Haifa defense firm set to lose big over Turkey impasse

Defense company says in announcement that it's talking with Defense Ministry about compensation for losses.

By YAAKOV KATZ
Turkish Air Force F-16 390 (R) (photo credit: REUTERS/Umit Bektas)
Turkish Air Force F-16 390 (R)
(photo credit: REUTERS/Umit Bektas)
Elbit Systems announced Sunday it stands to lose close to $65 million from its 2011 profits due to the Defense Ministry’s decision in December to stop the delivery of sophisticated intelligence systems to the Turkish air force.
According to Elbit’s announcement to the Tel Aviv Stock Exchange, it was still in talks with Defense Ministry director general Udi Shani about receiving compensation for the ministry’s decision to nix the deal just weeks before planned delivery.
In December, defense officials said although Israel was working to improve ties with Ankara, the ministry was “responsible for every product that receives an export license” and that it could not permit the delivery of the intelligence-gathering systems to Turkey.
“This has to do strictly with this system and should not impact the overall ties between the countries,” an official said at the time.
The $140 million deal, signed in 2009, was for the sale of the advanced infrared Lorop camera and associated equipment.
Developed by Elbit subsidiary El-Op, the camera is installed in a pod, which can be carried on combat aircraft. The systems were supposed to be delivered to Turkey in the coming months.
Defense Minister Ehud Barak said in a leaked speech in 2010 that Ankara’s newly appointed intelligence chief was a “friend of Iran” who might betray Israel’s secrets.
Israel’s ties with Turkey hit rock-bottom in 2011, when Ankara expelled the Israeli ambassador after the United Nations published its report on the 2010 flotilla incident. The report justified Israel’s sea blockade over the Gaza Strip.
Since the flotilla, diplomatic and military ties have been at a bare minimum.
Reuters contributed to the report.