ANKARA (BLOOMBERG) - Turkey is signalling that it could give ground on the Russian missiles it's poised to deploy if the US severs support for Kurdish forces Ankara views as a mortal threat.
The Turkish government is prepared to make concessions, such as agreeing to limited use of the Russian S-400 anti-aircraft missiles, because it's eager to secure the future supply of spare parts for its US-made weapons systems and avoid damage to its economy, according to two Turkish officials familiar with relations between the countries.
Ankara is also keen to prevent Washington from further strengthening Syrian Kurdish YPG fighters that dominate the US-backed force that quelled Islamic State in Iraq and Syria (ISIS) terror group in Syria, they said, speaking on condition of anonymity to discuss strategic issues.
The country's banking stocks index rallied as much as 3.4 per cent amid heightened hopes of a thaw with the US.
Halkbank, facing US criminal prosecution over alleged Iran sanctions violations, was up 2.1 per cent.
Defence Minister Hulusi Akar cited the installation of an earlier generation of Russian missiles for limited use in Greece as a possible model.
"We said we are open to negotiation," Mr Akar said in an interview with the Hurriyet newspaper published on Tuesday (Feb 9).
"There is no such thing as we will use it constantly. These systems are used according to the threat situation. We decide that."
US ambassador David Satterfield told Turkish media last week that Washington's policy of working with Syrian Kurdish forces has not changed and that Turkey would have to get rid of its S-400s if it wants related US sanctions lifted.
US President Joe Biden and Congress have both taken a hard line on Turkey, in part over its acquisition of the Russian S-400 missiles, which Washington says could gather intelligence on Western military capabilities, including Lockheed Martin Corp's F-35 stealth fighter jet.
American support for YPG fighters is a key area of conflict because of the force's link to another Kurdish separatist movement that Turkey has been fighting for more than three decades.
That group, the Kurdistan Workers' Party, or PKK, is classified as a terrorist organisation by the US and European Union.
Strains between Ankara and Washington can't be eased without resolving these two issues, Mr Akar said.
"The most sensitive issue in our relations with the US is the country's support to the YPG, the PKK's arm in Syria," Mr Akar told Hurriyet.
"We can find a solution for the S-400s in our negotiations with the US, but we expect them to see the facts about the YPG. If we cannot find a solution, we cannot go anywhere in relations with the US."
YPG forces seized chunks of territory along the Syrian border with Turkey in the course of Syria's civil war.
The Turkish military test-fired the S-400 batteries in October, but hasn't yet activated them.
The US has retaliated against the S-400 purchase by imposing sanctions on Turkey's defence industry and suspending its role in manufacturing the F-35.
President Recep Tayyip Erdogan said last month that Turkey and Russia would hold talks on issues including the delivery of a second batch of S-400 missile-defence systems at the end of January.
It was not clear whether those talks have been postponed or cancelled.
Turkey acquired the first system from Moscow in 2019 after dropping talks for a comparable US Patriot system because Washington refused to share technology.