WASHINGTON (Reuters) - Acting U.S. Defense Secretary Patrick Shanahan on Tuesday said he expected to resolve a dispute with Turkey over its planned purchase of Russia's S-400 air defense system, a day after the United States halted delivery of equipment related to F-35 fighter jets to Ankara.
The United States is at a crossroads in a years-long standoff with Turkey, a NATO ally, after failing to persuade President Tayyip Erdogan that buying the Russian air defense system would compromise the security of the F-35, the most modern fighter in the U.S. arsenal.
On Monday, the Pentagon said it had suspended delivery of equipment related to the F-35 "pending an unequivocal Turkish decision to forgo delivery of the S-400." The aircraft is made by Lockheed Martin Corp (NYSE:LMT).
If the Pentagon takes the next step and removes Turkey from the F-35 program, it would be the most serious crisis in the relationship between the two allies in decades.
Shanahan expressed optimism that both countries would find a way out of the crisis by persuading Turkey to purchase the Patriot air defense system instead of the S-400s.
"I expect we'll solve the problem so that they have the right defense equipment in terms of Patriots and F-35s," Shanahan told reporters at the Pentagon. The Patriot is made by Raytheon (NYSE:RTN) Co.
Shanahan added that he expected the United States to ultimately deliver F-35s currently at Luke Air Force Base in Arizona to Turkey, after resolving the dispute. Turkish pilots are receiving training on two aircraft at the base.
A senior State Department official offered a less optimistic view on Tuesday, saying that while the NATO alliance was "strong and unified," U.S. tensions with Turkey over its S-400 purchase plans are likely to loom large over a NATO meeting of foreign ministers in Washington later this week.
"We have very serious concerns about its stated plans to proceed with the acquisition of the S-400 missile defense system and there will be potential consequences, within sanctions law and the F-35 program if they continue," said the official. The official was speaking on condition of anonymity to preview the meeting of North Atlantic Treaty Organization foreign ministers.
Turkey could face sanctions under a U.S. law known as Countering America’s Adversaries Through Sanctions Act.
Turkey's lira currency dropped nearly 3 percent on Tuesday after the U.S. halt of the delivery and sanctions warning.
The disagreement over the F-35 and the S-400 is the latest of a series of diplomatic disputes between the United States and Turkey, including Turkish demands that the United States extradite Islamic cleric Fethullah Gulen, differences over Middle East policy and the war in Syria.