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Jan 11 2019

German defence contractor Rheinmetall pulls out of Turkish tank project - Stern

Turkey will continue to build a tank factory after one of its major tank suppliers, German defence group Rheinmetall, abandoned its joint tank projects, the German magazine Stern reported on Friday.

President Recep Tayyip Erdoğan last week joined a groundbreaking ceremony for the Turkish vehicle manufacturer BMC in the town of Karasu on the Black Sea coast, the report said. BMC received an official order to manufacture 250 Altay tanks, according to Stern.

Rheinmetall had planned to participate in the project, and set up the Ankara-based joint venture RBSS in partnership with BMC and another partner from Malaysia in autumn 2016, Stern reported.

However, Stern quoted Rheinmetall spokesman Peter Rücker as saying that the German company had abandoned the project.

"The joint venture is currently in the process of being liquidated," Rücker said. Rheinmetall could, however, indirectly help with the production of Altay tanks, he added.

Following a report released by Stern in March 2017, the company initially admitted its involvement in the planned tank project, despite widespread criticism at the time towards Erdoğan's policies and the arrest of the German journalist Deniz Yücel.

However, after news of Rheinmetall's involvement triggered protests, the company rowed back and claimed in summer 2017 that the joint venture was "not active at the moment".

Nevertheless, Rheinmetall CEO Armin Papperger tried to play down the "small investment" in President Erdoğan's country to the best of his ability, Stern said.

 "We have no intention of building a tank factory there. Those rumours are simply not true," the German magazine quoted Papperger as saying.

In the same year, however, Rheinmetall employees had already prepared presentations offering BMC a partnership and a ‘turnkey solution’ for the project in Karasu. This, Stern said, did not happen, perhaps because other German companies did not want to participate in the project, though the magazine added that plans for the project had not yet died.

In December 2017, one month after Papperger's denial, Yasin Öztürk from BMC's top management also commented on the issue. He said the joint venture, 40 percent controlled by Rheinmetall, would invest 60 million dollars in Karasu on the Black Sea coast. The same figure was quoted in June 2018 by the trade magazine Defence Turkey.

In June 2018, Turkish Foreign Minister Mevlüt Çavuşoğlu also praised the close ties with the German group.

"Rheinmetall and the Turkish companies are very satisfied with the cooperation they have enjoyed so far," the minister said.

"I also met the Rheinmetall representative in Turkey, he is a German friend. Rheinmetall is very happy to be in Turkey", Stern quoted the Turkish minister as saying.

The German company's earlier plans for Turkey could have made the joint venture a "global player" on the export markets, not least in the Emirate of Qatar, which holds almost 50 percent of BMC's shares.

However, with German involvement reportedly cancelled, Turkey will continue the project without Rheinmetall, according to Stern.