LMT Lockheed Martin Corp

By Vivian Salama, Michael C. Bender and Michael R. Gordon 

WASHINGTON -- President Trump said the U.S. would withhold sales of advanced F-35 stealth jet fighters to Turkey after Ankara received a new air-defense system from Russia, putting new strains on the North Atlantic Treaty Organization.

The decision to cancel the F-35 shipment was expected, but until Mr. Trump's remarks on Tuesday, the administration had held off on responding to Turkey's decision to accept delivery of the Russian S-400 system. Turkey's action and the U.S. response inject tension and uncertainty into the 67-year security pact between Turkey and other NATO members.

The latest moves come amid differences between Ankara and Washington over Syria and a sharp disagreement over the role of Kurdish fighters, who U.S. officials say have played a major role in battling Islamic State militants but who Turkey sees as a terrorist force.

Some U.S. officials and analysts have said the Russian-Turkish deal could jeopardize the future of U.S.-Turkish relations, and raises questions about Turkey's long-term role in NATO as Russia attempts to expand its own influence in the country in a broader bid to weaken the alliance.

The Pentagon is concerned that the radar capabilities of the S-400 could be used by the Russians to gather intelligence about the stealthy F-35s if the jets were delivered to Turkey.

The development stands to affect the Turkish economy, given Turkey's role as a manufacturing partner for the F-35. Turkish companies produce hundreds of parts for the plane. Last week, the Pentagon asked Congress for the authority to reprogram $206 million so it could restructure the supply chain if Turkish companies were evicted from the program.

The U.S. also faces potential economic issues. The U.S. and Russia are the world's biggest arms exporters and their contractors compete for dominance in the sector. Lockheed Martin Corp.'s F-35 is a major offering.

"I would say that Lockheed isn't exactly happy," Mr. Trump said on Tuesday.

Mr. Trump visited Lockheed's Derco facility in Milwaukee last week, vowing to boost U.S. manufacturing when Turkey first received the new Russian defense system last week.

Lockheed Martin, which derives around 30% of its sales from the F-35, has played down the impact of Turkey's potential ejection from the program in recent weeks, saying other countries are awaiting planes that would have been sold to Turkey.

Company officials didn't immediately respond to a request for comment.

Mr. Trump on Tuesday sympathized with Turkey's decision to pursue a $2.5 billion shipment of the Russian antiaircraft system, saying it is "not really fair" and that his administration is currently "working through it."

"Turkey is very good with us, very good," Mr. Trump said, citing President Recep Tayyip Erdogan's decision to release a detained American pastor last year. "And we are now telling Turkey, because you have really been forced to buy another missile system, we're not going to sell you the F-35 fighter jets."

The U.S. initially planned to sell 116 of the Lockheed Martin Corp.-made F-35 fighters to Turkey, but had warned Turkey that it risked sanctions, in addition to a termination of the fighter jet sale, if it pursued the deal with Russia. Mr. Erdogan has also floated the idea of cooperating with Russia to build the planned successor to the S-400 air-defense system, the S-500.

Reflecting bipartisan opposition in Washington to Turkey's move, the Republican and Democratic leaders of the Senate Foreign Relations and Armed Services committees called on Mr. Trump last week to impose sanctions on Ankara and end Turkey's participation in the F-35 program.

The U.S. decision to withdraw the F-35s order is a setback for Mr. Erdogan, who had bet heavily on a direct relationship with Mr. Trump to resolve the issue and persuade the U.S. president to disregard his own administration's repeated calls for punishing Turkey.

In addition to not receiving F-35s, for which it has forked out hefty down payments, Turkey risks losing its share of industrial workload -- about 6% of the value of each plane.

Officials at the Turkish presidency couldn't immediately be reached Tuesday evening.

Mr. Erdogan had said Turkey, which has invested $1.5 billion in the F-35 development, would seek international arbitration if it were booted from the program. The Turkish leader had also warned Ankara would retaliate.

U.S. officials said Mr. Erdogan de-escalated tensions over the S-400 when he met with Mr. Trump in June on the sidelines of the Group of 20 summit in Japan.

One official said Mr. Trump is hesitant to impose sanctions on Turkey because he wants Ankara's help on regional issues, including his pending plans to withdraw from Syria.

He also believes Turkey has shown its good will to negotiate after its decision to release Pastor Andrew Brunson -- a move that prompted the Trump administration to partly lift economic sanctions.

Mr. Trump also has warmed to Mr. Erdogan over Syria. Late last year, Mr. Trump abruptly announced a U.S. withdrawal from Syria, citing Mr. Erdogan's commitment to fill any resulting security vacuum.

But the move sparked outrage within the administration, and prompted then-Defense Secretary Jim Mattis to resign, with many warning Mr. Trump that Turkey would directly target U.S.-allied Kurdish fighters in northern Syria.

Turkish officials said they turned to Russia for air-defense equipment after the U.S. declined to sell Turkey the Patriot antimissile system. The Trump administration subsequently offered to sell the system last year, but Mr. Erdogan in June said the proposal had fallen short of the deal Russia offered.

Mr. Trump on Tuesday repeated his assertion that he inherited an intractable situation after the Obama administration imposed too many conditions for Turkey to purchase the American-made Patriot missile system, one of the most comprehensive NATO alternatives to the S-400s.

Former President Obama's initial strong relationship with Mr. Erdogan was strained by the U.S. decision to arm and train Syrian Kurdish fighters in the battle against Islamic State. The same issue has dogged relations between Messrs. Trump and Erdogan, and the missile issue became intertwined with the two countries' divergent goals in Syria.

In a phone conversation last December, the two discussed Syria and Mr. Trump initially agreed to a Patriot missile deal on the condition that Turkey abandon its S-400 deal with Russia, a senior Turkish official said.

But Mr. Trump later publicly restated a U.S. demand that Turkey guarantee the safety of the U.S.-backed Kurdish forces operating across Turkey's border. Mr. Erdogan maintains that these Kurdish fighters are terrorists and pose an existential threat to Turkey.

On the night before the S-400 delivery last week, Turkish state-run media reported a renewed Turkish military buildup along the border with Syria, which some within the U.S. government saw as an attempt to distract from the deal.

--David Gauthier-Villars in Istanbul contributed to this article.

Write to Vivian Salama at vivian.salama@wsj.com, Michael C. Bender at Mike.Bender@wsj.com and Michael R. Gordon at michael.gordon@wsj.com

(END) Dow Jones Newswires

July 16, 2019 19:25 ET (23:25 GMT)

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