German-Turkish tensions not a major threat to arms trade, officials say

A major political dispute between Germany and Turkey is largely for domestic consumption in both countries and will not leave a lasting strain on arms trade between the two, officials from both countries and industry sources said.

The two NATO allies are going through their worst bilateral ties in decades after Berlin banned Turkish President Recep Tayyip Erdogan to speak to the large Turkish community in Germany and Ankara accused Berlin of systematically supporting and harboring what it views as terrorists. In recent months, Turkey, in retaliation banned, German lawmakers from visiting German soldiers stationed in two military bases in Turkey.

Berlin accused Ankara of systematic human rights violations, especially after Turkey’s detention of a Turkish-German journalist and a German human rights activist on charges of terrorism. Germany also changed its travel advisory for Turkey to warn German citizens of risks associated with going to the country.

“This is a temporary crisis which both parties wish to solve sooner than later. We think things will go back to normal after German [parliamentary] elections [in September],” said one senior Turkish diplomat. “Neither we nor the Germans want to escalate this.”

Another Turkish diplomat said that government-to-government talks on various issues were on track despite the crisis. “There are powerful lobby groups and back channels at work. … The present state of affairs will benefit no one,” he said.

Tensions peaked when Germany’s economy ministry said it would review all future exports of weapons systems to Turkey. In 2016, Germany approved exports to Turkey totaling €84 million (U.S. $99 million), of which €58 million (U.S. $68.5 million) was for military aerospace components, according to the government. As of March 16, 2017, exports for €22 million (U.S. $25.9 million) had been approved, mostly for equipment in the category bombs, torpedoes and missiles.

In response, Erdogan told Germany to “pull itself together” and called German claims that Turkey was investigating German firms on terror charges as “black propaganda, defamation and evil slander.” To prove that it’s largely “business as usual,” Turkish Prime Minister Binali Yildirim met with representatives of 19 large German companies operating in Turkey and reassured them that no German firm is under investigation. “There definitely is no such investigation,” Yildirim told company executives.

A senior Turkish procurement official shrugged off German warnings of future reviews of arms sales.

“Everyone knows that Germany does not hold a monopoly on systems German companies may be selling to Turkey in the future. Any German system is easily substitutable by local efforts or coproduction with other [western] technology,” he said. “An arms embargo will hurt German companies more than it would hurt Turkey.”

While there has been considerable public backlash in Germany against the Turkish government’s move to imprison journalists and silence political opponents, the German Defense Ministry appears to hold out hope for de-escalation.

“Turkey remains an important strategic partner, both as a NATO ally and because of its proximity to the crisis-prone Middle East,” a spokesman told Defense News. “Both sides have an interest in improving their relations.”

No German-Turkish arms deals are on hold because of the crisis, according to the ministry.

“The German government is aware of reports that say at least six companies have articulated an interest in the competition for the Altay tank production,” the spokesman said.

The Altay is Turkey’s first indigenous new generation tank in the making. The Ankara government recently has invited three local manufacturers — BMC, FNSS and Otokar — to submit their bids for a serial production contract involving an initial batch of 250 units.

Marcel Dickow, a defense cooperation expert at the think tank Stiftung Wissenschaft und Politik, said officials in Berlin have begun to pay closer attention to the situation in Turkey and how it could affect the approval of arms deals. But an outright export ban is currently not on the table.

That could change, however, depending on how the human rights situation evolves. “That type of escalatory step has not yet been taken,” Dickow said, adding that implementing a halt to bilateral defense trade would constitute a first among NATO members.

Rheinmetall Defence is one of the German companies whose plans to prop up Turkey’s ambitions as a major defense exporter has raised eyebrows amid what some German politicians believe are human rights violations under the guise of counter terrorism.

The Erdogan government has rejected such assertions, calling Germany’s criticism an inappropriate meddling in its internal affairs.

The Düsseldorf, Germany-based company has said it wants to build an armor plant in the country, which some observers believe could act as a bridgehead for the broader Arabic market. Last year Rheinmetall launched a Turkey-based joint venture, RBSS, with Turkey’s BMC, one of the bidders in the Altay competition, and Malaysia’s Etika group.

For now, the government in Berlin is staying out of that project, even though opposition party members of parliament fear that sensitive tank-related technology could be transferred without the usual export control scrutiny.

According to written answers by the government to a recent Green Party information request, the company’s plans in Turkey fall outside the formal arms transfer process because they are considered a business development decision by a private business.

And while Germany’s minister of economy and energy, Brigitte Zypries, earlier this year said the government would take a closer review of Rheinmetall’s expansion plans, officials in their May response wrote that there is no need for additional regulation.

Some Turkish analysts suggest that in case of a German embargo on arms sales to Turkey, other western and nonwestern suppliers would jump in to fill the vacuum.

“There are already signs that potential rivals to German [defense] business in Turkey tend to view the Turkish-German row as an opportunity,” one Ankara-based analyst said.

He mentioned “visibly increasing interest in Turkish programs” from the U.K. and French and Russian companies.