. This met, and underlined the focus on in- structure aims at the development of vestments for the development of the a modern defense industry and the defense industry. modernization of the TAF, and con- stitutes the core organization of cur- The 4th Period: Post-1985 Era rent Turkish Presidency of Defense The year 1985 corresponds to a turn- Industries. Its institutional position ing point and the beginning of a new was first transformed into an under- era for the Turkish defense industry. secretariat in 1989 and then to a pres- In between the heavy burden of the idency in 2018. recent past, the longing for the days when the nation had a strong do- SAGEB and the SSM (the Undersec- mestic and national industry, and the retariat for Defense Industry) sub- demands and political preferences sequently witnessed many stages in for the establishment of a strong in- the context of their internal histor- dustrial infrastructure that includes ical process. In a way, the history of defense, SAGEB was established in SAGEB and then SSM may be con- 1985, under Law No. 3238, for the sidered the history of the Turkish de- development of the defense industry fense industry after 1980. In this con- and the modernization of the TAF. text, it should be taken into account that the historical transformation From the mid-1970s until 1985, the after 1985 corresponds to a rich pro- fulfillment of the needs of the defense cess with ups and downs that cannot industry, including its supply needs, be compacted into a single period. the modernization and reorganiza- tion of the TAF, and the coordination In this respect, in order to understand of the General Staff and Force Com- the transformation of the sector, it is mands with relevant public institu- important to divide the story after tions to this end were carried out un- 1985 into two main periods: 1985- der the responsibility of the Depart- 2017 and 2017 onward. Directly affil- ment of Technical Services, Research iating the Presidency of Defense In- and Development in the Ministry of dustries with the Turkish Presidency National Defense. Thus, in 1985, a necessitates its being categorized major transformation occurred with as a separate and new period in the the establishment of SAGEB. Turkish defense industry by considering many different factors, includ- The main pathways, committees and ing the structural interventions after councils that determine the entire the failed coup on July 15, 2016 and course of the industry such as the the events of this period, the central Defense Industry Executive Com- role given to the defense industry in mittee, the Defense Industry High the Development Plan of 2014, the Coordination Council, the Defense projects on the Presidency’s agenda, Industry Support Fund and the use the Presidency’s relations with the of a flexible budget were established industry and different fields such as

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The domestically produced T-129 ATAK helicopter, which took human resources, the Presidency’s system. Within the framework of part in the focus areas and the initiated new this policy, the aim is to glean the ut- “Olive Branch projects. most benefit from the infrastructure Operation” of the of the domestic industry, direct and Turkish Armed It should be noted that SAGEB, as the Forces (TSK), in encourage new advanced technology Kilis, March 11, core organization of The Presidency investments, encourage foreign cap- 2018. of Defense Industries (Savunma ital contributions, promote research RAUF MALTAŞ / AA Sanayii Başkanlığı – SSB), was estab- and development activities, and thus lished in 1985 under the Ministry of to produce all necessary weapons, ve- National Defense, but was restruc- hicles and supplies in Turkey as much tured as the Undersecretariat of the as possible. Defense Industry (SSM) in 1989. In the framework of the founding Law This policy envisages the formation No: 3238, SAGEB shall undertake in of a national defense industrial infra- Turkey the production, as much and structure and the establishment of a as economically as possible, of any defense industry that is open to the kinds of weapons, means and tools private sector, considers export po- needed by the TAF. tential, easily adapts to new technologies, allows balanced cooperation, Law No. 3238 is a critical turning aims to gain self-renewal capability point in terms of introducing a com- with technological developments, pletely new understanding of the and rescues Turkey from continu- defense industry, as well as an ex- ously being a buyer country seeking tremely flexible and fast operating products from other countries, es-

