The Weekly Wire: For Your Situational Awareness 9/4/20

 In Weekly Wire
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Japan After Prime Minister Abe

Aaron Lin, Research Associate

On August 28, Japanese Prime Minister Shinzo Abe made a surprise announcement that he would be resigning as Prime Minister, due to a relapse in his ulcerative colitis. While his ailment has been known for many years, his decision to resign was a surprise, especially as Japan continues to grapple with a second wave of COVID-19 cases. Prime Minister Abe leaves a strong legacy of supporting Japanese defense spending reversing years of defense budget cuts, strengthening the Japan-US alliance, and reinterpreting the Constitution to allow for collective self-defense. In his nearly eight years in power, he has put Japan on the pathway to acquiring aircraft carriers and long-range strike capabilities, things that would have been almost unthinkable a decade ago.

Though Abe’s record on other issues may be mixed, he has nonetheless set a clear strategic direction for Japan from which his successor is unlikely to deviate. This included closer ties with the US, building up relations with other Asian neighbors to balance China, while managing an economic relationship with China that is still vitally important to Japan. The main problem for his successor will be finding the resources and funds to support that strategic direction as the COVID-19 pandemic has taken its toll on the economy.

There are several factors that will make funding future defense growth very difficult, despite the security threats Japan faces. Japan was already struggling with decades of deflation that suppressed economic growth when COVID-19 hit. Furthermore, Prime Minister Abe significantly raised the sales tax to 10% in 2019. Although some economists believe that this was necessary to help the government raise revenue to support large debt and social spending, in the short term it further suppressed already low domestic consumption. On top of this, Japan has an intractable demographic problem, with Japan’s population expected to fall by as much as a third by 2060.

The Japanese government appears to broadly agree on the need to enhance Japan’s defense capability. But the amount of money that can dedicated to it will now have to be delicately balanced with supporting a post-COVID-19 economy. Under Abe, Japan’s defense budget has grown about 1% annually . In the near term, expanding defense spending beyond this rate will likely difficult, provided China, North Korea, or other threats do not increase suddenly and dramatically. In times of budget pressure, it is common to see projects that are in very early stages be the first to get cut or delayed. While Japan’s F-X fighter program will likely prove to be an exception to this, other bleeding edge R&D programs like those developing hypersonic missiles, may be more vulnerable.

Time will tell how Japan’s defense posture shifts under Prime Minister Abe’s successor, who will be chosen by the Liberal Democratic Party on September 14. Many observers note that the country has a pattern of going through frequent leadership changes before one administration manages to rule the country for an extended period. Since 1989, the average administration length has been less than two years. In fact, this pattern can be seen stretching back to the end of WWII, with many prime ministers in power for less than three years. Before Abe came to power in 2012, Japan changed prime ministers about every year going back to 2006. Indeed, Abe’s spent a year as Prime Minister from 2006-07 as part of these frequent changes. Frequent administration changes tend to complicate decision-making, which could present a risk during a time when Japan’s economy and security are coming under pressure. While frequent administration changes have certainly not stopped US-Japan cooperation, or Japanese investment into defense, an administration with a lengthier tenure in office is preferable.

Spain

After its cancellation in December 2019 due to cost overruns and a recompete tender issued in February 2020, the Spanish Ministry of Defense has finally signed the long-awaited production and delivery contract for 348 Dragons, an 8×8 armored combat carrier, with an option to build up to 1,000 total units. The overall contract worth $2.06 billion has been awarded to TESS Defence, a joint venture formed in May 2020 that includes General Dynamics European Land Systems-Santa Bárbara Sistemas (GDELS-SBS), Indra Sistemas, Sapa Placencia, and Escribano Mechanical & Engineering. The contract awarded in late August includes the production of the vehicle, support, and maintenance services, respectively. The first batch of 348 units is said to worth $870 Million and deliveries are expected to be spread over the seven year period.

