How Do Countries Buy Turkish Weapons? Contracts and Credit

A foreign government buying Turkish defence equipment has three routes. It can sign directly with the manufacturer — Baykar, ASELSAN, ROKETSAN and Turkish Aerospace all contract with foreign defence ministries in their own name. It can sign an intergovernmental agreement and contract with ASFAT, the company the Turkish Ministry of National Defence uses for state-to-state business. Or, from 2026, it can use DEDAS, the state-to-state military sales mechanism the Presidency of Defence Industries (SSB) has been building since 2024. Which route a buyer ends up on depends less on what it is buying than on how it intends to pay.

Türkiye has no equivalent of the American Foreign Military Sales system: no single case-management office, no published Letter of Offer and Acceptance, no standing grant-aid programme comparable to US Foreign Military Financing. What it has instead is a commercial industry that sells on its own account, a defence ministry company that handles government-to-government work, an export credit agency lending under published civil rules, and — new, and still untested in public — a state-to-state credit mechanism written into SSB’s own five-year strategy.

Route one: buy straight from the company

This is how most Turkish defence equipment is sold, and it is the route that has produced the largest single contract in Turkish export history. On 18 July 2023, during President Erdoğan’s visit to Jeddah, Baykar signed an agreement with the Saudi Ministry of Defense covering the Bayraktar AKINCI, together with technical, logistic and training services and follow-on cooperation on technology transfer and joint production. Baykar describes it in its own press material as the largest defence deal in Turkish history. It has never published the value. Figures circulating in English put it near US$3 billion; that number comes from reporting at the time, not from either government.

The commercial route is fast because it has fewer signatures in it. A defence ministry negotiates with a company, the company obtains its Turkish export licence, and the contract runs on ordinary commercial terms. Baykar built its export base this way, and so did ROKETSAN and ASELSAN, whose customers are usually foreign ministries of defence or their procurement agencies rather than the Turkish state.

Two consequences follow. The company carries the commercial risk, so it will want payment security — letters of credit, advance payments or a bank guarantee — before it starts cutting metal. And there is no government-to-government dispute mechanism behind the contract: if the relationship sours, the buyer is in a commercial dispute with a Turkish company, not a diplomatic one with Ankara.

Route two: the intergovernmental agreement and ASFAT

When a buyer wants a state counterparty, the contract goes to ASFAT A.Ş. — Askeri Fabrika ve Tersane İşletme A.Ş., the Military Factory and Shipyard Management company that sits under the Ministry of National Defence. ASFAT operates the military factories and naval shipyards and acts as the state’s export and intermediation arm. Envanter Medya has set out how ASFAT’s intermediary role differs from ASELSAN’s subsystem-supplier role in Turkish export projects, which is a distinction that confuses a lot of first-time buyers.

Two cases show what the route looks like in practice.

Pakistan, 2018. On 5 July 2018, Pakistan’s government announced a contract between the Pakistan Navy and ASFAT for four MILGEM-class corvettes: two built at Istanbul Naval Shipyard and two at Karachi Shipyard & Engineering Works, with what the Pakistani announcement called complete transfer of technology and transfer of the intellectual property rights in the designs. The fourth ship was to be jointly designed with Pakistan’s Maritime Technologies Complex. Islamabad did not publish a contract value; reporting at the time put it around US$1.5 billion. Two ships have been delivered and two remain under construction in Karachi. The MILGEM design has since become Türkiye’s most-exported warship family.

Romania, 2025. On 3 December 2025 the Romanian Ministry of National Defence signed an intergovernmental contract for one Hisar-class light corvette. The Romanian Naval Forces communiqué names the signatories — Brigadier General Ion-Cornel Pleșa, head of the ministry’s General Directorate for Armaments, and Mustafa İlbaş, CEO of ASFAT — with Romania’s interim defence minister and Türkiye’s deputy defence minister present. The published price is €223 million excluding VAT, covering the ship, personnel training and a logistic support package. The ship, the former TCG Akhisar, was handed over in June 2026. It is the first Turkish-built combat ship sold to a NATO and EU member state, which is why it matters well beyond its tonnage. Other Turkish systems already in NATO member inventories arrived through commercial contracts, not an IGA.

Note what Romania produced that the Saudi contract did not: a price. Intergovernmental deals tend to be transparent on the buyer’s side, because parliaments and audit offices require it — which is the most useful arbitrage available to anyone trying to establish what Turkish equipment actually costs. The numbers surface in the customer’s capital, not in Ankara. Envanter Medya makes the same point from the other direction in its Turkish-language analysis of why no unit price for the AKINCI exists in the public record.

ASFAT’s own volume is modest next to the industry’s headline figures. Musa Heybet, deputy minister of national defence and chairman of ASFAT’s board, said on Habertürk television on 26 August 2026 that ASFAT’s exports had passed US$550 million so far in 2026 and that it exports to more than 20 countries. Against a sector that shipped US$10.054 billion in 2025, the government-to-government channel is the minority route by value — but it carries the deals with the deepest industrial content, which is why it appears in almost every Turkish naval export programme.

