Turkey currently maintains a fleet of more than 200 F-16 aircraft, approximately 100 of which require upgrades. Reuters
Turkey currently maintains a fleet of more than 200 F-16 aircraft, approximately 100 of which require upgrades. Reuters
Turkey currently maintains a fleet of more than 200 F-16 aircraft, approximately 100 of which require upgrades. Reuters
Turkey currently maintains a fleet of more than 200 F-16 aircraft, approximately 100 of which require upgrades. Reuters

US stresses Nato interoperability as Turkey pushes F-16 sale


Bryant Harris
  • English
  • Arabic

The US on Monday stressed that it prioritises Turkey’s interoperability with Nato after Turkish President Recep Tayyip Erdogan said Washington had offered to sell Ankara F-16 fighter jets.

Mr Erdogan claimed at the weekend that President Joe Biden’s administration has offered to sell Turkey the F-16 aircraft as compensation for its expulsion from a co-production programme to build top-of-the-line F-35 fighter jets.

Turkey currently maintains a fleet of more than 200 F-16 aircraft, approximately 100 of which require upgrades.

“As a matter of policy, the [US State Department] does not confirm or comment on proposed defence sales or transfers until they have been formally notified to Congress,” a State Department representative told The National.

“The United States strongly values its partnership with its Nato ally, Turkey. The United States and Turkey have long-standing and deep bilateral defence ties, and Turkey’s continued Nato interoperability remains a priority.”

State Department spokesman Ned Price clarified that the US has not made an offer to help Turkey finance any potential F-16 sale, as it sometimes does for allies seeking to purchase expensive American military hardware.

"We would refer you to the Turkish government to speak to its defence procurement plans," Mr Price told reporters at a State Department briefing.

"What I can say is the United States has not made any financing offers on Turkey's F-16 request."

Turkey lost $1.4 billion in the F-35 coproduction programme after the US expelled it in 2019 over its $2.5bn purchase of the Russian S-400 missile defence system.

The US fears that the powerful S-400 radar system could allow Russia to spy on its military hardware.

But Washington has left the door open to Turkey rejoining the F-35 programme if Ankara abandons the Russian missile system.

Turkey has so far refused to relinquish the system, and instead, Mr Erdogan began a public push to convince the US to reimburse it for its F-35 investment last month.

Mr Erdogan is expected to meet Mr Biden on the sidelines of the G20 summit in Italy at the end of the month.

“We made a $1.4bn payment — what will become of that?” Mr Erdogan asked reporters after a meeting with Russian President Vladimir Putin last month.

“We did not — and do not — earn this money easily. Either they will give us our planes or they will give us the money.”

In addition to its removal from the F-35 programme, Turkey’s acquisition of the S-400 system prompted the US to sanction Ankara as required under a Russia sanctions law known as the Countering America’s Adversaries Through Sanctions Act (Caatsa), which Congress passed in 2017.

The sanctions could complicate any potential F-16 sale as they include a ban on all US export licences and authorisations to Turkey’s Presidency of Defence Industries, Ankara’s military procurement agency.

The sanctions also include an asset freeze and visa restrictions on Ismail Demir, the agency’s president, as well as other Turkish officials.

Mr Biden’s nominee to serve as ambassador to Turkey, former Republican senator Jeff Flake, told Congress last month that those sanctions will remain in place until Turkey abandons the S-400 missile system.

“I will also warn Turkey that any future purchase of Russian weapons risks triggering further Caatsa sanctions in addition to those already imposed,” said Mr Flake.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: October 18, 2021, 8:43 PM