US-Turkey Row Could Jeopardize $1.5B Helicopter Deal Between Pakistan and Turkey

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AUG 13, 2018: An escalating diplomatic crisis between NATO allies Turkey and the United States may risk suspending a $1.5 billion deal between Turkey and Pakistan for the sale of 30 Turkish-made T129 ATAK helicopter gunships.

The T129 being produced by Turkish Aerospace Industries under license from the Italian-British company AgustaWestland are helicopter gunships which have the capability to perform adequately over the higher altitudes of the Hindu Kush mountain range separating Afghanistan and Pakistan.

The AH-1F Cobra gunships Pakistan presently has lack the capability, according to Defense News.

“The problem is related with the U.S.made parts for which TAI will need U.S. export licenses in order to materialize the deal,” a Turkish aerospace official said, DN cites in its report.

“Apparently we shall need U.S. export licenses to go ahead with the T129 deal,” a senior procurement official said. “This is not a technological or financial matter but is purely political at the moment.”

Washington has sanctioned two Turkish ministers, and U.S. President Donald Trump pledged to double tariffs on Turkish steel and aluminium exports to his country. Turkey retaliated by sanctioning two U.S. secretaries, but the row has already sparked a financial crisis in Turkey. The Turkish lira has lost 81.5 percent of its value against the U.S. dollar in the year to Aug. 12.

The two NATO allies also have been at odds over U.S. support for Kurdish militants fighting the Islamic State group in northern Syria, as well as Turkey’s refusal to follow U.S. sanctions on Iran, and Ankara’s decision to deploy the Russian-made S-400 air and anti-missile defense systems on Turkish soil.

“This is a commercial deal (with Pakistan) with a country that has friendly relations with America. For Washington what matters should be the recipient of the systems, not who produces it and if relations are bumpy with the producer country,” a Turkish defense official said. “Why should the Americans punish Pakistan for their disagreements with Turkey?”

But the Trump administration has been upping the ante against Pakistan after latter’s refusal to tow former’s line in Afghanistan and the broader region.

Earlier this month, a bipartisan group of US senators expressed concern over potential bailout requests to the International Monetary Fund (IMF) by countries who have accepted “predatory Chinese infrastructure financing”.

In a letter addressed to Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, the senators asked how the Trump administration plans to address “the dangers of China’s Belt and Road Initiative (BRI)”.

The China-Pakistan Economic Corridor (CPEC) is part of the BRI — its flagship project, and involves billions of dollars worth of infrastructure development and establishment of energy projects in Pakistan. However, the development has also involved China extending loans to Pakistan, much to the dismay of the US that feels Beijing is using “economic pressure to affect foreign policy decisions”.

“It is apparent that…the goal for the [Belt and Road Initiative] is the creation of an economic world order ultimately dominated by China,” the letter quoted US senators as saying.

The Trump administration this week cut down coveted training and educational programs that have been a hallmark of bilateral military relations between the US and Pakistan for more than a decade.

How will it affect the already fractured ties between Washington and Islamabad is a matter of concern for analysts and foreign relations experts.

A TAI official said a U.S. embargo on the chopper deal was unlikely because it would also hurt a U.S. company as well as two British companies and one Italian. “These are not enemy producers,” he said. “They are on the ally side. And we (TAI) are not being sanctioned by the U.S. or any other ally country.”

To finance one of the country’s largest defense and aerospace export contracts, Turkey offered Pakistan a $1.5 billion credit line in 2017.

“President Trump is not always predictable. … He may wish to punish Turkey by sabotaging such a critical export contract at a time when the Turkish economy is badly ailing. At the same time he may also wish to give a message to the Pakistanis,” according to a European defense attache in Ankara.

Meanwhile, Pakistan has been guaranteed financial backing from Beijing, report The Express Tribune citing senior officials, as the incoming government of Imran Khan seeks to avoid going to the International Monetary Fund (IMF) as it resolves its foreign exchange crisis, reported the Financial Times on Monday.

Islamabad’s new government has been assured that they will get further loans from China amid depleting reserves that dropped to $9 billion before Beijing came to the rescue with a $1 billion inflow.

“China has promised to continue helping Pakistan overcome the crunch on foreign payments,” one prospective cabinet minister told the FT.

Another senior leader of Khan Sahib’s party PTI said, “The Chinese have signaled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.

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