Professor Ünal Tekinalp, head of the commission that prepared the draft trade bill, provided readers with some details in an interview with daily Sabah on Tuesday.
He said that under the current outdated trade law, either the relatives or close associates of company bosses have been fulfilling the duty of inspector, indicating that Turkish companies, including banks, have lacked an internationally accepted oversight of their balance sheets.
"If the Turkish trade law is not adopted, banks will be obliged once again to postpone a decision to join Basel 2 [already postponed to 2009]. Another postponement will mean that banks will not be in a position to even give credits due to the absence of the new trade law regulations that envisage, among other things, a mechanism that will also inspect the inspector." (Sabah, Dec. 4)
I now wonder whether Turkey's military-owned defense companies, already free from any kind of external inspection, will be subject to the new trade law or will be excluded from inspection according to internationally recognized standards.
To my knowledge it is only the Aselsan military electronics company which is quoted on the stock exchange, out of around 15 military-owned companies operating under the umbrella of the Foundation to Strengthen the Turkish Armed Forces (TSKGV).
Those companies include Aselsan, Havelsan, Tusas Aerospace Industries (TAI) and Roketsan. The executive boards of these companies are filled with mostly ex-generals, and there have been serious issues with productivity within these companies.
It is only recently that military foundation-owned companies have been pushed to contribute to the country's fragile economy, as the Turkish Undersecretariat for the Defense Industry (SSM), the country's main arms procurement agency, has pursued policies forcing those companies to produce local military products to boost the Turkish defense industry infrastructure, which is still heavily reliant on abroad -- about 75 percent of main systems.
A strategic plan, or the road map released by the SSM covering the years 2007 through 2011, aims not only to increase the proportion of defense systems produced locally from the current 25 percent to 50 percent and to reach that target by 2010, but also to increase defense product exports and services to around $1billion per year by 2011 from the current $200-$300 million per year.
For a country like Turkey, which has been earmarking a considerable amount of resources for defense from its already limited fiscal budgets, the current export figures and the level of the local defense industry are not acceptable.
In a recent interview with defense magazine Savunma ve Havacılık, Dr. Faruk Özlü, SSM deputy undersecretary for military projects, complained about Turkish companies, which he said were not making satisfactory efforts in openings abroad to get shares of work.
"For example, in the Joint Strike Fighter Project [JSF, a US-led project that Turkey is partner to, pledging to buy 100 fighters at a cost of around $10 billion], with the exception of some of Turkey's private companies, the big Turkish companies [referring to TSKGV companies] did not make any special effort to grab a work share from within the project. What is Aselsan's work share within the JSF project? What is Havelsan's work share within the same project? These questions should be asked." (Savunma ve Havacılık Magazine, No: 2007/04)
We also learn from the same interview that the SSM has created a $325 million budget to help Turkish companies in setting up their infrastructures to enable them to get work shares within the JSF project. The SSM-created budget is interest free, envisaging a very long-term payment mechanism.
But, says Özlü, none of the big Turkish companies have so far applied to the SSM to benefit from the credit mechanism.
This criticism of Özlü's alone underlines the importance of close scrutiny of military-owned companies if the ongoing burden of costly defense expenditures is intended to be reduced even to a certain extent.
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