"Defense News" reports that Turkey's Undersecretariat for Defense Industries director Murad Bayar has announced that Ankara is ready to accept delivery of six Heron unmanned aerial vehicles (UAV) built for Turkey by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), after Bayar said they "passed critical performance tests in Israel."
Bayar said, "Six of the aircraft have successfully passed the tests inspected by a delegation of Turkish officials. We are expecting their deliveries in the weeks ahead. And this closes the deal from our point of view."
"Defense News" added that Turkey and the Israeli team had been at odds over delays of more than two years in the delivery of the Herons. The dispute regarding the technical fulfillment of contract specifications was resolved after revisions in the original terms and conditions, Bayar said.
IAI and Elbit won the Turkish UAV contract in 2005 beating competition from US firms. "Defense News" said that the program was dogged from the start by technical difficulties. The contract was worth $183 million, of which about $50 million would go to Turkish subcontractors Turkish Aerospace Industries and Aselsan.
The Heron dispute in recent months was part of the deterioration in relations between Turkey and Israel. But a critical meeting between Turkey's Minister of National Defense Vecdi Gonul and Israel's Minister of Defense Ehud Barak in late January paved the way for a degree of reconciliation.
The coldness in Israeli-Turkish relations is also reflected in a recent Turkish decision to drop Israel's Arrow 2 anti-ballistic missile system from its list of options for a new missile defense system. Only companies from China, Russia, the US, and Europe were invited to participate in a new tender for the system, worth $1-2 billion. Turkey plans to deploy the system around Ankara and large military bases.
There is no certainty that the US, which finances half of the Arrow project, would have approved a sale of the Arrow 2 to Turkey. The US might have even vetoed a sale just to bolster the chances of US companies in the tender. However, there is no doubt that a Turkish request to include the Arrow 2 in the tender would at least have been considered by the Obama administration.
Published by Globes [online], Israel business news - www.globes-online.com - on February 16, 2010
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