Turkey Defence & Security Report 2016

Aug 22, 2016 - Business Monitor International - 45 pages - USD $1,295
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We maintain our forecast for steady growth in Turkish defence spending throughout our forecast period to 2025 - facilitated by robust forecast real GDP growth - and driven by still-elevated risks of terrorism, separatism and political unrest. Coupled with strong government support and evolving international trade and industry collaboration partnerships, this will ensure continued development and expansion of Turkey's already-substantial defence sector - and thus Turkish defence exports - over the coming decade.

Recent Analysis & Developments

The failed coup on July 15-16 will substantially raise long-term political risks in Turkey. President Erdogan will use the occasion to tighten his grip on power, but this is likely to lead to political overreach eventually, prompting a backlash. Meanwhile, Erdogan's moves will accelerate Turkey's drift away from the West.

In June 2016, IS carried out a terrorist attack at Istanbul's international airport, killing over 40 people. We expect the dual threat of Kurdish separatists and IS to remain elevated in Turkey over the next several years.

Turkish government rhetoric against Assad appears to have softened in recent months, and in July 2016, Turkish Prime Minister Binali Yildirim hinted at the possibility of a normalisation of ties to Damascus. This can be seen in the context of a broader foreign policy shift by Ankara, which has also worked to improve ties to Russia and Israel.

For 2016, we forecast Turkish defence expenditure to reach TRY36.8bn (USD12.4bn) - compared to TRY32.7bn in 2015. Turkey's annual defence spending growth will be much lower in dollar terms than in local currency terms, as the Turkish lira has depreciated by close to 30% since January 2015. As a proportion of GDP, defence spending will come in at 1.7%.

Our Country Risk (CR) team has adjusted its forecast for Turkey's real GDP growth in 2017 following the failed coup in July - from 3.3% y-o-y to 3.0%. As such, we have lowered our forecast for defence expenditure in the same year, to TRY40.4bn (USD12.8bn), assuming it will remain at 1.7% of GDP.

Ankara announced in March 2016 that Turkey's defence industry executive committee had approved USD5.9bn in new defence projects - of which USD4.5bn would be directed towards local industry.

FNSS Savunma Sistemleri won a contract for the delivery of 260 anti-tank vehicles to the Turkish army in June 2016.

The Undersecretariat for Defence Industries (SSM) announced in June 2016 that Turkey had initiated a USD3.5bn multirole helicopter project with US-based Sikorsky.

Turkey, in December 2015, signed an agreement with BAE Systems for collaboration on the former's National Fighter Aircraft project.

In April 2016, Aselsan and Malaysian K Defensetech signed an agreement to jointly produce remote-controlled weapon stations in Malaysia. In the same month, Ukraine-based UkrOboronProm and Havelsan signed an agreement to develop and produce radar equipment.

The SSM issued a request for proposal for six general-purpose aircraft in June 2016. In the same month, the bureau announced a request for proposal for two command and control aircraft.

The SSM has decided to upgrade its Lockheed Martin F-16 Block 30 Fighting Falcon fighter aircraft. It has also indicated plans to order an additional 17 T-129 attack helicopters from TAI/ AgustaWestland.

In June 2016, Turkey placed a USD121mn order for additional Cobra II 4x4 tactical armoured vehicles from Otokar.

The US Department of Defense announced in February 2016 a USD683mn contract awarded to Ellwood and General Dynamics for the delivery of BLU-109 2,000 lb penetrator bomb parts to Turkey.

The Turkey Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI'sTurkey Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Turkish defence and security industry.

Key Benefits
Benchmark BMI's independent defence and security industry forecasts on Turkey to test other views - a key input for successful budgetary and strategic business planning in the Turkish defence and security market.
Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).

Coverage

Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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About the Publisher
BMI Research offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities. Through 'Total Analysis,' their unique, reflexive approach linking macroeconomic, industry and financial market analysis, they help clients gain unparalleled insight across 24 industries and 200 global markets.