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pecially NATO countries. In this period, a relatively clearer road map was Even if the formation of a drawn for the defense industry with the Turkish defense industry Policy domestic and national defense and Strategy Principles document in industry had always been 1988, which was put into effect closer emphasized, the insistence of to the 2000s. then Prime Minister Erdoğan Themes such as the emphasis on made it possible to take exports and international competi- tion, adaptation to new technologies, concrete steps in this direction making the most of existing oppor- and to carry out the process tunities, and producing for civilian on strategic ground despite all purposes began to be stressed more strongly. In terms of the history of odds the Turkish defense industry, Law No. 3238 and the Policy Document enabled, especially between 1990 and as Turkey’s financial situation, polit- 2000, the approach of procurement ical preferences and defense industry to be changed from ready purchase policies. to joint production. The memory of the embargo that had In this period, projects such as the remained alive and strong since the Armored Combat Vehicle, Small mid-1970s led to a breakthrough in Cargo Aircraft, Beginner Trainer Air- the defense industry in the 1980s. craft, and Cougar Helicopter came In this period, ‘meeting the needs of to the fore. After 2000, there was a the TAF’ naturally became the main tendency toward a partial design ap- determinant and defense industry proach in main platforms. Obviously, products were not offered to foreign the steps taken during these periods markets and had not turned into are important and valuable. In spite an effective instrument in foreign of the critical steps taken, however, policy. The great contraction in do- the change made in the work flow of mestic purchases with the economic projects, and the private companies crisis in 2001 induced an inclination or official institutional structures toward foreign markets, but again, that were gradually established, the this effort did not turn into a full- framework promised by documents, blown act. laws, etc. remained only requests, desired targets and mechanism rec- In this period, the most critical in- ommendations, particularly until tervention in terms of the transfor- the mid-2000s. The achievement of mation of the defense industry was an overall, substantial and compre- the set of decisions taken at the De- hensive structural transformation fense Industry Executive Committee failed due to different factors such (SSİK) meeting in May 2004. It was

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portant steps to gain the support of The post-1985 period that we all segments of the public for foreign th sales. As for defense system supplies, categorize as the 4 period main domestic contractors were del- positively contributed to the egated. Feasibility studies were con- development of a unique ducted to determine the feasibility of the projects in terms of performance, defense industry culture time and resources in advance, pre- within Turkey’s defense vent the waste of time and resources, eliminate risks stemming from in- industry structure ability to meet the needs and make a feasible budget.

chaired by then Prime Minister Recep In the 9th Development Plan (2007- Tayyip Erdoğan and attended by the 2013) published in 2006, in order Minister of National Defense Vecdi to meet the needs of the defense in- Gönül. The meeting ended with the dustry in a secure and stable man- following decisions: the cancellation ner through national means, the of ‘unmanned aerial vehicles, attack main objectives were been identified tactical reconnaissance helicopter as: developing production within a and modern tank’ projects, the for- structure that is competitive, self-suf- mation of new procurement models ficient, flexible and integrated with based on ‘maximum use of national the country’s industry; actively par- resources and domestic production ticipating in international cooper- and original design,’ in meeting the ation activities in the areas of joint needs of the TAF and transition from production, design and research and a threat-based procurement model to development; and, to that end, estab- a talent-based procurement model. lishing the necessary infrastructure Owing to this determination, Turkey and gaining technological and man- accomplished MİLGEM (the national agerial know-how. Similar themes warship program) and launched new are referred elsewhere such as The national initiatives such as ATAK (the Defense Industry Select Commis- national attack helicopter project) sion Report (2007-2013) stated the and Altay (the national battle tank main sectoral vision as “Addressing project). national defense and security needs by developing effective domestic Even if the formation of a domestic solutions and achieving a defense in- and national defense industry had al- dustry infrastructure that possesses ways been emphasized, the insistence international competitiveness.” of Prime Minister Erdoğan made it possible to take concrete steps in this In this period, emphasis was placed direction and to carry out the process on the transformation of the supply on strategic ground despite all odds. system, the support of defense indus- In the same period, Turkey took im- try exports and the development of

