WASHINGTON Nov 12 U.S. arms makers Raytheon Co
and Lockheed Martin Corp are considering ways to
sweeten their offer to build a Patriot missile defense system
for Turkey after Ankara said it could still back away from a
provisional $3.4 billion deal with China, sources familiar with
the issue said on Tuesday.
"There are internal discussions going on about improving the
Patriot offer," said one source, who is familiar with the talks
but not authorized to speak publicly.
A second source confirmed that preliminary discussions were
under way within industry and the U.S. government about how the
offer could be adjusted to be more competitive with bids
submitted by the Chinese firm, and a European group.
Both sources said no decisions had been made and it was
important to allow Turkey - a member of NATO - time to make up
Turkey announced in September it had chosen China's FD-2000
long-range air and missile defense system against rival offers
from Franco/Italian Eurosam SAMP/T and Raytheon.
It said China offered the most competitive terms and would
allow co-production in Turkey, but the decision caused alarm in
NATO countries worried about China's growing clout.
Secretary of State John Kerry and other U.S. government
officials raised concerns after Ankara's choice of the missile
defense system built by China Precision Machinery Import and
Export Corp, a firm that is under U.S. sanctions for violating
the Iran, North Korea and Syria Nonproliferation Act.
"We continue to convey our serious concerns about the
Turkish government's contract discussions with a Chinese company
- which is currently sanctioned by the United States - for an
air and missile defense system that will not be inter-operable
with NATO systems or collective defense capabilities," said one
State Department official.
State Department officials said Kerry had expressed his
concerns to Turkish Foreign Minister Ahmet Davutoglu in New
York, and Assistant Secretary of State Victoria Nuland, who
oversees European and Eurasian affairs, has discussed the issue
with senior Turkish officials.
Washington sees Turkey as a key partner in the Middle East,
with common interests from energy security to counter-terrorism,
but Ankara is not the deferential ally it once was as it seeks
an increasingly independent role on the world stage.
One of the sources said the U.S. companies were examining
whether they could scale back their bid to bring it more in line
with what was offered by the Chinese firm, which did not include
the capability to target medium-range missiles.
That may involve changes in the missiles that would be
provided with the Patriot system.
The companies are also reviewing the offset agreements and
co-production deals involved in the U.S. bid, the sources said.
Turkey was seeking some space launch capabilities, but it
was unclear if U.S. officials would approve the export of such
sensitive technologies as part of an offset package accompanying
the missile defense deal, said one of the sources.
The sources said the U.S. proposal was more comprehensive
and offered Turkey greater capabilities than the Chinese system,
as well as ongoing maintenance and technical support for the
Patriot missile defense system. They said the offer also
included substantial co-production arrangements.
"It's really not certain how it will work out," said one of
the sources. "But there is a lot of interest in at least
examining what could possibly be done."
Sources familiar with the discussions have said the deal
could affect Turkey's plans to buy radar-evading F-35 fighter
jets built by Lockheed.
Turkey helped fund development of the F-35 and hopes its
participation results in component orders for Turkish firms.
Pentagon officials have confirmed that the Defense
Department's policy chief, James Miller, visited Turkey this
month, but declined to give any details about his discussions
with Turkish officials about the missile defense deal.
Turkish Defense Minister Ismet Yilmaz last week said Turkey
has asked bidders for the missile defense system to extend the
their bids and offer improved terms - in case talks with the
Chinese firm failed.
Executives at Raytheon and Lockheed say they remain prepared
to work with Turkey on the issue, but have declined comments on
any specific efforts to revise their offer.
"We welcome the opportunity to continue discussions with the
Turkish government for their critical missile defense needs,"
Lockheed spokesman Gordon Johndroe told Reuters in an email.