Defense Market

World Surveillance Group Inc., a developer of lighter-than-air unmanned aerial vehicles (”UAVs”) and related technologies, has demonstrated its Argus One UAV to the U.S. Department of Defense (”DoD”) at the U.S. Department of Energy Nevada Test Site. The Argus One is a mid-altitude, lighter-than-air UAV designed to hover above the earth’s surface for extended periods of time. The uniquely constructed low observable airship is designed to handle surface winds in a more efficient manner than traditional “blimp-like” airships, while delivering a cost-effective solution based on minimal ground and human infrastructure. The recently held flight exercise was the first in a series of flight and testing activities planned for 2012. The Argus One UAV remains inflated inside a hangar facility for further testing, evaluation and demonstrations.

U.S. foreign military sales reached $35 billion in 2011, with the largest buyers being:

• Afghan Security Forces $5.4 billion;
• Taipei Economic and Cultural Representative Office in the United States $4.9 billion;
• India $4.5 billion
• Australia $3.9 billion;
• Saudi Arabia $3.5 billion;
• Iraq $2.0 billion;
• United Arab Emirates $1.5 billion;
• Israel $1.4 billion;
• Japan $0.5 billion;
• Sweden $0.5 billion.

U.S. foreign military sales are expected to to reach the same level in 2012 as well.

Sniper and sighting technologies are widely presented at ISDEF 2011.

B.E. Meyers presented weapon aiming and illuminating systems, flash hiders, non-lethal visual disruption lasers.

McMillan presents sniper rifles specially designed for the purpose of long-distance sharpshooting

Ashbury Precision Ordnance [APO] presents tactical precision rifles, electro-optical mounts, tactical tripods and sniper support systems

The 5th Annual International Defense and Security Exhibition (ISDEF 2011) started today at Tel Aviv. The ISDEF 2011 presents the impressive range of defense and homeland security innovations, solutions and technologies.

The ISDEF 2011 highlights:

CAA Tactical presents advanced small arms accessories

Computech International (CTI) presents Network Centric Warfare system Tamnun (Octopus)

IDO Security presents screener for shoes-on inspection

Silver Shadow presents ultracompact Gilboa Automatic Pistol Rifle

Eltics presents the world’s first active adaptive stealth technology against thermal imaging, night vision and heat seeking missiles

The Turkey-Israel rift under the pretext of Mavi Marmara incident disrupted the Israeli military contracts for the supply of UAVs to Turkey. Though the Israeli Defense Ministry does not disclose figures on its UAV exports to Turkey, but they are estimated at about $300 Mln annually over the past five years in equipment, maintenance, support and training services. The Israeli UAVs are indispensable in the fight with Kurdistan Workers Party (PKK) insurgents.

Turkey is looking to replace Israel by US or EU suppliers. The Obama administration has indicated its willingness to the lease or sale of unmanned aerial vehicles (UAV) to Turkey, pending approval by the US Congress (unlikely event by itself). However, our analysts doubt that such replacement is possible for the following reasons:

Technical and cost considerations
Technical difficulties and costs of replacements for the Turkish side are staggering: another platform, steep learning curve, entire infrastructure has to be replaced. Generally US and EU alternatives are more expensive than the Israeli models.

Political considerations
It’s unlikely that US and EU will be willing to supply UAVs to a country on collision course with the West. Possibly US and EU governments consider option of recognising Kurdistan as a sovereign state in the future to balance regional forces. In this scenario UAV suply turns into bargaining chip to influence both Turkish and Kurdish sides.

Economic considerations
Suppliers have to be paid and the military toys are expensive. Some analysts consider the Turkish economy a bubble that can burst any moment. Turkey’s budget deficit is at 9.5%, for the sake of comparison the Greek economy collapsed having reached budget deficit of 10%. High Turkey’s GDP growth rates of the recent years were artificially inflated by Erdogan regime’s easy going populist fiscal policies – low interest rates, easily available loans, printing money to solve economic problems.

So, will Turkey get UAVs? Unlikely by any account.