BMI's Executive Summary

[TOP]

In the last quarter of 2007 the Ankara government forcibly focused international attention on the problem posed by Kurdish separatists in the PKK, based in the south-east of Turkey and in the north of Iraq. By pushing through legislation aimed at authorising cross-border incursions and massing 100,000 troops along the frontier, the government of Prime Minister Tayyip Erdogan was in our view indulging in some carefully calculated brinkmanship. Unilateral Turkish action in northern Iraq would threaten the US effort to pacify that strife-torn country, and sure enough a procession of senior US political and military officers were soon visiting Turkey for consultations, offering intelligence-sharing and support in the struggle against the rebels. The Kurdish question will remain a source of tension in the area, but it seemed that Ankara's short-term objectives had been met.

Turkey's political structure, and perhaps more importantly the civil-military relationship within it, remains as solid as ever despite fears that the secular military and Islamist-leaning government were threatening to come to blows at various points in 2007. A fatal division remains unlikely given that both sides are fiercely nationalist – neither will want to jeopardise Turkey's EU membership efforts. Turkey faces a number of internal and external security threats. It has found itself on the front line of the 'war on terror', having been targeted by terrorist attacks perpetrated by Islamist groups in its major cities, and has suffered some consequences from the regional destabilisation caused by the war in Iraq. Furthermore, the increasing presence of ballistic missiles in the Middle East is of concern to Ankara.

Turkey is slowly embarking upon a modernisation of its armed forces and a reduction of the number of conscripts. The sheer size of the military stretches the establishment, but the number of troops is set to fall over the following years as Turkey faces changing threats and a diminishing military budget. Turkey has long had a high military budget, a by-product of the dominant role played by the military in Turkish politics. However, the country's weak economy, the pressure of EU membership hopes and the policy of the current government of assigning more funds to social programmes are likely to reduce the defence budget over the long term.

Turkey's defence industry is relatively small, and lacks efficiency and quality in the design and production of weapons systems. It has long relied on purchases or co-operation with foreign partners. However, it is growing due to the continued boost to the local industry by the Under Secretariat for Defence Industries through the preferential awarding of procurement contracts and the stimulation of technology transfers (via foreign company involvement). The effects of this should be felt in terms of increased efficiency and quality of domestic products. Turkey is the world's fourth largest arms importer. The volume of Turkey's imports is unlikely to change in the near future despite the evolving political picture. Exports remain relatively insignificant due to the state of its defence industry – it is the world's 28th largest exporter. However, the move to boost local design and production is likely to increase exports over time as Turkey develops competitive products.

Domestic political stability is ensured but threats to Turkey's security, from both internal and external sources, remain significant. Turkey has the second largest armed forces in NATO, which need to be equipped with NATO-compatible hardware. This is at great cost for a country with a small defence industry and limited budget, but fortunately Ankara is perceived to be a pivotal player in relations between the West and the Muslim world.

Contents

[TOP]

Chapter 1 - Executive Summary

SWOT Analysis

Turkey Political SWOT

Turkey Security SWOT

Turkey Defence Industry SWOT

Turkey Economic SWOT

Turkey Business Environment SWOT

Chapter 2 - Political Overview

BMI Core Scenario

Domestic Political Outlook

Resort Bombs to Have Limited Impact

New Chief Of Staff – Barrier to Reform?

But Fears Of Division Are Overblown

External Political Outlook

PKK Troubles

Doing As The Israelis Do It

Unlikely To Risk Consequences

Dealing With the PKK Threat

EU Criticism As Turkey Talks Security

But Suspension Of EU Talks Is Unlikely

Good House In A Bad Neighbourhood

Chapter 3 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: Turkey Regional Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

Turkey Security Risk Ratings

Turkey Conflict Risk

Turkey Terrorism Risk

Turkey Physical Safety Risk

Chapter 4 - Security Risk Profile

Internal Security Situation

Table: Insurgent Groups

Militancy

Al-Qaeda

Secular vs Islamic

External Security Situation

Missile Proliferation

Relations with Greece

Chapter 5 - Military Structure & Defence Industry

Armed Forces

Table: Regional Armed Forces (including conscripted) 2006

Current Strength

International Deployments

Table: Foreign Deployments

Weapons Of Mass Destruction

Chapter 6 - Market Structure

Arms Trade Overview

Imports

Exports

Industry Trends & Developments

Table - Key Players – Turkey Defence Sector

Procurement Trends & Developments

Chapter 7 - Industry Forecast Scenario

Army Enlargements

Table: Turkey Defence Sector Size of Armed Forces

Table: Turkey Defence Sector – Government Expenditure

Key Risks To BMI’s Forecast Scenario

Chapter 8 - Macroeconomic Forecast

Medium Term Prospects Remain Impressive

Table: Economic Indicators

Chapter 9 - Company Profiles

Aselsan Military Electronics Industry Inc

Havelsan A S

Chapter 10 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 11 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for MEA Defence & Security: Sample of  
Companies Ranked

[TOP]

Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

[TOP]

BMI's Middle East & Africa Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: