Aselsan ‘suffers’ from Chinese missile accord

Erdal Sağlam ANKARA / Hürriyet

ASELSAN is Turkey’s leading defense firm and has long been an incubator of new technology, but the firm is worried about a partnership with CPMIEC. DAILY NEWS photo

While the diplomatic tremors Turkey has created by awarding a long-range missile tender to a company from China continue, problems for ASELSAN – which will also take part in the project – are compounding.

Officials from the Chinese firm CPMIEC came to the Military Electronic Industries of Turkey (ASELSAN) to build up a partnership last week, but Turkish officials are still keeping the door open for Western firms that lost in the missile tender last year to perhaps swoop in and clinch the ultimate agreement.

The 30 experts that came from China held talks at ASELSAN, mostly working on matters related to research and development. In their bid, the Chinese firm stated that a portion of the project would be carried out in cooperation with ASELSAN.

However, this situation and the visit created turmoil, rather than pleasure, at ASELSAN, amid the knowledge that Western military powers have consistently said CPMIEC’s missile defense system cannot be integrated into a NATO-wide network. CPMIEC is also under Western sanctions for violating non-proliferation acts with countries such as Syria, Iran and North Korea.

As business proceeds, the anxiety of the ASELSAN management has increased, and there are suggestions that “such a decision on cooperation cannot be made at the executive committee but can only be made at the General Assembly.”

The ASELSAN management made an inner study following reaction from the West, noting the effect that partnerships with Western firms could be severed due to the continued cooperation with CPMIEC.

ASELSAN, which is known to be the cradle of technological development in Turkey, will experience extensive damage in the event that the cooperation with CPMIEC continues, according to sources. Also, ASELSAN’s development both economically and technologically could be interrupted.

The ASELSAN management, which is anxious because of the Chinese visitors, is also re-contacting the French-Italian partnership and the American companies which lost the September 2013 tender
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One source said the discussions could not have happened without the permission of the government. “The government probably understood it made a mistake after some consultations and is looking for ‘ways to reverse the decision.’”

According to a story broadcast on CNNTürk last week, French President Françis Hollande and a French defense delegation met with Defense Minister İsmet Yılmaz and defense industry undersecretary Murad Bayar in Ankara during which a renewal of the French partnership’s offer was discussed. After this, U.S. Ambassador in Ankara Ambassador Francis Riccardone met with Bayar regarding the situation of the American firm.

No foreigners to broker public offerings

Meanwhile, ASELSAN has also been experiencing trouble in terms of public offerings due to the selection of CPMIEC. Merrill Lynch initially said it did not want to broker a public offering because of the American administration’s stance. Barclays won the tender, followed by Merrill Lynch and Goldman Sachs. Because the first bid was too expensive for ASELSAN, the management submitted an offer to the firm in second place, Merrill Lynch. After the U.S. company refused to deal with ASELSAN over fears of sanctions, the Turkish defense firm spoke to Barclays and Goldman Sachs again. Both firms subsequently expressed concerns similar to Merrill Lynch’s, demanding assurances that “no work will be done in cooperation with the Chinese firm.”

After negotiations with all three companies fell through, ASELSAN’s management also contacted, albeit unofficially, foreign establishments such as Citibank and Credit Suisse, but received the same reply.
Consequently, it appears as if ASELSAN’s second public offering, which has been planned for a long time, has been postponed.

ASELSAN is reportedly now trying to find a Turkish stock broker to broker the public offering.