Turkey’s defense industry suffers setback but future remains promising
The Turkish defense industry saw a significant decline in its revenues last year according to newly released data, but companies in the sector remain optimistic about their growth prospects.
Turkey’s defense industry has been a rising star in the country’s economy in recent years, attracting well-established entrepreneurs and novices alike. Pro-government business people — in particular those eager to draw close to President Recep Tayyip Erdogan — have vied fiercely for a place in a sector where political dividends are as high as economic ones.
Yet a newly released report by the Defense and Aerospace Industry Manufacturers Association (SASAD), widely seen as the most reliable and least politically contaminated overview of the sector, shows the growth of the industry remains prone to external headwinds and political risks.
The report, which summarizes the sector’s performance in 2020, cites the economic fallout of the COVID-19 pandemic as the reason for downticks in an array of key metrics in the industry. The sector’s turnover fell by 18.6% to some $8.9 billion from $10.8 billion in 2019. Overseas sales revenues totaled about $2.3 billion, dropping 26.1% from nearly $3.1 billion in 2019. Research-and-development spending decreased 25.7% to $1.2 billion from $1.6 billion the previous year. Imports were also down, decreasing 30% to $3 billion. In sum, figures indicate the Turkish defense industry contracted by one-fourth in 2020 from the previous year. The industry’s rise had begun in 2015, when its turnover stood at about $5 billion. The sector doubled its turnover by 2019. Last year’s decline brought the figure back to the level of 2018.
The impact of the pandemic could hardly be disputed, but the report omits another major factor: the sanctions the United States slapped on Turkey over its purchase of S-400 air defense systems from Russia. Washington removed Turkey from the joint F-35 fighter program in July 2019 and followed up with sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA) in December 2020.