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defense industry cooperation efforts. ities. In this direction, the Presidency The same emphasis may be seen in aimed to lower Turkey’s dependency the Strategy Plans of the period. on overseas sellers by putting these programs into effect. These programs In the direction of its mission to sys- were intended to gain experience in tematically meet the needs of the TAF defense and security technologies, and public institutions, to determine develop indigenous platforms and and implement strategy and methods systems to bring about technologi- for the development of the defense cal superiority and prepare the TAF industry, the Presidency aimed to for the combat environment of the become an expert supply institution future. providing unique domestic technological solutions to meet the stra- The post-1985 period that we cat- tegic defense and security needs of egorize as the 4th period positively the country and guide a competitive contributed to the development of defense industry that is integrated a unique defense industry culture with the international market. In the within Turkey’s defense industry period between 2007 and 2012 in structure, the transformation of sup- particular, the transformation of the ply models, budget-use flexibility, country’s economy in terms of both project processes, the management a comprehensive foreign policy vi- of workflow and the formation of an sion and practices and finance, and autonomous and expert institution. the industrial development initiatives In this period, projects in many ar- were all substantially reflected in the eas and under many different head- defense industry as well. ings were launched; although a few of them failed, the overall effect was a Turkey’s socioeconomic transforma- successful performance for a country tion between 2002-2012 was directly at Turkey’s level. reflected in the main trends in the defense industry; unique design pro- Indeed, myriads of turning points grams were initiated for the purpose and successes in the defense industry of producing critical technologies in this period came to the fore as a and optimizing design capabilities to reflection of an overall change and the fullest extent possible under the transformation in Turkey. A power- responsibility of the main contrac- ful dynamism throughout the sector tors in the country. In this period and stands out compared to previous pe- within this framework, the Strategic riods due to an institutional struc- Plans consistently emphasized the ture directly responsible for defense mission to make Turkey superior in supply (a tradition continuing since defense and security technologies 1985), flexibility in budget-use and and to direct industrialization, tech- the strong political support provided nology and supply programs that by the Erdoğan governments. In the would sustain the development of framework of this dynamism, do- Turkey’s defense and security capabil- mestic development models such as

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joint production, production under transformation of the defense indus- license and production-based engi- try, changes in the methods used in neering and design gradually came the fight against threat factors and forward to replace foreign acquisi- changes in Turkey’s government tions and ready-made procurements model. as the dominant supply model. These changes established a prolific ground As mentioned above, the embargo for the infrastructure of a robust de- trauma that negatively affected the fense industry. Turkish defense industry and its concrete consequences led to the The 5th Period: 2017 and Beyond establishment of a self-sufficient de- The Presidency of defense industries fense industry. In this context, rap- under the Turkish Presidency today idly launching initiatives, setting up was set on the road as SAGEB in 1985 procedural infrastructure, forming and restructured as an Undersecre- an autonomous institution of supply tariat under the Ministry of National expertise and gradually establish- Defense in 1989. From 1989 to 2017, ing foundational companies came the Undersecretariat of the Defense to the fore in the following years. Industry (SSM) performed activities As of the late 1990s until the mid- under the Ministry, but it was affili- 2010s, themes including strategic ated with the Presidency of the Re- plans, declared objectives, sectoral public in December 2017 and then policy analyses, the emphasis on a renamed the Presidency of Defense self-reliant defense industry and on Industries (SSB) ratified by Executive the importance of exports defined in Order No. 696, titled “The Executive the reports of the SSB, SASAD, SSI, Order on Making Some Regulations etc., were frequently visited. Concrete under the State of Emergency.” steps taken at this point and internal achievements helped the sector reach This procedural change is extremely a certain point by the mid-2010s. In critical in terms of the direct affilia- the following period, the Turkish tion of the decision-making mecha- defense industry gained momen- nism of the structure to the top exec- tum in many areas, faced its exist- utive office of the country. This -cor ing deficiencies and problems and responds to a first-ever procedural solved them and followed a unique implementation in the history of the trend of gaining strength, rising and SSM in terms of showing the impor- expanding. tance given to the defense industry in decision-making processes. In this period, two critical events and processes enabled the defense indus- The process of direct affiliation with try to move to a quite different point the decision mechanism is relevant in the Turkish economy, defense pol- to the point that the defense indus- icy, the Turkish bureaucracy and the try has reached, as well as its de- Turkish defense industry. The first sired objectives, the policies and the development was the comprehen-

