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Ruling party panel calls for doubling Japan's defense budget

Tougher security environment and US pressure lead to 2% of GDP target

TOKYO -- A group of lawmakers from Japan's ruling Liberal Democratic Party has called for the country's defense spending to double in response to growing national security risks and pressure from the U.S.

The LDP's Research Commission on National Security has urged the government to break with its traditional policy of limiting the defense budget to 1% of Japan's gross domestic product, raising it to around 2% of GDP, the target adopted by NATO.

Washington has also been pushing Japan to shoulder more of the cost of its defense, spurring the LDP to call for a bigger budget. The government will review its National Defense Program Guidelines and the Midterm Defense Program at the end of the year. In August, ministries and agencies will submit their budget requests for the next fiscal year to the Finance Ministry.

The ruling party's proposal is aimed at influencing the defense budget in response to U.S. President Donald Trump's demand that Japan spend more. The LDP commission argues that the country faces "the most critical" security situation since the end of World War II.

In making its case for greater defense outlays, the panel has enumerated what it sees as threats to national security, including China's rapid military buildup and the growing likelihood of space and cyber attacks. Japan's defense budget has risen for six straight years, reaching 5.19 trillion yen ($47.7 billion) in the original budget for fiscal 2018, which began in April.

The Maritime Self-Defense Force helicopter carrier Kaga is docked at a port in Kyushu: Critics say calls to double Japan's defense spending are unrealistic.   © Reuters

The commission said the 1% limit -- which is no longer official policy -- underscores the need for a massive expansion of defense spending. Gen Nakatani, an LDP lawmaker and former defense chief who heads the body, said Japan's defense budget is "too small" relative to its economic strength, when compared with other countries.

In fiscal 2016, the U.S. spent 3% of GDP on defense, Russia's military budget equaled 4.8% of the country's economic output. Britain and France spent around 2%. China officially spent 1.3% of GDP on defense, but most experts believe that figure significantly understates its actual spending.

The LDP panel referred to NATO's defense spending target, emphasizing that its proposal is in line with the standard among U.S. allies.

Japan's security treaty with the U.S. specifies different roles for the two countries. U.S. military's offensive capabilities are meant to serve as the "spear," while Japan, with its strictly defensive forces, acts as the "shield." Japan also hosts many U.S. military bases and shoulders their operating costs. Despite this, Tokyo has been under constant pressure, publicly and behind the scenes, from Washington to ramp up its defense spending over the past two decades. 

A turning point came after the 9/11 attacks in 2001. President George W. Bush's decision to go to war in Iraq and Afghanistan, and the resulting rise in military spending, strained the U.S. federal budget. Washington adjusted by slimming down the military and stepping up pressure on its allies to spend more on national security. Donald Rumsfeld, Bush's defense secretary, stressed that Japan's defense budget was only 1% of GDP, compared with the U.S. figure of 3%, every time he met with a Japanese cabinet member or lawmaker.

Bush's successor, Barack Obama, pruned the defense budget to improve U.S. fiscal health and declared that America would no longer act as the world's policeman. But despite the cajoling, Japan has held its defense spending below the 1% of GDP level. Trump is the main factor behind the LDP's call for doubling the budget.

During the 2016 presidential campaign, Trump pledged to cut the U.S. trade deficit with Japan. After taking office, he demanded talks on a bilateral free trade agreement and expressed his desire for more U.S. exports of cars and farm products to Japan.

Tokyo wants to avoid committing itself to import quotas, but because Japan's defense industry is relatively small, buying more U.S. arms is one way to reduce Japan's trade surplus without hurting its domestic economy much. Trump has demanded that Japan buy more fighter jets and other weapons from the U.S., directly linking economic and security issues.

And China's growing naval might, coupled with North Korea's nuclear and missile programs, has made a big increase in Japan's defense budget more palatable politically. This presents an opportunity for LDP lawmakers with ties to the Defense Ministry and arms makers to push for a big expansion of the budget.

"Our thinking has been limited by the 1% ceiling," said one LDP legislator. "We will try to increase all items in the defense budget, including spending on equipment." The LDP commission's proposal, however, is short on specifics about what to do with the additional 5 trillion yen it wants. It only refers to expenditures on training and equipment maintenance as possible areas of growth.

Many policymakers believe increasing Japan's defense budget to 2% of GDP is unfeasible, as it would require doubling it to around 11 trillion yen.

Of the 29 NATO member countries, only a handful, including the U.S., Britain and Poland, spend more than 2% of GDP on defense.

Experts point out that Japan can squeeze more value out of its current budget by driving a harder bargain when buying U.S. weapons, for example. A growing portion of Japan's purchases are made under Washington's Foreign Military Sales program. Under the program, the Pentagon buys equipment on behalf of its partners, rather than those countries buying directly from U.S. defense contractors. That allows the White House to set prices. Policymakers close to Prime Minister Shinzo Abe and the LDP say the process is unfair.

The commission acknowledges that reaching 2% of GDP on defense spending is "a challenge." In its draft proposal, the panel described the figure as a "target," but later toned that down to a "reference figure" following complaints that it was unrealistic.

In 1976, the cabinet of Prime Minister Takeo Miki formalized the 1% limit on defense spending through a cabinet decision. Although the decision was later rescinded, the 1% ceiling has a hold on the imagination of Japanese voters of a certain age. The LDP panel's call for a steep rise in the budget is partly aimed at emphasizing that the limit has been scrapped.

As for the new National Defense Program Guidelines, Abe said the document should be based on a "rigorous assessment of genuinely necessary defense capabilities," rather than a simple update of the traditional policy. He will have to weigh Japan's defense needs against the country's fiscal constraints in deciding how much to spend.

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