"Baykar is forging ahead like an icebreaker, creating a path" for more Turkish business with the Kingdom, CEO Haluk Bayraktar told Breaking Defense. 

BEIRUT — Turkish drone maker Baykar’s July deal with the Kingdom of Saudi Arabia represented the company’s largest drone export deal ever. But the ramifications could expand beyond Baykar, with experts telling Breaking Defense that the agreement should open to doors for other Turkish defense firms to do business with the deep-pocketed Saudis.

In an emailed exchange with Breaking Defense, Baykar CEO Haluk Bayraktar agreed with that assessment, saying that with the deal to sell Akinci drones to the Saudis, “Baykar is forging ahead like an icebreaker, creating a path” for more Turkish business with the Kingdom.

Already, Bayraktar’s firm is moving to add new ties to KSA. On Aug. 6, Baykar signed localization agreements with Saudi Arabia Military Industries (SAMI) and the Saudi National Company for Mechanical Systems (NCMS). As part of that, Turkish firms Roketsan and Aselsan also signed independent deals with KSA to provide ammunition and optical sensors for the Akinci.

“Our partners ASELSAN and ROKETSAN, with whom we collaborate, have also entered agreements with NCMS based on their technological capabilities. Thanks to these agreements, hundreds of companies producing subsystems in the Turkish defense and aviation industry will expand their export portfolios through new collaborations in this field,” Bayraktar said.

He added that through the latest agreement, SAMI will help produce parts of the Akinci locally, with guidance from Baykar workers.

“Through this, we will also transfer knowledge and experience gained from years of R&D efforts, contributing to technology transfer. I believe that these agreements will significantly contribute to Saudi Arabia’s Vision 2030 project, which aims to develop technology and localize production,” Bayraktar told Breaking Defense.

Can Kasapoglu, a Senior Fellow at the US-based Hudson Institute and Director of Defense Research at the Istanbul-based Edam think tank, noted that one of the main elements in this deal is the offshoring of production, which allows for an expanded and continuous manufacturing as well as burden-sharing.
What weapons or parts of weapons will be produced in Saudi Arabia under the new deal was not made clear by either country, but Kasapoglu expects that SAMI will offer Baykar a facilitative role in some manufacturing segments, including airframe structures, advanced electronics, ground equipment, as well as the final assembly of the Akinci.

“Besides the ability to produce such systems, other economic considerations such as competitive advantage will be key in the distribution of subsystem/subcomponent production,” he added.

“Baykar seems confident that it found itself a competent tango in UAV manufacturing and advanced electronics that it can cooperate with to produce its top-notch systems. Joining forces with the Saudi defense industry will accelerate Baykar’s rate and capacity of production, which is crucial to meet the burgeoning demand for the Turkish unmanned aerial solutions,” Kasapoglu said.

Although he didn’t respond to Breaking Defense questions about the number of drones or worth of the deal, Bayraktar claimed that the deal with KSA is the largest defense and aviation export agreement between Turkey and Saudi Arabia.

The company CEO also wanted to put to bed any rumors that his firm has been or will be sold to Saudi Arabia, something that has appeared in local media reports.

“it is not true that BAYKAR has been sold or that any such process is underway. BAYKAR continues to progress just as it has before. There will be no change in our company structure and business approach,” he told Breaking Defense.

Turkish Firms Capitalizing On Saudi Deal

Aselsan and Roketsan may be the first firms following Baykar’s lead, but they are unlikely to be the last, experts tell Breaking Defense.

Baykar’s “deal with Saudi Arabia will put the other Turkish defense industry companies under the spot too. Baykar’s successful work will encourage Saudi Arabia to contact and establish relations with other Turkish defense companies in other fields too,” said Ali Bakir, non-resident senior fellow at the Atlantic Council’s Scowcroft Middle East Security Initiative.

Kasapoglu shared Bakir’s view on the new opportunities lying ahead of Turkish firms.

“As Akinci is compatible with a multitude of Turkish indigenous munitions made by Roketsan and TUBITAK SAGE [a government-backed defense technology research group], this deal will certainly create a long-term relationship between the two nation’s defense industries,” Kasapoglu said.

He added that most Turkish defense products, including some included in the deal, are the result of the cooperation of numerous Turkish defense companies that design and manufacture subsystems.

“It can then be argued that these subsystem makers have the potential to sign contracts with Saudi companies in the future once the technology transfer to the KSA begins to produce indigenous Saudi products,” Kasapoglu said.

Baykar has gotten a big boost on the global stage thanks to the success of the TB2 Bayraktar drone and its very public participation in the war in Ukraine, to the point Ukrainian forces created a song about the drone in the early days of Moscow’s invasion. While that may have helped put the company on KSA’s radar, ultimately the biggest reason Baykar won this deal was likely due more to the location options provided by Ankara.

Bakir noted that localization challenges are always a real issue that could pop up. But he believes that “if the model works, then it will definitely facilitate and boost Turkey’s defense cooperation not only with Saudi Arabia but also with the other GCC countries too,” noting that the Gulf countries usually follow each others’ steps in defense procurement.

“Saudi Arabia’s deal with Baykar will encourage the other GCC states to strengthen their relations with the company and try to acquire its advanced defense platforms too in the future. This would increase the company’s business and its inter-relations with the Arab Gulf countries,” Bakir said.

Saudi, Turkey, China And The Geopolitical Game

With restrictions imposed by US on defense exports to KSA, and with Washington prioritizing other regions like Ukraine and the Indo-pacific above the Middle East, Baykar was able to capitalize on improved relations between the two countries, even as major players were eyeing the same deal.

“There were formidable competitors for both the export contract and the collaboration agreement. Despite competitors from China and the USA, Bayraktar AKINCI emerged as the winner of the process. By surpassing very important rivals, we have become the executor of such a project,” Bayraktar told Breaking Defense.

The company chief executive officer expected strong and strategic partnership to be established between Turkey and Saudi Arabia. ” I believe that the joint efforts of the two countries will contribute to regional and global stability,” Bayraktar said.

Kasapoglu highlighted the well chosen timing of Baykar’s deal with KSA.

“Baykar’s move was very timely and cleverly designed to exploit the positive momentum sparked by the rejuvenation of the Gulf-Turkish diplomatic ties. To understand the real value of Ankara’s entry into the Gulf arms market, one should look at the recent transactions of the regional states. Amid the void created by Washington’s self imposed restrictions on its arms makers as to armed drone exports to the Middle East, China is rushing to fill the demand,” Kasapoglu said.

He added that this sale does not only mark an important transaction between two regional countries but a geopolitical one to counterbalance China’s interest in the region. As strained as relations have been between Ankara and Washington over the last decade, neither has an interest in a greater Chinese presence in the region.

Kasapoglu stressed an “NATO” important aspect of the deal.

“The takeover of the Gulf UAV market from China by a NATO ally” is notable, he said. “American UAVs have long failed to enter the market due to export restrictions of Washington. China quickly filled this gap and became the primary supplier of drones to the Gulf.”

Kasapoglu added that this not only broadened China’s position as an advanced arms exported but also provided valuable feedback to the PLA with respect to the performance of their products.” As a result, actively countering this trend not only benefits Turkey but the whole NATO alliance.”


Source:Breaking Defense