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sive transformation of the concept of counter-terrorism, which came The protection of civilians to the agenda as an important topic in defense policies and procurement and soldiers in the fight processes, especially since the mid- against terrorism, ISIS 1980s. The second was the coup at- and PKK in particular, and tempt on July 15, 2016, which directly affected all dynamics in Turkish pol- increasing the impact of itics, as well as the structures of the terrorist operations have TAF and the Turkish bureaucracy. been very effective in raising Another issue that needs to be dis- awareness to strengthen cussed within the same framework the domestic and national is the method of fighting against threat of terrorism. Although there defense industry have been several cross-border operations since the late 1980’s, the manner of conducting anti-terror- strengthening of the SSM’s place in ism operations was substantially do- bureaucratic mechanisms. mestic. Since 2016, however, these operations transformed from being The desired goals for the defense in- predominantly domestic one to oper- dustry were expressed even more ations abroad—particularly in Syria sharply than before in the 10th Devel- and Iraq. opment Plan (2014-2018). The Plan calls for a competitive structure for As of August 2016, three major oper- the defense industry; it states that ations have been carried out against Turkey’s defense system and logistics terrorist organizations such as ISIS need to be met in an integrated and and the PKK/PYD in Syria. The sustainable way by the country’s do- model of operations changed into a mestic industry based on indigenous model that included direct fortifi- design, civilian use of appropriate cations on the ground and evolved technologies, increase in the domes- into a comprehensive policy of pre- tic ratio and the share allocated for caution and intervention in the field. Research and Development as well This situation, apart from the polit- as supporting networks and cluster ical dimensions of these processes, structures in specific areas of the de- essentially reflected the transfor- fense industry. mation of defense policies, Turkey’s rising self-confidence in the defense The changing political context, the industry (such as the capacity of not priority given to the defense industry, to be affected by a possible embargo the increase in the opportunities and at a structural level), increase in the capabilities, and the increase in the opportunities and capabilities of the number of projects, especially after defense industry and the further 2015, enabled the SSM to set sharper

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sub-headings, including bureaucratic In terms of quality, the concept mechanisms, the number of projects and targets, its place in industrial of technological depth and policies, number of employees, sec- global effectiveness, a concept tor size, export capacity, integrated that encompasses interactions defense vision or relationship with non-military sectors and technology not just at the institutional concept. Hence, the new period, in and sectoral levels, but also this framework must be described as the fifth period in the history of in a wider area, has been the Turkish defense industry. At this adopted point, focusing on the background and the political-historical context that gave rise to the fifth period is important for understanding this and larger targets in the 2017-2021 period. Strategic Plan. Background and Features of the 5th The Strategic Plan identifies the ob- Period jectives and targets of the SSM to As has been stated, along with the em- ‘manage by providing an integral bargoes we were subjected to during approach to ensure the sustainabil- the Cyprus Peace Operation in 1974, ity of the defense industry by devel- the strategic value and importance of oping the capabilities of our country the defense industry has been an is- to increase its power in defense and sue frequently mentioned, especially security areas’ in order to make ‘Tur- since that date. The numerous steps key a global player in the defense and taken, regulations made, and support security domain with indigenous given to the defense industry have design and advanced technology been meaningful and have yielded capabilities.’ fruits mainly in this context before the 2000s. The special emphasis on a holistic approach stands as a summary of the Later, in the same framework, the more comprehensive conceptual po- protection of civilians and soldiers sitioning of the defense industry both in the fight against terrorism, ISIS in the sector and outside the sector and PKK in particular, and increas- by going one step beyond being a tra- ing the impact of terrorist operations ditional ‘mere military procurement has been another important factor. entity’ while maintaining its charac- Such elements and problems have teristic as an institution of expertise. been very effective in raising awareness to strengthen the domestic and As the next section explores in de- national defense industry. However, tail, this period corresponds to a new it took time to bring this awareness era on the structural level in its all from a defensive perspective to a stra-

