Volkswagen postpones Turkey plant on Syria incursion

German carmaker Volkswagen delayed a decision on building a factory in Turkey amid international criticism of the Turkish military incursion into Syria, German newspaper Handelsblatt reported.

Volkswagen is greatly concerned by the operation in Syria’s north, an unidentified company spokesman told Handelsblatt.

Volkswagen was poised to announce a $1.1 billion investment in Turkey to build cars including the Passat and Skoda Superb models. Turkey is seeking investment from abroad, which has slumped in recent years, to help bolster economic growth following a currency crisis last year.

Volkswagen set up a subsidiary in the western Turkish province of Manisa at the start of October. It paid a quarter of a planned 943.5 million liras ($160 million) in capital into the unit.

Volkswagen has said it is in the latter stages of talks with the Turkish government over the establishment of the factory. The carmaker has also considered Bulgaria as an alternative but indicated that Turkey is the leading candidate.

The investment by Volkswagen has proven controversial because of Turkey’s record on human rights and democracy under President Recep Tayyip Erdoğan. The president, who has tightened his grip on the country’s politics, economy and judiciary, could use the factory as proof of the success of his government even as Turks grapple with an economic downturn.

European Union countries suspended arms sales to Turkey this week in protest at the military incursion into Syria, which it says threatens to further destabilise the region.

Volkswagen is in final talks that could be successfully completed in two weeks or less, board member Andreas Tostmann told reporters in Berlin at the end of September. Negotiations have snagged over high tax rates on motor vehicle purchases.