ITALIAN CO. WINS TURKISH HELI CONTRACT
By Selcan Hacaoglu Associated Press Writer

BusinessWeek
March 30 2007

ANKARA, Turkey – Italy’s Agusta Aerospace on Friday won a major
Turkish tender worth $2.7 billion to co-produce attack helicopters
as Turkey sought to diversify resources from its usual supplier _
the United States.

For the first time since they began cooperating in arms sales,
no U.S. companies bid for the contract because of strict Turkish
regulations. The rules stipulate Turkey be given full access to
the aircraft’s specific software codes _ which the U.S. considers a
security risk _ and a guarantee from the provider’s government that
there would be no political obstacles to the sale.

U.S. firms have been the main arms suppliers to Turkey, a key
element of NATO’s southern flank during the Cold War. Turkey, whose
neighbors include Iran, Iraq, Syria and traditional rival Greece,
has been eager to supply its large army, which is also dealing with
a domestic Kurdish insurgency.

The contract is for the co-production of 30 Mangusta A-129 helicopters
with an option for 20 more, Defense Minister Vecdi Gonul said. The
Turkish model will be named T-129.

The only other company to be shortlisted in the tender was Denel of
South Africa. Franco-German company Eurocopter and Kamov of Russia
were eliminated earlier in the process.

Denel’s Rooivalk helicopter was powered by an engine manufactured by
France _ with whom Turkey suspended military relations in November
in response to proposed French legislation that would criminalize
denying that the mass killings of Armenians in the Ottoman Empire at
the end of World War I amounted to genocide.

Asked whether the use of a French engine in the South African model and
the tensions with France over the Armenian bill negatively affected
the selection process, Gonul said: "all aspects were evaluated,"
private Dogan news agency reported.

But Gonul said the main factor in the decision was the huge price
difference, the state-run Anatolia news agency reported. He did
not elaborate.

Turkey imposed new bidding rules for military contracts in 2005, after
it canceled a 2004 tender when a deal for U.S. firm Bell Helicopter
Textron’s "King Cobra" _ a Turkish version of the AH-1Z Super Cobra
used by U.S. Marines _ collapsed over price, technology transfer and
licensing problems.

Turkey went through a low point in defense relations with Washington
following its refusal to host U.S. troops for the invasion of Iraq
in 2003. It has actively sought out other potential arms suppliers,
making Turkey’s business less attractive for U.S. companies.

The new rules also empower Turkey to substitute alternative, locally
manufactured components such as weapon systems, the mission computer,
avionics and electronic warfare suites, and require the supplier to
integrate other systems or equipment built by Turkish companies.

Turkey’s concerns over technological control of its weaponry increased
after it faced arms blockades from several countries because of
human rights problems in its fight against Kurdish guerrillas, while
Washington demanded Turkish progress on human rights as a condition
for arms sales.

Meanwhile, Turkish firm Otokar, which produces armored vehicles, won
a tender of $500 million to develop a main battle tank prototype,
private CNN-Turk television said. If successful, the firm could be
granted the authority to produce tanks to replace Turkey’s aging tanks.

Gonul expressed hope that his country would be allowed to produce
upgraded F-16 warplanes under U.S. license. Turkey had assembled
previous F-16 models under U.S. license.