32 Insight Turkey TRANSFORMATION OF THE TURKISH DEFENSE INDUSTRY: THE STORY AND RATIONALE OF THE GREAT RISE

Tanks and armored vehicles of the Turkish and Azerbaijani Army take part in joint military exercises in Baku, Azerbaijan on August 1, 2020. TURKISH DEFENSE MINISTRY / HANDOUT / AA tegic ground despite all its contribu- of defense industry and the devel- tions and steps taken, before 2000 in opments in the Mediterranean. Al- particular. though each and every one of these themes refers to a broad spectrum The first founding moves in the effort with its historic and political dynam- to create the strategic ground was the ics, from the view of defense industry, decisions taken at the Defense Indus- it points out a clear need to enhance try Executive Committee meeting Turkish defense industry, and to lay in May 2004, as summarized in the the ground for a closer relationship previous section. The background of between Turkish foreign policy, the the movement of domestic-national defense industry and military needs. defense industry has gained a strong and strategic framework with prefer- Without having a national and in- ence for new supply models and their digenous, robust and active infra- central function in meeting the needs structure for the defense industry of the TAF. and a product portfolio, Turkey will face difficulty to protect its interests, The second turning point can be be quite affected by embargoes and contextualized in the framework of narrow its maneuverability. Precisely several developments such as the for this reason, even if there is no di- military operations held in Syria af- rect relationship with these develop- ter the failed coup attempt in Turkey, ments, threat dynamics and elements the military-political and economic to which Turkey is exposed in the re- aspects of these operations in terms gion, especially from 2014 onwards,

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necessitated a thorough transforma- mation of an institutional tradition. tion in the defense industry. The peri- Similarly, cooperation and exchange ods the historical details of which are of experience in the field of defense given above have emerged exactly in are of paramount importance for the this context. Turkish defense industry. In this respect, we, as the Turkish defense in- The domestic and national defense dustry, obviously see NATO-Turkey industry has been seen as a strategic relations as a strategic value with crit- and indispensable need and obliga- ical importance. tion, all necessary supports have been given, investments have been made, However, it is a fact that our defense projects have been accelerated; as a industry was considerably handi- result, the industry has actively taken capped due to our membership in the ground in case of a threat. At this NATO until the period of awareness point, we may say that the develop- in 1974, in particular, as far as the ment of the defense industry in Tur- domestic and indigenous character- key is, before else, regarded as an im- istics of the defense industry are con- perative strategic domain to protect cerned. To position the domestic and Turkey’s interest in our region. Even national defense industry as a stra- if the defense industry investments tegic imperative, in this context, is a and products have a direct impact on subject that cannot be ignored. the economy and an increasing influ- ence, the main priority is to create the On the other hand, in the broad dy- capacity to protect Turkey’s interests, namic and complex spectrum of in- remove threats, and that is a strategic cidents in its region, particularly in priority. This is exactly the situation Syria and Iraq, Turkey faces threats. that President Erdoğan describes NATO, for many reasons, has de- as “taking the matter into our own clined to provide active support to hands” if no action is taken despite Turkey to eliminate the threats or di- all diplomatic efforts. rectly contribute to its security. Lack of support and the absence of con- At this point, another dynamic that crete support against threats has thus affects the defense industry and the come into view as a critical factor. investments is, without doubt, international alliances we are a member Through this angle, developing a of. NATO stands out as a primary ex- robust, indigenous and national de- ample here. Turkey has always given fense industry for Turkey indispens- importance and valued the NATO ably serves to respond to security Alliance as a strategic preference and issues and meet Turkey’s needs. The a military positioning. While Turkey use of largely domestic and national makes a tremendous contribution weapons, ammunitions, etc. in Op- to NATO, NATO also contributes to erations Euphrates Shield, Olive the determination of military stan- Branch, and Peace Spring prevented dards, supply processes and the for- the operations from being negatively

