By Jonathan Spicer and Huseyin Hayatsever
ANKARA (Reuters) -Canada has unfrozen talks with Turkey on lifting export controls on drone parts after Ankara gave its nod for Sweden to join NATO, a person familiar with the talks said, a move seen as one of several concessions won in exchange for the Turkish blessing.
President Tayyip Erdogan's greenlight, which ended more than a year of opposition to Sweden's membership bid, came as a surprise even to allies at home who had supported him in demanding Stockholm first take steps against groups deemed terrorists by Ankara.
Erdogan's decision, announced ahead of a North Atlantic Treaty Organization summit in Vilnius, was followed quickly by a statement from Washington that the United States would move ahead with a transfer of F-16 fighter jets in consultation with Congress.
In a potentially significant move for Turkey's defence industry, NATO member Canada agreed to re-open talks on lifting export controls on drone parts including optical equipment, the person familiar with the talks said, declining to be identified because they were not authorised to discuss details with media.
Canada suspended the export of some drone technology to Turkey in 2020 after concluding the equipment had been used by Azerbaijan's forces fighting Armenia in the enclave of Nagorno-Karabakh.
Those export controls, which "were imposed for important reasons," remain in place, Canadian Prime Minister Justin Trudeau's office said in statement.
"The Prime Minister discussed Sweden's accession to NATO with our partners in Vilnius, including with President Erdogan," the statement said.
"Canada remains committed to the principle that there should be no restrictions, barriers or sanctions to defence trade and investments among Allies."
Ahead of the NATO summit, Turkey, already seeking assurances over the F-16s in talks with Washington, asked that Canada's export controls also be rolled in to the final discussion, the person familiar with the talks said.
Turkey sought "a package deal", the person said.
Canada agreed to reopen talks on the matter that had been frozen since Turkey initially objected to NATO membership bids by both Sweden and Finland last year as long as Turkey pledged to ratify Sweden's bid at Vilnius, the person said.
At Vilnius, Canada outlined its position to Turkey on rules regarding uses of any exported technologies, and was awaiting a response. This means the talks on export controls are no longer frozen, a move that helped play a role sealing Erdogan's pledge over Sweden, the person said.
Asked whether Turkey was in talks with Canada to lift export curbs, a Turkish defence ministry official said it was unacceptable for NATO allies to impose export restrictions on each other and "a certain progress has been made at the Vilnius Summit on that issue".
"But we will follow the results of the negotiations and decision taken at the Vilnius summit," the official said.
ERDOGAN'S 'LEVERS'
In an interview with Turkish media published on Thursday, Erdogan said his country expects all NATO allies to lift sanctions and restrictions on its defence industry.
On Wednesday, Erdogan said he was "more hopeful than ever" about the sale of the F-16 fighter jets, after meeting with U.S. President Joe Biden a day earlier. Turkey had requested in October 2021 to buy $20 billion of F-16 fighters and nearly 80 modernisation kits for its existing warplanes.
Ankara's objections have been a major obstacle in the path of Sweden and Finland joining NATO after the Russian invasion of Ukraine. Turkey's demands included a tougher line against the Kurdistan Workers Party (PKK), which took up arms against the Turkish state in 1984. The PKK is designated a terrorist group by Turkey, the United States and the European Union.
Turkey's parliament ratified Finland's membership in March, after Erdogan said Helsinki had taken concrete steps to crack down on groups seen as terrorists, and to free up defence exports.
Erdogan said on Wednesday he would forward Sweden's ratification to parliament when it reopens in October, adding Stockholm would provide a roadmap to Turkey regarding the steps it would take before the approval.
The leader the Nationalist Movement Party (MHP), upon which Erdogan's AK Party depends for its parliamentary majority, said on Tuesday that Sweden had failed to distance itself from terrorism, but added that Erdogan would make the final call about Sweden's membership bid.
Erdogan met with MHP leader Devlet Bahceli on Thursday.
Erdogan has also said he expects steps from the EU, including on updating a customs union and visa-free travel, before Turkey begins "work on implementing the promises (it) has made."
A European diplomat said Erdogan "may have maximised how much he could get from holding Sweden up".
"We've seen in the past he likes to use his levers."
(Reporting by Huseyin Hayatsever in Ankara and Jonathan Spicer in Istanbul; Additional reporting by Steve Scherer in Ottawa and John Irish in Vilnius; Writing by Tom Perry; Editing by Jamie Freed)
