By Andrea Shalal
LE BOURGET, France (Reuters) - Washington is looking at imposing financial sanctions on Turkish firms beyond those that build parts for the Lockheed Martin F-35 fighter jet, over Ankara's plans to buy a Russian air defence system, a top Pentagon official said on Monday.
Chief arms buyer Ellen Lord said U.S. officials viewed Turkey as an important NATO ally and urged it to drop its plans to buy the Russian-built S-400 air defence system so that its companies could continue to build critical parts for a wide range of other U.S. weapons systems beside the F-35 fighter jet.
Discussion has focused so far mainly on the high profile F-35 programme. But Lord's comments at the Paris Airshow reflected growing concern in Washington about Turkey's refusal to reverse its purchase of the S-400 system.
Lord said the issues were being kept separate for now, but an inter-agency U.S. government group was looking at potential sanctions against a wider range of Turkish firms under the U.S. Countering America's Adversaries Through Sanctions Act (CAATSA).
"We have bifurcated the S-400 and F-35 impact from (the) impact to the rest of our defence and commercial industry," Lord told reporters. "Everything outside of the F-35 from a defense perspective, we have reviewed within the department and that would be subject to any CAATSA sanctions."
She said no decisions had been made, but a decision to proceed with sanctions would hit Turkish industry hard.
"There have been no decisions made on that point. However it would be very, very significant for Turkey," Lord said, noting that the U.S. industry was resilient and could find other sources for the Turkish parts.
"That's not really what we want to do," she said. "We want to find a way to continue to work with Turkey."
Turkish firms build 937 parts for the stealth fighter, and Ankara had planned to buy 100 of F-35 fighters, which would have a total value of $9 billion at current prices. The Pentagon now plans to move that production to U.S. sites and elsewhere, ending Turkey's manufacturing role by early next year.
Turkish officials argue that Ankara is fulfilling its responsibilities in the F-35 project and expected the program to continue as planned. They say buying the S-400s is only meant to meet Turkey's defense needs and posed no threats to the F-35.
Ralph Acaba, president of Raytheon Integrated Defense Systems, said Turkish firms build components for the company's Patriot missile defence system, although Turkey does not own or operate that system.
He said Turkish firms were important, reliable suppliers, but Raytheon was constantly looking at alternatives, based on risk assessments. He declined to provide details on the total amount of Turkish content on Raytheon weapons systems.
"No matter what happens, we're going to meet our contractual obligations to our customers," he said.
Rick Edwards, executive vice president of Lockheed's international division, said the most significant programme involving Turkish content was the F-35. But he said the impact to Turkish industry if all U.S. defence orders were cancelled would be significant.
"If all American work disappeared ... that would have a pretty severe economic impact on those companies," he said.
(Reporting by Andrea Shalal; Editing by Hugh Lawson)