34 Insight Turkey TRANSFORMATION OF THE TURKISH DEFENSE INDUSTRY: THE STORY AND RATIONALE OF THE GREAT RISE

affected by an embargo, proved our defense industry’s level of success and Turkey’s defense projects enabled Turkey to have a defense industry with proven experience on the were carried out in ground. 2002 with a budget of approximately $5.5 billion. By the same token, the other note- worthy matter, the details of which Today, as of 2020 the are given above, is Turkey’s under- project volume reached $60 taking of a comprehensive bureaucratic and industrial transforma- billion with an increase of tion process after thwarting the July approximately 11 times. 15 coup attempt in 2016, as well as Considering the projects still the institution’s change of position within the Turkish bureaucratic in the bidding process, it is structure by being directly affiliated predicted that a figure of with the Turkish Presidency in 2017. Thanks to this, a direct contact with over $75 billion will soon be the decision-making mechanism reached provided serious relief in terms of both the rapid implementation of the decisions made and the political support. the Rise of Turkish defense industry, as may be seen through the data pre- Overall, after the first four periods of sented in the next section. Turkish defense industry, transformation in the defense policies, changes Characteristics of the 5th Period in the procurement policies, transfor- In terms of institutional position- mation of Turkish bureaucracy, new ing, the Undersecretariat of Defense dynamics in the foreign policy of Industry that was directly affiliated Turkey, restructuring of Presidency with the President of Turkey in 2017 of Turkish defense industry and has undergone another change in alongside these transformations, new 2018. With Decree Law No. 703 on forms of relationship built by the SSB “Amending Certain Laws and De- with different sectors such as health, cree Laws for Compliance with the energy, and communication, the Constitutional Amendments” dated changing quality and quantity of de- July 9, 2018, the Undersecretariat was fense projects and several others fea- restructured as the Presidency of De- tures lay the ground for a new period fense Industry. Its establishment, du- in Turkey for defense industry. These ties, powers and responsibilities were processes en masse mark the begin- arranged and updated with Decree ning of a new period in the Turkish Law No. 7, titled “Presidential Decree defense industry and brought about on the Presidency of Defense Indus- a period that can be categorized as try” dated July 15, 2018.

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the defense industry sector, which is These efforts, which we a relatively isolated area of specialty. The summit brought together differ- have only summarized, have ent segments of the defense industry transformed both the SSB for two days. With steering figures and the defense industry from the Land, Air, Navy, Cyber, and, Space sectors in attendance, speeches eco-system in accordance on financing, human resources, with the principle of renovation, and technology-inno- vation-production are a critical in- “global effectiveness and dicator of the concentration points technological depth” that of the sector. On the first day of the comprises the 5th period summit, over 2,000 people, 200 of them foreigners, attended the meetings and more than 500 institutions and organizations followed the Sum- Changes in the qualifications that mit. The summit focused on youth on determine the scope, content and the second day and set a significant framework of the activities of the example in terms of representation. Presidency also mark a change in the Over 2,000 students from more than founding theme that confirmed Tur- 100 universities participated in the key’s entry into a new era. Both in the summit. This represents the efforts of sector in general and in the Under- the sector to leave Turkey’s period of secretariat in particular, the founding isolation period behind. themes of the activities of the previous periods were confined to ready- The theme of technological depth made purchasing, joint production, and global effectiveness is, to an ex- the domestic development model tent, related to the transformation (production under license, engineer- of the positioning of the Presidency ing and design-based production); in of defense industry. Thanks to this the new era, the concept of techno- transformation, the Presidency, be- logical depth and global effectiveness yond being an autonomous procure- has become the founding theme. ment institution, has turned into a coordinator and guardian institution The emergence of new founding of defense industry and industry in theme is confirmed by the defense general at the structural level. The industry Summit held December 12- institution has been granted a cen- 13, 2018 and hosted by President Er- tral function and role in the context doğan. The main theme was techno- of both the defense industry sector logical depth and global effectiveness and the general transformation of the in the framework of “Global Power country. Turkey.” The 2018 summit represents a critical turning point as it hosted In addition to functions such as de- many figures of the public and of termining the nature of needs in the

