Notably, international arms sales did not rise but rather fell dramatically following 1990, only slowly reconstituting themselves towards the end of the decade. In terms of percent, U.S. and European sales rose slightly, while Soviet/Russian sales collapsed. In 1987, the Soviet Union still sold arms worth $23.1 billion, whereas by 1992 Russia was only selling $2.5 billion worth of arms. Domestically, too, the defense industry is typical of a highly imperfect market. There are few buyers, mainly the national defense organs or sanctioned foreign buyers. Again, there are a few large suppliers who have consolidated throughout the 1990s due to international competition. Traditionally, the top five national firms supply around 80 percent of the defense market. Further, the defense industry suffers from limited labor mobility and the paradox of increasing returns to scale due to structural peculiarities. Enormous research and development (R&D) costs combined with limited borrowing capability and existing heavy debt of the defense industry raise the dependence on large single-product contracts. Similarly, the defense industry faces a time lag. The period required to develop a new product is long, and several additional years are required to produce it. During this process, most resources are locked in, limiting the firm's operational choices. Hence, the defense industry is extremely dependent on long-term planning.[21] Moreover, the long-term nature of the industry leaves most firms with excess capacity, because they cannot quickly adjust their production to changes in demand, which tends to be unpredictable. This aspect increases the necessity in closing large contracts, especially because there are competitive technologies in the defense industry. At the same time, a primary sale is likely to result in future sales to the same countries, since the products are often not compatible with competitor's products (even if developed afterwards).[22] Lastly, the defining characteristic of the defense industry is the high degree of regulation. Regulation obviously determines who may purchase the defense products. For instance, although defense companies in the United States are technically private, the government can also occasionally have detailed influence on the firms' practices. Specifically, the government can have an input in the choice of product, R&D, as well as financing schemes (due to it being the major financer). This governmental influence is frequently expressed by issuing specific operational and technical regulations.[23]
Turkish Buyer Power in the 1990s In the first five years following the end of the Cold War, the international arms market initially shrunk by more than 30 percent. Most of this reduction took place within domestic defense contracting, thereby forcing most arms suppliers to downsize or to find alternative markets abroad.[24] One of the main characteristics of the international arms market at present is that arms sales are primarily guided solely by economic considerations, meaning no more politically motivated grants or loan payment arrangements. Into this environment stepped Turkey, with a massive military modernization program focused on procurement. The announcement of spending $25-30 billion over five to ten years, and up to $150 billion over 30 years, electrified the international arms market. Already during the 1994-98 period, Turkey had become the third-ranked weapons recipient worldwide. Turkish intent on buying sophisticated NATO-compatible equipment reduced the number of potential suppliers, excluding two of the top seven suppliers--China and Russia. Hence, each Turkish contract to be awarded makes up a significant amount of a country's arms sales. Turkey's modernization differs from other arms sales because it foresees constant large purchases over an extended period, whereas other major arms recipients usually stage intermittent individual large purchases.
