The implications of the ‘Autarky-Efficiency Dilemma’ for the Turkish defence industryThe pursuit of developing indigenous defence-industrial capabilities often encounters with the need in sacrifices. As noted by Moravcsik, this involves an “autarky-efficiency dilemma”, in which relative autonomy can only be attained at the expense of production efficiency. (Moravcsik A., 1991) Governments tend to address this issue by adopting different strategies, which ultimately shape their defence industry and markets. By introducing the case of Turkey and specifically concentrating on two distinct segments of the Turkish industry: land and aerospace platforms, this paper, in turn, reasserts Moravcsik’s argument that although autarkic policies are triggered by political and military objectives, economic and technological factors appear to provide strongest clues in defining the rational extent of these policies.

During the last half-a-century many developing countries have considered adopting policies aimed at achieving self-sufficiency in their defence industries, which has led to a long-lasting debate on this topic. On the one hand, smaller domestic production runs lead to higher unit costs, lower quality product and higher pressure on government to sustain the industry, as well as depriving the national economy of the opportunity to specialize in a narrower range of production. On the other hand, the “public good” character of defence products and its direct role in the national security planning, along with the desires of international prestige and aspiration of becoming an independent player, leads states to aim at decreasing their dependency on foreign suppliers in order to increase their power position relative to other international actors. (Markowski S., 2010) Thus, the increased costs stemming from the inefficiencies commonly associated with state-owned or supported defence industries often are deemed acceptable. 

Turkey is a stark example, whose defence industrialization was galvanized by the arms embargo in 1974, which left Turkish military at a very difficult situation, where it could not even conduct simple maintenance due to its full dependence on foreign products. With this awareness of the need to become self-sufficient in arms production, Turkey established the Undersecretariat for the Defence Industry and made important investments that would institute the foundation for the future Turkish defence industries through a policy of offsets for military procurements. The most notable advancements were Turkey’s first successful offset contract with General Dynamics for the production of F-16 parts, which enabled the establishment of TUSAS Aerospace Industries Inc. in 1984 (later TAI), and the Advanced Infantry Fighting Vehicle project, which gave birth to military vehicle company FNSS – a joint venture of Nurol Construction and Trade (49%) and FMC (now BAE Systems, 51%) in 1988.

Since then, Turkey has been able to make significant inroads into self-sufficiency in land warfare, as four Turkish private companies: Otokar, FNSS Defence Systems, BMC and Nurol Makina (Ankara advances) – now have the capability to design, develop and produce armored vehicle designs ranging from large armored personnel carriers and infantry fighting vehicles like the FNSS PARS to mine-resistant ambush protected vehicles like the BMC KIRPI (Turkish Defence, 2015-2016). Meanwhile, Turkish Aerospace Industry has established itself as the leading prime contractor in the air warfare sector, producing fighter aircrafts under license (co-production of F-16s with General Dynamics) (Defence and Security, 2015). Other co-production agreements include manufacturing of products, such as Turkish T-129 reconaissance and attack helicopter with AgustaWestland (Turkey test, 2009), or T-70 helicopters with Sikorsky (Sikorsky comes, 2016) etc. 

As of 2014, Turkey was already able to meet 60% of its military needs through local production, proclaiming to reach autarky in 2023. (Forrester, C., 2015) However, as indicated above, there is stark contrast between the self-sufficiency levels of distinct industry segments: while land platforms have achieved total autarky, air platforms still largely depend on the co-production agreements. In the meantime, Turkish authorities, relating to the recent growth rates, perceive the current state of foreign participation as an intermediate step on the road to achieving defence autarky. (Bağcı H., 2017)

Two points have to be emphasized at this moment:

The implications of the ‘Autarky-Efficiency Dilemma’ for the Turkish defence industryFirstly, if at some point Turkey achieves autarky in the aerospace industry, then referring to Moravcsik, in the condition of exponentially rising fixed costs, greater complexity of production technology, and the emergence of significant learning economies, the management of the autarky-efficiency dilemma will become the preeminent concern for the Turkish government. The government could face the continuous pressure for sustaining its industry, and national markets would be insufficient to support aircraft production, leading to increasing demand for exports. 

