* Official says deal could be signed within 6 months
* Turkey sees urgent need to bolster air defences
* Chinese firm chosen over U.S., European, Russian rivals
* U.S., NATO officials raise concern
By Tulay Karadeniz and Jonathon Burch
ANKARA, Oct 3 Turkey is likely to sign a $3.4
billion missile defence deal with a Chinese firm under U.S.
sanctions, a senior official said on Thursday, a proposal that
is already straining relations with Washington.
Turkey sees a growing threat of spillover from the war in
neighbouring Syria, as well as wider turbulence in the Middle
East, and has been scrambling to bolster its air defences.
Murad Bayar, Undersecretary of Defence Industries at the
Defence Ministry, told reporters in Ankara that Turkey could
finalise the deal with China Precision Machinery Import and
Export Corp (CPMIEC) within six months.
Turkey's Defence Ministry said last week it had chosen
CPMIEC's FD-2000 missile defence system over more expensive
rival systems from Russian, U.S. and European firms. Despite
Bayar's comments, Turkish leaders have stressed the deal is not
The United States has expressed "serious concerns" over
North Atlantic Treaty Organisation member Turkey cooperating
with CPMIEC, under sanctions for violations of the Iran, North
Korea and Syria Nonproliferation Act.
But Foreign Minister Ahmet Davutoglu said Turkey, which
shares a 900-km (560-mile) border with Syria and has NATO's
second largest deployable military force, urgently needed to
step up its air defences.
"With the latest crisis in Syria and the crises in the
Middle East, we have realised ... that however strong our armed
forces are in terms of conventional weapons, they are not at the
desired level to counter missile and related threats," he said
in an interview on local television on Wednesday.
Turkey has seen Syria's conflict frequently spill across its
frontier and has responded in kind when mortars and shells fired
from Syria have hit its soil.
The government is also concerned about Syrian President
Bashar al-Assad's chemical weapons arsenal, particularly after a
sarin nerve gas attack on a Damascus suburb in August, and
parliament voted on Thursday to extend a mandate authorising
sending troops into Syria if needed.
NATO sources have said Turkish collaboration with China on
the system could raise questions of compatibility of weaponry
and of security. For China, it would be a breakthrough in its
bid to become a supplier of advanced weapons.
Bayar said Turkey was not sharing any information on NATO
defence systems with China and Turkey was not bound to comply
with sanctions placed on CPMIEC as they were not drawn up by the
"This is a short list and China is in first place. We are
going to invite the Chinese, the offer is on the table and we
are going to turn this offer into a contract," Bayar said.
"It is highly likely, a great probability, we will sign the
contract with the firm we have chosen in first place."
He said if the deal went ahead most of the production would
be carried out in Turkey.
CPMIEC's bid of $3.44 billion had come in significantly
lower than rival systems from Russian, U.S. and European firms
and below Turkey's estimate of $4 billion, Bayar said.
He said the Franco/Italian Eurosam SAMP/T system was second
and Raytheon Co, a U.S. company that builds the Patriot
missile, was third. A Russian bid had been eliminated. All
losing bids had come in above $4 billion, Bayar said.
Davutoglu said the selection was not politically motivated,
and that the Chinese offer had met Turkey's primary demands of
price and the ability to place much of the production in Turkey,
although he reiterated that the decision was not final.
"It is as if people always think, 'this government has an
agenda and is making its choice based on this'. No, this was a
professional choice. A choice determined by the criteria put
forward. But this is not a final choice," Davutoglu said.
"If only Eurosam, or the American and European system makers
offered better conditions and we could choose them," he said.
Some defence analysts said they were surprised by Turkey's
decision, having expected Raytheon or Eurosam to win the
contract, and U.S. government and industry officials were
reportedly not informed of the selection beforehand.
"The deal with the Chinese may be designed to put pressure
on Raytheon to negotiate a more favourable deal for Turkey, in
particular a more liberal technology and know-how transfer and
co-production and perhaps on price," said Fadi Hakura, a Turkey
expert at London's Chatham House think tank.
Industry experts have said they do not expect Raytheon to
offer significant price concessions to secure the deal, given
its big backlog of orders from other countries for the Patriot
system and other missile defence equipment.
"Turkey's primary aim is to build a local defence
manufacturing capacity," Hakura said, noting Turkey had been
trying to build a domestic defence industry since the 1980s.
"Still, what the deal does is further poison the atmosphere
of worsening relations between Washington and Ankara."
Turkey has long been one of the closest U.S. allies in the
Middle Eastern region, bordering during the Cold War on the
Soviet Union. The U.S. military exercised great influence over a
Turkish military that strongly influenced domestic politics.
Under Prime Minister Tayyip Erdogan, elected in 2002, the
role of the Turkish military in politics has been curbed.
Political and military relations between Ankara and Washington,
while still close, play a less central role, and this could be
reflected in procurement policy.
NATO has said it is up to each country to decide what
military capabilities they acquire but that compatibility with
other members' systems is important. Davutoglu said members did
not need to consider NATO's needs on everything as each country
had its own national considerations.
Bayar said a delegation of Turkish industry and air force
officials had witnessed test launches from all the firms but
that the Chinese had allowed Turkey to pick its own scenario and
offered it a tailored demonstration.
"We said we want this kind of a launch, and our delegation
watched the launches as if they were the operators. These were
real launches," Bayar said.