Route three: DEDAS, and what SSB actually promised

DEDAS — Devletten Devlete Askerî Satış, state-to-state military sales — is not a rebrand of the ASFAT route. It is an SSB mechanism, and its purpose is stated plainly in SSB’s own International Cooperation and Export Strategy 2024–2028. Under Strategic Goal 2, Objective 2.1 commits SSB to implementing the DEDAS method, with legal and structural arrangements complete by the end of 2024 and one DEDAS project launched by the end of 2024 plus three more during 2025.

Strategic Goal 3 is the financing half, and it is the more consequential one. Objective 3.1 commits Türkiye to creating “new state-to-state credit facilities for customer countries with limited budgets”, with the regulations completed and one export credit project realised by the end of 2025. Objective 3.2 sets up a dedicated export fund inside SSB and annual credit support for five companies a year — including, in a detail that ties directly to Türkiye’s exposure to foreign export controls, “product development credit support” for firms replacing foreign subsystems that are subject to export restrictions.

The strategy also contains a line foreign procurement officials should read carefully. Objective 2.5 states that destructive competition between Turkish firms in foreign tenders will be prevented, and that SSB will coordinate between Turkish companies bidding for the same overseas tender and construct alternative models. A buyer running an open competition may therefore receive Turkish bids that have been deconflicted upstream rather than arrived at independently.

Now compare the strategy’s milestones with what was reported a year later. In the SSB president’s 2025 year-end assessment, Haluk Görgün said that to address financing issues, SSB “will implement the Government-to-Government Military Sales model starting in 2026”, the legislative and institutional preparations having been completed during 2025. The mechanism that the strategy scheduled for end-2024, with four projects due by the close of 2025, was announced as arriving in 2026.

The three routes, and the money underneath them

How the money moves: Türk Eximbank

Where a buyer cannot pay from its own budget, the instrument is a buyer’s credit from Türk Eximbank, the state export credit agency. Two variants matter. Under Buyer’s Credit Through Sovereign Guarantee, the borrower is a foreign ministry or institution authorised to borrow under its state’s sovereign guarantee. Under Buyer’s Credit Through Foreign Banks, a foreign bank holding a Türk Eximbank credit line takes on the debt on the buyer’s behalf.

The published terms are the same in the essentials. For maturities under 24 months, Türk Eximbank can finance up to 100% of the export contract value; at 24 months or more, up to 85%, with the remaining 15% covered by the buyer. Principal is repaid in equal semi-annual instalments, with the first payment falling no more than six months after the weighted average shipment date or the commissioning date. Risk premium is charged flat, in line with the OECD Arrangement on Officially Supported Export Credits.

One condition in the small print does more work than anything else on the page. The goods financed must be exported from Türkiye, certified with origin country code 052 on the Turkish customs declaration. Turkish credit finances Turkish content. A buyer structuring a package that includes a foreign engine, a foreign gearbox or an imported sensor should expect that portion to fall outside the facility — which makes the localisation question, familiar from every argument about how independent Turkish production really is, a financing question as well as a technical one.

The carve-out nobody mentions

Türk Eximbank’s published buyer-credit terms reference the OECD Arrangement throughout. Türkiye is one of the eleven Participants to that Arrangement, alongside Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, the United Kingdom and the United States. But the Arrangement’s own text, in its January 2026 revision, states that it “applies to all officially supported export credits with a repayment term of 2 years or more. It does not, however, apply to military equipment and agricultural commodities.”

So the disciplines that produce those published figures — the 85% ceiling, the minimum premium rates, the maximum repayment terms — do not bind defence transactions. They describe Türk Eximbank’s civil business. The terms of a Turkish arms credit are a matter for negotiation, and they are not published.

For a buyer that is an opportunity: terms are negotiable in a way a civil infrastructure loan is not. For an analyst it explains why the financing side of Turkish export deals is close to opaque — the numbers are not hidden so much as never required to be disclosed. This is not a Turkish peculiarity. The same carve-out applies to every Participant, which is why American, French and South Korean arms credits are equally invisible in Arrangement reporting.

The eligibility problem

The sovereign-guarantee product carries a constraint that cuts against the market Turkish industry is often said to serve. The borrowing country must be eligible to borrow on commercial terms under IMF and World Bank criteria. Countries in debt distress, or restricted to concessional lending, sit outside it.

That is a real limitation, and it matters because the buyers most attracted to Turkish pricing are frequently the ones least able to satisfy a commercial-terms test. It is also the clearest reading of why SSB’s strategy writes about credit for “customer countries with limited budgets” as a new facility to be built rather than an existing one to be used: the existing instrument does not reach them.