36 Insight Turkey TRANSFORMATION OF THE TURKISH DEFENSE INDUSTRY: THE STORY AND RATIONALE OF THE GREAT RISE

field of defense in a wider framework tures are concerned; the ‘great rise of and identifying and addressing new the Turkish defense industry’ corre- areas of need instead of being solely sponds to this period. a military and isolated procurement agency, the coordinator or guardian institution feature, which we describe Turkey’s Technological Depth and as the new central function, points to Global Effectiveness: Facts at a more than one role: executive, regula- Glance tor/standard-setter, standard-imple- menter, educator, awareness-raiser, • The $1 billion of defense and avia- etc. In general terms, the features that tion turnover of 2002 has reached determine the status of the institu- $11 billion per year as of the time of tion can be summarized as the main this writing. carrier institution/executive-direc- • Defense and aviation exports that tor process manager in all relevant were only $248 million in 2002, ex- dimensions. ceeded $3 billion in 2019. • Over the same period, the number of In terms of quality, the concept of Turkish defense companies has in- technological depth and global effec- creased from 56 to 1,500 today. The tiveness, a concept that encompasses total number of personnel working interactions not just at the institu- in the sector has reached approxi- tional and sectoral levels, but also in mately 75,000. a wider area, has been adopted. This • While only 66 defense projects were concept expresses a perspective that carried out in 2002, today the num- includes the institutional experiences ber of projects has increased more of the SSB, its affiliates and stakehold- than 10 times and approaches 700. ers, all components of the defense in- • Approximately 350 new projects dustry sector, all relevant ministries were initiated between 2015 and and institutions, universities, the 2020. media, the general public, the youth • Turkey’s defense projects were car- population and the external sphere ried out in 2002 with a budget of ap- (stakeholders, customers etc.). proximately $5.5 billion. Today, as of 2020 the project volume reached $60 In terms of the positioning of the billion with an increase of approxi- institution, the new theme means mately 11 times. Considering the moving away from being an isolated projects still in the bidding process, island. This theme preaches rise and it is predicted that a figure of over expansion of technology, a directive $75 billion will soon be reached. that is compatible with the general • In the same period, such strong state of the country in terms of the support was provided to research need for ‘indigenous defense indus- and development that it has become try.’ For the very same reason, this an autonomous field on its own. In period can be described as the fifth 2002, research and development ex- period as far as its structural fea- penditure was nearly $50 million,