France is given as an example, where the national markets were simply too small to maintain aircraft production in the post-WWII period, leading the government to pursue policy of stimulating exports. Since competing with the United States was not a realistic choice, their strategy was to create a unique market niche by producing mid-performance, low-cost fighters and offering them wherever the U.S. was unwilling or unwelcome as a source. As a result, the country began exporting between 60 to 90 percent of the output of its major aeronautic systems, mainly to the Third World. However, this obliged the leading producers to focus their attention on designing and marketing to suit low-quality needs, which ultimately led to a condition, where the design of the French military systems was unacceptable and inadequate for battles on the European central front. The irony occurred, when at some point, in a striking affirmation of the French military’s discontent, the French navy proclaimed its preference for the U.S. fighter aircraft over local products. (Moravcsik A., 1991) 

Moravcsik’s illustration of French export policy case perfectly demonstrates how the struggles of a new producer like Turkey to infiltrate less-competitive markets, could have disastrous effects on the overall quality of its future production. In contrast, domestic market for the land platforms seems to be sufficient for the domestic producers, not to be dependent on the low-quality requirements of the non-competitive export markets.

Thus, Moravcsik’s solution for countries such as Turkey seems to be “entering international collaborative arrangements to benefit from economies of scale and agglomeration orto protect their home industry base by arranging an international work-share agreement” in the areas such as aerospace industry. Consequently, according to Moravcsik, current course of Turkish participation in the international aerospace industry production might be the most efficient way for addressing the autarky-efficiency dilemma in this market segment.

Secondly, defence autarky requires increasing the spending on research and development, especially when defence industrialization is geared towards self-sufficiency, where funds have to be spread across the board rather than concentrating on some selected military technologies. However, Turkey’s government defence R&D spending is substantially lower than the industries of advanced and even emerging countries, against which Turkey is currently competing. According to the OECD data, Turkey’s defence R&D spending has fluctuated between 579 million and 1515 million since 2008, while Republic of Korea, Japan, the United Kingdom, Germany and France have heavily outspent Turkey in this area. (OECD, 2016) 

Furthermore, Turkey’s innovation capabilities are estimated to be well below EU average across all dimensions according to the European Innovation Scoreboard 2016. For Turkish companies to sustain themselves in the global market, they must be competitive in quality and price, however, with the current level of government R&D spending and innovation capabilities, it is highly unlikely that Turkey could challenge major arms producing countries in the foreign markets. (Hollanders, H., 2016) Therefore, Turkey’s market share in the international arms landscape will remain limited to the low-to-medium technology products such as land systems. Even the local production of relatively more sophisticated land platforms requires foreign support. Altay main battle tank, for instance, is the product of a technology agreement between Turkey and South Korea’s Hyundai Rotem. (Turnbull G., 2014) 

To sum up, we can state that the size of the internal market and the level of R&D spending are strong indicators of the way states tend to address the autarky-efficiency dilemma in different segments of the defence industry. In case of Turkey’s aerospace platforms, it seems rather rational not to acquire autarkic strategies, while land platforms are perfect examples of the opposite approach.

Nevertheless, two more crucial points on this issue have to be emphasized. Firstly, as Erickson puts it, ‘Turks do not want or need the world’s best tank, if it means that the spare parts can only be procured from an outside supplier, they would rather have a good tank that is competitive against regional adversaries and which they produce internally’ (Erickson 2004, p.33). Secondly, the discourse of independent defence industry has become such an effective tool of electoral attraction in Turkey, that not only the ruling party but also the major opposition parties tend to support developing indigenous defence industry in the country. (Bağcı H.,2017) These two points clearly suggest why the idea of achieving autarky will persist in the Turkish political and military circles for years to come.




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