The will, but not the way, to increase Japan’s defense budget

Takatoshi Ito July 04, 2023 09:15

Following Japan’s defeat in World War II, the United States took pains to ensure that Japanese militarism could never again pose a threat to the Asia-Pacific or the world. As in Germany, these efforts were profoundly successful. For almost eight decades, Japan has eschewed foreign adventures and violent conflict. Pacifism was not only enshrined in its constitution; it also became deeply rooted in its political culture. By relying on America and its network of alliances and global partnerships, Japan could focus on itself, building economic strength rather than military, emerging as one of the world’s largest and most advanced economies.

But over the past decade or so, the geopolitical environment has grown more dangerous, and Japanese leaders have increasingly recognized the need for a change. Some have proposed abolishing Article 9 of the constitution, which stringently limits the use of force to self-defense. This has been a contentious topic, owing to sharp divisions on the matter within the Japanese electorate. Nonetheless, in the face of threats such as North Korea’s nuclear program and Chinese revisionism, public support for deepening Japan’s defense-policy coordination with America has grown.

According to the Stockholm International Peace Research Institute, Japan ranked tenth globally in 2022 military spending (in current US dollars), putting it behind not only the US, China, and Russia, but also India, Saudi Arabia, the United Kingdom, Germany, France, and South Korea. In relative terms, Japan spends only around 1% of its GDP on defense, leaving it at 106th in the world, far behind the US (3.45%), the UK (2.23%), France (1.94%), Italy (1.68%), Germany (1.39%), and Canada (1.24%).

But Japan now aims to catch up. In Prime Minister Fumio Kishida’s 2023 budget, defense will receive 26.3% more than it did in 2022, and this will be merely the first increase in pursuit of a larger program known as the Fundamental Reinforcement of Defense Capabilities. Over the next five years, defense expenditures are projected to increase to a total of ¥43 trillion ($298 billion), up from about ¥26 trillion over the previous five-year period.

The Japanese public supports such a change. According to a December 2022 Nikkei survey (conducted in the middle of the 2023 fiscal-year budget discussions), 55% of respondents supported the Fundamental Reinforcement, whereas 36% opposed it.

Sensing that there are growing threats to Japan and its neighbors – not least Taiwan – the public recognizes the need for developing a greater deterrence capacity, even if doing so is expensive. Russia’s unprovoked war of aggression against Ukraine may be playing out on the other side of the Eurasian continent, but it nonetheless sent a shock wave through the Japanese polity. Suddenly, a major military power with the world’s largest nuclear arsenal had taken it upon itself to redraw the map of Europe, brazenly violating the United Nations Charter.

If the world is entering a new era of rearmament and hard power, Japan’s “peace constitution” and soft power may no longer be sufficient to ensure its national security. Gone are the years after WWII when 1% of GDP could be considered the ceiling for defense spending. Back then, left-wing parties even suggested that Japan’s Self-Defense Forces were unconstitutional. But almost no one thinks this way any longer. Japan and its fellow G7 members may have no wish to change the status quo by force; but other countries clearly do.

While a majority supports the Fundamental Reinforcement, there is deeper disagreement when it comes to paying for the increased defense spending. As Kishida made clear during the budget debate, tax increases will be necessary even after retaining budget surpluses and slimming down other expenditures. Hence, a February 2023 NHK survey shows that only 23% of respondents favored a tax increase to finance an increase in defense spending, while 64% opposed it.

When the Diet (parliament) finally approved the budget for the Fundamental Reinforcement on June 16, it did not specify when taxes would increase or whether the additional revenues would come from corporate income taxes, personal income taxes, consumption taxes (that is, the value-added tax), or elsewhere.

The implication is that Japan has agreed to expand its defense capability, while punting on the question of how to pay for it. Kishida will most likely postpone any tough decisions until after the next general election, which is expected sometime in the next two years. It is hard to blame him. Tax increases never make for a good campaign platform. Then again, the same could be said of defense weakness in the face of mounting threats to national security.

Copyright: Project Syndicate

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Takatoshi Ito

A former Japanese deputy vice minister of finance, the writer is a professor at the School of International and Public Affairs at Columbia University and Senior Professor at the National Graduate Institute for Policy Studies in Tokyo.