Table 2 proves Turkey's buying power. Even before modernization really started, Turkey was Germany's second largest customer and America's fifth largest customer, with $5.55 of its $6.60 billion spent on purchasing going to those two countries. The intended procurement for 2000-02 could make Turkey Germany's single largest and America's fourth largest customer. In fact, the Turkish tank deal (one thousand tanks for five to seven billion dollars) by itself equals Germany's total foreign military sales in a three-year period. In economic terms, the nature of the modernization program gives Turkey real buying power, because there is a limited amount of alternative buyers, given the structure of the international arms market. Also, as a NATO alliance member, Turkey is one of the few countries theoretically allowed to purchase all equipment. Moreover, the long-term aspect of its modernization compounds Turkey's buyer power vis-à-vis the suppliers, because defense industries are so dependent on long-term planning. Especially the early stages of the modernization may determine which suppliers will be able to produce compatible products for Turkish purchase, and therefore, it is imperative for defense industrial firms to secure early projects. As a result, Turkey can affect the price and more importantly, the conditions under which it purchases the equipment. Due to the size and long-term plans of the modernization, Turkey has been able to ensure its procurement will render economic benefits for Turkey's own military industrial complex. Indeed, almost all procurement plans include investment offsets, explicit co-production with Turkish firms or alternative means of technology transfer.[26]
Political Economy of Weapons Sales to Turkey In arms-producing countries, weapons sales to Turkey become a domestic political controversy. On the one hand, anti-Turkish and human rights advocates struggle to prevent sales to a country with a dubious democratic and human rights record and that is involved in tensions with its neighbors. On the other hand, there is the defense industry lobby, which in light of economic conditions described above, desperately needs to win these Turkish military contracts. Those opposed to weapons sales to Turkey consist of human rights activists or ethnic groups in historic conflict with Turks, such as Armenian or Greek lobbies that are particularly influential in the U.S. They list three major points in their criticism. First, there are accusations that Turkey does not meet U.S. criteria for arms exports. Second, they claim that arms sold to Turkey were used against its own civilian population, and that in general Turkey commits wide-scale human rights violations. In particular, they claim Turkey uses the military equipment it purchases abroad to suppress the Kurdish insurgency in the Southeast. This claim was especially popular during Turkey's quest for the acquisition of 145 attack helicopters in 2000 (with an estimated price tag of $4.5 billion). The third argument against supplying Turkey's military with arms and political support for modernization is that it occurs at the expense of Turkey's democratic development, since it circumvents democratic leaders and civil society.[27] Working against the influence of those lobbies, the various defense industries have powerful networks of lobbies of their own in the different country capitals. In light of the economic considerations, the defense industry strongly wants to secure Turkish contracts. In particular, the defense industry in the United States is closely intertwined with the government, and has become very experienced at political lobbying and has become a "de facto participant in the policymaking process."[28] Today there exists an intricate network of defense industry lobbyists with contacts to various congressional committees and representatives, not to mention with the federal bureaucracy. Evidence to this effect can be found in the large "government relations" offices of almost every defense contractor and the creation of political action committees by all major defense firms for the sake of lobbying. Moreover, the common practice of senior industry employees entering government service and vice versa--U.S. Vice President Dick Cheney is but the most prominent example of this common practice--is matched by regular donations to numerous political campaigns regardless of political affiliation.[29] When traditional lobbying fails, the defense industry has several effective arguments to persuade public opinion to be pragmatic on arms sales. First, there is the issue of jobs. Before high-technology became a critical part of weapons manufacturing, it was calculated that every one billion dollars of arms sales financed 40,000 jobs.[30] Today, that number is certainly lower due to increased productivity and inflation, but nevertheless, large arms sales like Turkey's annual four to five billion dollars can translate into 100-150,000 jobs, at least for political polemics. Other economic justifications point to the need for steady demand in order to maintain the defense industry. Without the constant demand, especially through foreign sales, most defense industry companies could not sustain their size. Foreign military sales comprise up to 35 percent of some major military industrial firms and cannot afford to lose a large-scale customer like Turkey. Also, most firms need to recoup the enormous R&D costs, which the national government only compensates partially.[31] The argument of a foreign military sale being crucial to defense industrial survival is frequently transformed into a three-pronged national security argument. First, as mentioned above, the national defense industry can maintain its size and sophistication by the income generated by foreign military sales. This is particularly important because it allows for the preservation of domestic production capacity should a national need arise. Second, the provision of weapons, including the transfer of technology and other economic inducements to another state, automatically gives the supplier influence in the recipient state.[32] Third, there is the argument for weapons sales being an element of defending strategic interests. In that context, Turkey is a major strategic ally whose military modernization also benefits Western interests. A stronger Turkey means a more active NATO member, an allied country able to fend off threats by itself without assistance, and a source of stability in an unstable region. Obviously, there are some difficulties with this line of argument, but in the public debate it is hard to reject military sales to a reliable ally without rejecting foreign military sales altogether.
