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Canadian defence company bankrupted due to arms embargo on Turkey

Turkish Army tank in Cukurca district of Hakkari, Turkey on 25 December 2020 [Mesut Varol/Anadolu Agency]
Turkish Army tank in Cukurca district of Hakkari, Turkey on 25 December 2020 [Mesut Varol/Anadolu Agency]

A Canadian defence company has gone bankrupt due to the country's arms embargo on Turkey, which caused it to lose its primary customer in the Turkish defence industry.

The Canadian defence firm, Telemus Systems Inc., shut down its operations and filed for bankruptcy on 24 August this year. Prior to that, it had already suffered a net loss of $360,000 last year and a staggering $1.1 million this year.

It has now been revealed, however, that those huge losses were incurred due to the Canadian government's implementation of its arms embargo on Turkey in 2019, and which it has since doubled down on in April this year. That embargo was meant as a punishment for Ankara's military actions in Syria and its assistance to Azerbaijan during its conflict with Armenia over the Nagorno-Karabakh region.

In a report by the global professional network KPMG, which was the trustee of Telemus's bankruptcy, it stated that "Despite the company's repeated attempts to reach a resolution with the GAC [Global Affairs Canada], including explaining the material adverse impact on the company's financial situation and solvency, the company's Turkish export permits remained suspended."

READ: Canadians protest arms sale to Saudi Arabia in ongoing row over 'perpetuating' war in Yemen

With the firm no longer allowed to attain the export licences needed, it was unable to provide its largest customer—Turkish Aerospace Industries (TAI)—with the military goods and equipment agreed upon. "As a result of the government sanctions, the company was no longer able to generate any revenue," the report added.

Prior to the embargo and the suspension of the export licenses, Telemus sold electronic intelligence and support systems to TAI, which was helping to build and develop an armed drone named TAI Anka.

According to an anonymous Turkish official, who was cited by the news outlet Middle East Eye, Ankara warned Ottawa and told it that the embargo "would harm both Turkish and Canadian companies … We hope the new Canadian government will be more long sighted."

READ: Turkey, Azerbaijan drone success should worry Europe, says European Council analyst

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