Japanese defence spending at the fiscal crossroads

eastasiaforum.org -- Feb 18
Japan’s 2021 defence budget is set to be its largest ever, continuing a near decade-long trend set in motion by former prime minister Shinzo Abe. Under Abe’s watch, Japan has increased its defence budget every year since 2005.

The uptick in spending has continued since Abe left office in September 2020 — last December, the Ministry of Defense released its revised budget request for the 2021 fiscal year totalling approximately 5.3 trillion yen (US$50.2 billion).

Royal Australian Navy, Republic of Korea Navy, Japan Maritime Self-Defense Force and United States Navy warships sail in formation during the Pacific Vanguard 2020 exercise, 11 September 2020 (Photo: Reuters/ABACAPRESS).

This upward trend has at times been sensationalised as a return to militarism, with critics pointing to new capabilities introduced during Abe’s tenure. Recent examples include the indigenous development of long-range surface-to-air missiles and other ‘standoff capabilities’ to replace the cancelled Aegis Ashore missile defence program. The Aegis system will be replaced with destroyers and long-range cruise missiles based on the surface-to-air missiles already in use by the Japan Ground Self-Defense Force.

The reality is that Japan’s defence budget now and under prime minister Abe has remained below one per cent of GDP. If one excludes expenses related to relocating US forces in Okinawa, replacing and maintaining the Japanese equivalent to Air Force One, and making the Japan Self-Defense Forces (SDF) and Ministry of Defense more resilient to natural disasters, Japan’s defence budget did not recover to the 2006 level until 2018.

Increases in nominal defence spending since 2013 have been necessary to pay for several big-ticket items, such as enhancing the SDF’s amphibious capabilities and creating more robust space and cyberspace defence systems. Spending increases were also necessary to phase out F-2 fighter jets with next-generation F-X aircraft, and most recently to replace Aegis Ashore. This hardly meets the sensational characterisations of Japanese defence spending. Rather, these moves reflect decisions to address problems introduced by the country’s long period of economic stagnation known as the ‘lost decade’.

The defence budget’s basic ratio has remained largely unchanged. Personnel-related expenses continue to account for nearly 40 per cent of the budget. The remaining 60 per cent is spread thinly across other categories that include education and training, maintenance and repair, and research and development for new acquisition programs.

Future meaningful increases in Japan’s defence spending, however incremental, may not be forthcoming. Abe not only believed in investing in Japan’s defence capabilities to better prepare for tomorrow’s rising national security challenges, but also had the political gravitas necessary to secure the increases. New Prime Minister Yoshihide Suga, by contrast, is already seeing a decline in his public approval ratings due to his government’s indecisive handling of the third wave of COVID-19 infections. It is unclear whether Suga can continue to provide as much political support for a bigger defence budget as his predecessor did.

- eastasiaforum.org