Example of Turkish Political Influence from Military Modernization Turkey will have increasingly less difficulty acquiring military equipment if it embarks on long-term procurement, because the defense industry has the necessary political leverage to ensure deals are not blocked and can even minimize the complications that might arise with additional requirements that countries sometimes include in arms sales. Also as suggested, Turkey may increasingly utilize the defense industry's interests in order to achieve other political goals. In a sense, Turkey's military modernization project has become the carrot and stick of Turkish foreign policy. Turkey offers or threatens to retract arms supply contracts in persuading Western governments or parliaments. France experienced Turkey's penal retraction of defense contracts after the Assemblée Nationale passed a bill recognizing the Armenian genocide. On October 19, 2000, the U.S. House of Representatives was about to pass a similar bill. This resolution angered Turkish officials who threatened the administration both to review the strategic relationship with the United States as well as cancel all defense contracts and bar U.S. firms from bidding for future tenders. On Capitol Hill, the main argument for withdrawing the bill in the last minute was the threat of canceled military purchases by a strategic ally. Coincidentally, Turkey had just closed a $4.5 billion helicopter deal with Bell Textron. Nevertheless, it is questionable whether "Turkey would have made good on its threat to cancel arms deals with U.S. companies."[33]
CONCLUSION Once Turkish military modernization proceeds as originally announced, the effects on the political economy of Turkey and Western arms supplier states will be great. Two characteristics of Turkish military modernization make this case unique. First, Turkey is a developing country with an incomplete process of democratization. Second, the scope and especially the time range of the Turkish military modernization program create particular economic and political conditions in the supplier states. Regarding Turkey's domestic development, the effects of Turkish military modernization remain debatable. However, it is certain that modernization will greatly develop Turkey's military industrial capacities and fundamentally professionalize the Turkish Armed Forces. The probable result is that while the military's role in society will to some degree be restored, its conduct will be influenced by its interests as owners and employees of large industries, which will probably converge with regular commercial elites who demand macroeconomic stability and reliable governance. Also, the military's goal of increased activism within NATO and Turkey's successful EU candidacy will depend on the army's abstention from politics. On account of those two reasons, one can expect Turkish military modernization to indirectly promote Turkish democracy. For Turkey's arms supplier states, the modernization program will become central to their relations with Turkey. Due to the structure of the defense industry, the economic incentives of supplying Turkey will gradually outweigh other political considerations. If Turkey also improves its democracy, Turkish influence is bound to grow even more. Turkey will be able to use its substantial procurement contracts as a policy tool in its conduct of relations with Western countries. In other words, the military modernization will provide the foundation for Turkey's continued rise as a regional power. NOTES [1] As suggested by Keith Hartley and Todd Sandler, Handbook of Defense Economics (Oxford: Elsevier, 1995), pp. 59-61. Furthermore, it should be noted that industry data is only available with delay and that it is most recommendable to refer to one source only due to various methodologies. Hence, the usage of WMEAT 2000 as the most recent and reliable data set. [2] Simon Mayall, Turkey: Thwarted Ambition, McNair Paper 56, Institute for National Security Studies, (Washington, DC: National