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Turkish-German row stalls defense projects, Rheinmetall CEO says

Deals affected include Altay tank production, Leopard tank upgrades

Ongoing tensions between Germany and Turkey have stalled several defense projects, the CEO of a German defense contractor said on Monday.

Armin Papperger, CEO of Rheinmetall AG, told German news agency DPA that his company is still waiting for a final decision from both the Turkish and German governments regarding several projects. The planned projects include providing ammunition for fighter jets and modernization of Leopard tanks in Turkey to better protect them against anti-tank missiles.

Germany has been one of Turkey’s main allies in the EU, but relations between the two nations have significantly deteriorated since the beginning of this year. Berlin launched several measures against Turkey including trade restrictions in response to Turkey’s arrest of several dozen German citizens, including journalists and human rights defenders.

Germany has also been critical of Turkey’s crackdown on opponents since the failed military coup last year.

“If relations with Turkey don’t improve it will be difficult to obtain a permission from Germany. The German and Turkish governments would have to come much closer together again,” Papperger said.

Turkey's Altay main battle tank
The Turkish Altay main battle tank, designed and prototyped by Otokar. Image: Otokar

Altay main battle tank

Last year, Rheinmetall founded a joint venture called RBSS with Malaysia-based Etika Strategi and Turkish truck and the bus manufacturer BMC, which is 50 percent owned by a Qatari fund. The German corporation holds a 40 percent stake in the deal.

RBSS says it is focused on the production of wheeled and tracked vehicles and is currently seeking a lucrative defense project that includes the initial serial production of up to 250 Altay main battle tanks. The project may eventually produce 1,000 units and is estimated to be worth more than $8 billion.

Based on the South Korean K2 Black Panther tank, the Altay was designed and prototyped by Turkish armored vehicles manufacturer Otokar. In June, Turkish authorities scrapped single-source negotiations for serial production with Otokar and opened a bidding process instead.

Both Pakistan and Saudi Arabia have reportedly shown interest in purchasing the Altay, and RBSS is in talks with Qatar for the sale of up to 1,000 armored vehicles.

German arms export laws

Even if RBSS wins the Altay serial production contract, the German government will need to give clearance for the deal.

Under German federal laws, arms exports to countries with poor human rights record are strictly regulated. In May, protesters picketed outside a building where Rheinmetall was holding its annual conference, demanding the German defense company suspend arms exports to Turkey.

Papperger said his company has no plans to build its own tank factory in Turkey, primarily because Ankara would only accept joint ventures for domestic production. The transfer of technology to Turkey also requires permission from Berlin.

Papperger said Rheinmetall is currently in touch with the Turkish government despite the tense relations. He added that Turkey is still a NATO partner and the “shield of the alliance in the east.”

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