Trump Signals F-35 Sale to Turkey: Sanctions and Jets on the Agenda

Donald Trump, the leader of the US Republican Party, signaled a critical turning point in US-Turkey defense relations with his statements during the NATO Summit held in Ankara. Trump indicated that they would consider the potential sale of F-35 fighter jets to Turkey and the lifting of sanctions imposed on Ankara. This development holds significant potential for a breakthrough in the long-standing F-35 dispute.

Turkey was removed from the F-35 Joint Strike Fighter program in 2019 after acquiring Russian S-400 air defense systems. Following this decision, Washington imposed sanctions on Turkey's defense industry agency in 2020 under the Countering America's Adversaries Through Sanctions Act (CAATSA). Turkey had been both a partner and a significant producer in the program and has long expressed its grievances over not receiving the jets it had paid for.

During the summit, Trump emphasized Turkey's loyalty, stating that the F-35s are "by far the best plane" and that they would "certainly consider" the sale. He also said, "We're going to be taking the sanctions off." President Recep Tayyip Erdoğan echoed positive expectations, noting that Trump had previously promised Turkey five F-35 jets and "always keeps his promises." Discussions also included options such as transferring the S-400s to a third country, a potential workaround for one of the biggest obstacles to the F-35 sale. However, it remains uncertain whether Russia would approve such a solution and how legal hurdles in the US Congress would be overcome.

The potential F-35 sale, if realized, would signify a multi-billion dollar defense contract and could provide a significant boost to Turkey's defense industry. The recent notification to Congress of the US's intent to sell over $700 million worth of F110 jet engines for Turkey's indigenous KAAN fighter jet project is also seen as a sign of improving bilateral ties. Such large-scale agreements and the removal of sanctions could have a positive impact on the Turkish Lira (TRY) and boost investor confidence in Turkish markets, particularly the BIST 100 Index (XU100).

This development holds immense geopolitical significance, beyond just economic and defense industry considerations. While conveying messages of unity within NATO, the normalization of US-Turkey relations could strengthen the alliance. However, Israeli Prime Minister Benjamin Netanyahu has openly expressed his opposition to the F-35 sale, citing concerns about regional power balance and Turkey's anti-Israel rhetoric. The US Congress also has a law prohibiting F-35 sales due to the S-400s, posing a significant challenge for the Trump administration.

Market analysts note that Trump's statements are a positive step, but the realization of the sale requires both a resolution to the S-400 issue and convincing the US Congress. The stance of Republican and Democratic lawmakers in Congress will be crucial for the future of F-35 sales. In the coming period, the fate of the S-400s and negotiations in the US Congress will be the key factors determining whether Turkey can rejoin the F-35 program.