What this looks like in real deals

The Indonesian case is the most instructive of the four, because it separates two things that are usually conflated. Jakarta signed on 3 February 2023 for twelve ANKA aircraft at US$300 million, six built in Türkiye and six to be assembled by PT Dirgantara Indonesia at Bandung. The aircraft side has moved. The industrial side has not: PTDI’s own newsroom has stated that the cooperation becomes effective only when the procurement contract between Indonesia’s defence ministry and Turkish Aerospace becomes effective, and that the contract has been working through bank guarantees for financing. The technology was never the obstacle. The payment structure was. The pattern repeats across the ANKA’s wider export customer base, where industrial commitments consistently take longer to land than aircraft do.

What Türkiye does not have

The gap most visible to anyone who has run an FMS case is procedural rather than financial. There is no standard Turkish offer document with a fixed validity period, no published case-tracking system, and no equivalent of the US Defense Security Cooperation Agency notification that puts a proposed sale, its value and its contents into the public record before signature. Turkish export approvals are not announced in advance. For a buyer worried about political exposure at home that cuts both ways: less pre-signature scrutiny, but also less independent confirmation that a deal exists.

Nor is there a published Turkish grant-aid line comparable to Foreign Military Financing. Türkiye does donate equipment and provide training, but not through a budgeted programme with an annual allocation recipients can plan against. The SSB strategy’s credit objectives are the closest thing Ankara has proposed, and they are loans.

What comes next

Three markers are worth watching, and all three are checkable.

The first is a named DEDAS project. SSB’s strategy called for four by the end of 2025 and none has been publicly identified. The first named one will show whether DEDAS is a contracting vehicle, a financing vehicle, or both.

The second is published credit terms. If Ankara means to compete for budget-constrained buyers, at some point it has to say what it is offering. Until it does, a finance ministry cannot model a Turkish offer against a Korean or Chinese one.

The third is Indonesian contract effectiveness. It is the cleanest live test of whether the financing architecture works, because every other variable in that deal is settled. The day PTDI starts assembling at Bandung, the model has worked. Until then, the strongest evidence available is that Turkish industry can sell faster than the Turkish state can finance — and that is the constraint on the next phase of growth, not production capacity and not technology.

FAQ

Can any country buy Turkish weapons?

No. Every export requires a Turkish export licence, and Turkish policy restricts sales in line with its own foreign policy and its international obligations. Separately, systems containing US-origin components can be blocked by Washington regardless of Ankara’s position, which is a recurring constraint on Turkish exports.

Does Türkiye offer financing for defence exports?

Yes, through Türk Eximbank buyer’s credits, which can cover up to 85% of contract value for maturities of 24 months or more and are restricted to goods of Turkish origin. SSB has also committed, in its 2024–2028 strategy, to building state-to-state credit facilities for customer countries with limited budgets. That mechanism was announced as being implemented from 2026 and its terms have not been published.

What is ASFAT?

ASFAT A.Ş. is a company under the Turkish Ministry of National Defence that operates military factories and naval shipyards and acts as the state’s counterparty in government-to-government defence sales. It signed Pakistan’s MILGEM corvette contract in 2018 and Romania’s Hisar-class corvette contract in 2025, and its board chairman said in August 2026 that it exports to more than 20 countries.

What is DEDAS?

DEDAS (Devletten Devlete Askerî Satış) is the state-to-state military sales method set out in SSB’s International Cooperation and Export Strategy 2024–2028. It is intended to let Ankara contract directly with a buyer government and to bring financing into the same package. SSB stated that implementation begins in 2026.

Why are Turkish defence contract values so rarely published?

Neither SSB nor Turkish companies routinely publish contract values, and defence transactions are outside the scope of the OECD Arrangement’s transparency provisions. Where values do appear, they usually come from the customer’s side — Romania published €223 million, Indonesia published US$300 million — because buyer parliaments and audit bodies require disclosure that Turkish law does not.

Is Türkiye’s export financing competitive with China’s?

There is not enough published information to answer this. Chinese defence credit terms are also unpublished. What can be said is that Türk Eximbank’s civil products follow OECD Arrangement disciplines that Chinese lending does not, and that the sovereign-guarantee product’s commercial-terms eligibility test excludes some buyers that Chinese lending has historically served.

Sources

• Presidency of Defence Industries (SSB), International Cooperation and Export Strategy 2024–2028 (Turkish)
• OECD, Arrangement on Officially Supported Export Credits, January 2026 revision
• Türk Eximbank, Buyer’s Credit Through Sovereign Guarantee and Buyer’s Credit Through Foreign Banks
• Romanian Naval Forces, Communiqué no. 103, 3 December 2025, on the Hisar-class corvette contract
• Government of Pakistan, Press Information Department, announcement of the MILGEM contract with ASFAT, 5 July 2018
• Baykar, press statement on the Saudi Arabia export agreement, 18 July 2023
• PT Dirgantara Indonesia, newsroom statement on the ANKA contract’s effectiveness
• Defence Turkey, SSB President Haluk Görgün’s 2025 assessment and 2026 targets, and ASFAT’s 2026 export figures
• Envanter Medya (Turkish), ASFAT and ASELSAN’s respective roles in export projects and the absence of a published AKINCI unit price