Defense University, 1997), p. 78. It should be noted that most of that equipment was not even cutting edge, but rather second-hand equipment. [3] State Department, World Military Expenditures and Arms Trade (WMEAT) 2000 (Washington, DC: State Department, 2000), Table I: Military and Government Expenditures. [4] Ali L. Karaosmanoglu, "The Evolution of the National Security Culture and the Military in Turkey," Journal of International Affairs, Vol. 54, No.1 (Fall 2000), p. 215. [5] William Hale, Turkish Politics and the Military (London: Routledge, 1994), pp. 327-328. [6] Dietrich Jung, "Die Rache der Janitscharen--Der Türkische Modernisierungsprozeß und seine Blockade," ORIENT (February 1999), pp. 230-231. [7] State Department, WMEAT, Table II: Arms Transfers and Deliveries and Total Trade. [8] Wolfgang Piccoli, Alliance Theory: The Case of Turkey and Israel, wwwc.cc.columbia.edu/sec/dlc/ciao/wps/pic01/pic01.html, p. 21. [9] Tomas Valasek, "Turkey's Shopping Spree," Weekly Defense Monitor, Issue 24 (June 1999), p. 2. [10] Sverre Lodgaard and Robert Pfalzgraff, Arms and Technology Transfers (Geneva: UNIDIR, 1995), p. 168. [11] R. Chase, E. Hill and P. Kennedy, "Pivotal States and US Strategy," Foreign Affairs Vol. 75, No.1 (January/February 1996). [12] Mayall, Turkey: Thwarted Ambition, p. 58. [13] Alan Makovsky, "New Activism in Turkish Foreign Policy," SAIS Review, Vol. 19, No. 1 (Winter-Spring 1999), p. 7. [14] European Commission, Issues Arising from Turkey's Membership Perspective, (October 6, 2004), p. 10. [15] Süddeutsche Zeitung, Das Rot-Grüne Problem der Türkei-Panzer (May 22, 2000). [16] Michael Eisenstadt, "Turkish-Israeli Military Cooperation: An Assessment," Policywatch, No. 262 (July 24, 1997). [17] State Department, WMEAT, Table II: Arms Transfers and Deliveries and Total Trade. [18] See Andrew Ross's definition of the nature of competition in the international arms market in Political Economy of Defense-Issues and Perspectives (New York: Greenwood Press, 1991), p. 128. [19] David Mussington, "Understanding Contemporary International Arms Transfers," Adelphi Paper, No. 291 (September 1994), p. 58. [20] State Department, WMEAT, Table IV: World Arms Deliveries. [21] See the underlying economic factors in Jacques Gansler, The Defense Industry (Cambridge, MA: MIT Press, 1980), pp. 29-31. [22] Gansler, The Defense Industry, p. 30. [23] Markus Kerber, "Rüstungsbeschaffung, internationaler Wettbewerb und Ordnungspolitik," Sicherheit und Frieden (April 2000), p. 360. [24] Valasek, "Turkey's Shopping Spree," p. 2. [25] State Department, WMEAT, p. 13 for 1995-1997 figures. Using all references one can calculate minimum expenditures for the years 2000-2002, but Turkey has not yet fully disclosed how it allocated the funds. This just illustrates the potential increase each weapons supplier state could experience. [26] Lodgaard, Arms and Technology Transfers, p. 267. [27] Tamar Gabelnick, Turkey: Arms and Human Rights, Foreign Policy in Focus, May 1999, p. 1. [28] Gordon Adams, The Politics of Defense Contracting: The Iron Triangle (New Brunswick: Transaction, 1982), p. 24. [29] See Adams, The Politics of Defense Contracting, pp. 227-444 on profiles of major defense industrial corporations. [30] Stephanie Neuman and Robert Harkavy, Economics of Arms Transfers, Arms Transfers in the Modern World (New York: Praeger, 1980), p. 179. [31] Adams, The Politics of Defense Contracting, pp. 35, 97. [32] Jean-Marc Blanchard, Edward Mansfield and Norrin Ripsman, "Economic Statecraft, Interdependence and International Conflict," Security Studies, Vol. 9, No. 1-2 (Autumn 1999 – Winter 2000), pp. 5-7. [33] David McKeeby, "‘Legislating History?' Congress and the U.S.-Turkey Strategic Partnership," CSIS: Turkey Update (October 20, 2000) http://www.csis.org/turkey/TU001020.html. Elliot Hen-Tov is a doctoral student in contemporary Turkish affairs in the Near Eastern Studies Department at Princeton University. Publisher and Editor: Prof. Barry
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