Thailand

The ongoing COVID-19 pandemic has placed an extreme amount of pressure upon Thailand’s tourism-driven economy and is leading the nation’s main opposition party to push against the approval of the $717 million purchase of Type 039A submarines from China. The purchase had been long-viewed with suspicion by outside observers, not only due to the high cost of the submarines, but also due to the increasingly odd justifications for the sale, most notably saying that the submarines would help deter piracy and illegal fishing. It is generally agreed that submarine-launched torpedoes would be highly effective against fishing boats, but highly ineffective at resolving the ensuing international tensions. The first submarine, whose $390 million purchase was approved in 2017, is slated for delivery in 2024.

Greece

Greek press reported that Greece and France are on their way towards a sale of 18 Rafale fighter jets to the Hellenic Air Force (HAF). 10 of the Rafale’s would be new-build aircraft, while the remaining eight would be former French aircraft given for free as a gift. Other sources are more cautious, citing a lower number of gifted aircraft. The 18 aircraft could replace nearly half of Greece’s 30+ year old fleet of 42 Mirage 2000s, or over half of their even older fleet of 33 F-4 Phantoms. France and Turkey have been at odds recently, highlighted by an incident last July when Turkish ships allegedly targeted a French warship off the Libyan coast. No final decisions or contract signings have been made yet, and Greek government sources appear to have indicated more broadly that Greece is simply ready to spend cash reserves on arms. Besides the Rafale, France is also offering Greece two Belharra frigates. This would not be the first time the press has jumped the gun on a French-Greek defense deal. In August 2018, many reports circulated that Greece would be leasing two FREMM frigates, claims which the French defense minister dismissed. Additionally, Greece is currently upgrading 84 F-16s to the V variant for $996 million, with the goal of completing the upgrades by 2027.

Lithuania

Despite economic concerns due to the COVID-19 pandemic, Lithuania and Slovenia are continuing with their planned procurement of Oshkosh’s Joint Light Tactical Vehicle (JLTV) with both programs remaining on track for delivery in 2021. Slovenia is due to receive 38 vehicles from 2021 to 2023 while Lithuania has placed a larger order with 200 units to be delivered from the end of 2021 to 2024. Lithuania is expected to decide in 2024 whether to take the option for an additional 300 vehicles. Montenegro is also expected to procure 67 vehicles, continuing the success Oshkosh has had with the JLTV in Europe. Elsewhere in Europe, the UK is still planning to procure JLTV to meet its Multi-Role Vehicle – Protected program with the vehicle remaining the preferred option. The UK Ministry of Defense recently awarded Oshkosh a demonstration contract, running through 2022, to examine the integration of UK specific systems on the vehicle. However, with the UK currently undergoing its Integrated Review of Security, Defense, Development and Foreign Policy it is unclear when and how many vehicles will be procured.

Australia

Last week, Australian Defence Minister Linda Reynolds and Defence Industry Minister Melissa Price announced a new five-year, AUD $15 million (USD $11.06 million) R&D investment into indigenous autonomous maritime technologies. The initiative specifically concerns unmanned platforms that could enhance Australia’s near-shore mine clearance capabilities which, according to the 2020 Force Structure Plan, are paramount to Australian defense planners as they seek to secure the country’s extensive maritime environment. The project will see Thales Australia work in conjunction with both the Department of Defence and Australia’s Trusted Autonomous Systems Defence Cooperative Research Centre (TASDCRC). Several Australian universities, including Flinders University, the University of Technology Sydney, and Western Sydney University, will reportedly contribute by designing, developing, testing, and evaluating various platforms as well.

Argentina

On September 1, Argentina decided to start several naval construction projects. Specifically, Argentina will restart construction of two 300-ton training vessels, convert two MEKO corvettes into offshore patrol vessels, and commission two new polar vessels. The training vessels began construction in 2016 but were suspended in 2018. Renewing construction is expected to cost approximately USD $1.3 million. No pricing was given for the MEKO conversion, but the modifications will involve changes to the stern and the removal of a deck gun from each vessel. For the polar vessels, one is being donated by P&O Maritime, while the other will be developed and constructed by an Argentine shipyard. The Argentinian Defense Minister also mentioned plans to modernize Argentina’s remaining MEKO corvettes and to create a submarine force, but no timeline or funding estimates were given for these.

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