‘Sometimes you get along with the toughest people’: Trump moves to lift Turkey sanctions, clearing the country’s path back to F-35s

Trump said the U.S. will lift Turkey-related sanctions tied to Ankara’s purchase of Russia’s S-400 and Turkey’s 2019 removal from the F-35 program, easing legal hurdles to re-enter the F-35 ecosystem. At the NATO “big reveal” in Ankara, NATO announced/advanced multiple defense procurement efforts (e.g., up to 10 Saab GlobalEye surveillance aircraft for a consortium; potentially up to 5 Triton drones; and an Airbus-related multinational effort), alongside funding tied to an EU defense-loan scheme up to $170B. Overall, the news is more geopolitically significant than immediately financial, with likely mid-term implications for defense contractors and Turkey-U.S. defense access.

Analysis

This is more signal than cash flow: lifting the sanctions lowers the political discount on Turkey rejoining Western procurement, but the earnings impact for primes is still mostly out in the 6-18 month window. The faster monetization is actually in the broader NATO recap cycle — tankers, transports, ISR, drones, MRO — where capacity-constrained suppliers can convert backlog into price/margin leverage before fighter-jet sales ever hit revenue.

The near-term risk is that the market overprices a headline that is still legally and politically gated. Any Congressional pushback, Israeli lobbying, or renewed Turkey-Russia defense purchases can stall the process and unwind the move; the thesis only gets real if sanctions relief is followed by formal approvals and funded procurement, not rhetoric. In the next 1-3 months, the cleaner catalyst is NATO contract award visibility and European funding releases, which matter more for order books than the Turkey optics.

Contrarian view: consensus is probably fixated on the F-35 angle and missing the less glamorous winners with better conversion rates — airlift, refueling, surveillance, spares, and sustainment. If European cheap-loan financing turns into signed purchase orders, the operating leverage should accrue to firms with existing industrial footprint and service content, not just platform OEMs. If the summit produces headlines but no hard awards, defense multiples can give back quickly because a lot of rearmament optimism is already embedded.

Key Decisions for Investors

• Long EADSY on pullbacks over the next 1-3 months: Airbus is a better expression of NATO recapitalization than the Turkey/F-35 headline, with more immediate visibility from tanker/transport awards; stop if the expected follow-on contracts fail to materialize.
• Add to ITA or XAR only on weakness, not chase on the open: use any defense-beta dip to build exposure into confirmed NATO procurement announcements; risk/reward is better if the market waits for actual awards rather than sanction-rumor momentum.
• Use a short-dated call-spread sale on ITA after a gap-up if the session is driven purely by Turkey headlines: the setup is a fade unless we get formal sanction language, Congressional acquiescence, or a signed F-35 process milestone within days.
• Watch-list, not buy-list: if European ISR/airlift names like SAABF or other local defense suppliers re-rate on concrete contract flow, rotate there instead of chasing F-35 primes; that trade has the cleaner 3-6 month conversion path.
• Falsifier: a formal U.S. approval package for Turkey’s F-35 return, or a materially larger-than-expected NATO spending authorization, would invalidate the 'headline-only' view and force a reassessment of the defense-beta trade.