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which was next to nothing, and as of human resources and long-time ori- today it has reached approximately ented approaches that require collab- $1.5 billion. oration with more than one field has • Seven Turkish firms are currently on been taken. These programs and ini- the list of the world’s largest defense tiatives are summarized below: companies, up from only two firms four years ago. • YETEN (Talent Inventory): A pro- • Export-oriented approaches have gram in which the human resourc- grown stronger in this period and es, inventory, product line and in- targets began to be clarified in terms frastructure of existing companies, of both exports and general trends of institutions and organizations in the the sector. These goals include: sector are gathered in a single cen- o Increasing comprehensive coor- ter; all kinds of analysis and evalu- dination initiatives to achieve the ation can be made and automation desired levels of exports; in decision-support systems can be o Increasing product variety; achieved. o Accelerating the production of • EYDEP (Industrial Competence As- country-specific solutions; sessment and Support Program): The o Expanding the defense eco-sys- program evaluates firms according tem in order to reach sufficient to certain criteria, tallies the inven- production capacity to respond to tory and examines the industrial external demands; competence of the entire sector. EY- o Increasing the export of val- DEP and YETEN foresee providing ue-added subsystems and compo- guiding support to companies as nents in addition to the platform needed after their evaluations. EY- exports that are subject to state- DEP and YETEN stand out togeth- to-state sales; er as important initiatives that allow o Setting tangible bars/levels such the presentation of both the current as increasing Turkey’s export situation and the possible future pro- target to $10.2 billion for 2023, jection of the entire sector on a data raising 10 Turkish companies to basis. the top 100 list and reaching an • Visionary Youth: Aims to increase export target of $50 billion with a defense awareness and defense liter- fully independent defense indus- acy. Visionary Youth seeks to attract try in the long term. the attention of young people to the defense sector and organize direct In the last five years, several programs face-to-face meetings with youth. that transform and deepen the scope The program intends to develop of the defense industry have been joint programs in cooperation with initiated to change the nature of the think tanks and universities on de- relationship between the defense sec- fense literacy programs. tor and the Presidency. Rather than • Defense Industry Academy: The limiting defense with military field; Academy aims to evaluate the ex- technology-oriented, industry-based, isting academic opportunities in all

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fields directly or indirectly related to the defense industry, determine The perseverance and training needs and organize training programs. determination, against • In-house training, sectoral training, all odds, of our engineers, collaborations with vocational high technicians, companies, schools, collaborations with universities, supporting Master’s and Doc- human resources and of our torate programs. nation itself, whom I call the • Developing specific projects for main areas such as Health, Energy, devoted souls bejeweled Transportation. with national consciousness • Extending given boundaries of the sector, and deepening specialization in focus studies such as the forma-  Sectoral leadership achieved tion of Cyber Security Clusters. through being at the center of bureaucratic mechanisms. Overall, when we consider all of the aforementioned topics and phases, These efforts, which we have only the critical factors in the rise of the summarized, have transformed both Turkish defense industry may be the SSB and the defense industry summarized under six headings: eco-system in accordance with the principle of “global effectiveness and  The leadership factor, crystalliz- technological depth” that comprises ing in the political leadership of the 5th period. This period has been a President Erdoğan; critical turning point in the history of  A comprehensive holistic ap- the Republic, which will celebrate its proach, in which working with 100th year in 2023. It is a period where many fields including health, the centuries-old goals of the Turkish communication and education defense industry have been realized. rather than a logic of procure- But here, as someone who monitors ment limited to the military field these processes closely, I must also is essential; express that I believe that a 7th factor  A research and development-ori- is at the center of the whole transfor- ented procurement model whose mation process as the prime element. vision extends beyond urgent This factor is the perseverance and needs; determination, against all odds, of  An organic approach that es- our engineers, technicians, compa- tablishes defense procurement nies, human resources and of our through close contact with the in- nation itself, whom I call the devoted dustrial field; souls bejeweled with national con-  A technology-oriented perspec- sciousness. Today, if the Turkish de- tive based on technological pro- fense industry has gained great mo- duction; mentum, the main factor behind it is

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that state of determination and com- gorized as following 1923-1950 as the first, 1950- th 1974 as the second, and 1974-1985 as the third mitment that I hail as the 7 factor. bloc or historical periods. Then post-1985 era is summarized into two major eras as 1985-2006 and 2006 up until today. Here, in this article, tak- Endnotes ing into major historical turning moments into consideration, I suggest to categorize these blocs . See www.ssb.gov.tr for more information. The 1 as following 1923-1939 as the first, 1939-1974 way I discuss historical background and cate- as the second, 1974-1985 as the third historical gorize different historical eras in this article is periods. Such a reading I believe provides a more slightly modified version of the summary pro- accurate analysis of historical background of vided on the website. defense industry in Turkey and offers a fair read- 2. For instance, in the traditional institutional ing of post-1985 era. For more information see, approach the first three historical blocs are cate- www.ssb.gov.tr.

40 Insight Turkey