Defense spending requests need close scrutiny

The Defense Ministry’s budget requests for fiscal 2018 hit a record ¥5.25 trillion, a 2.5 percent increase from the initial budget for this year. The rise reflects plans to upgrade the nation’s missile defense capabilities in light of North Korea’s ballistic missile and nuclear weapons programs — a threat that was highlighted once again this week when an intermediate-range ballistic missile fired by Pyongyang flew over Hokkaido. It is important to beef up the missile defense system to serve as a shield against possible attacks. Still, the spending requests need to be scrutinized item by item to see if they serve their intended purpose given the nation’s tight fiscal conditions.

The combined funding requests from ministries and agencies submitted by the Thursday deadline exceeded ¥100 trillion for the fourth year in a row, although that amount will be pared by the Finance Ministry as the requests undergo screening until the draft budget is compiled by the end of the year. Both budget requests and the government’s actual budget keep rising as social security expenses increase with the rapid aging of the nation’s population. Amid lukewarm efforts by the administration of Prime Minister Shinzo Abe to rein in rising public expenditures, the goal of achieving a primary balance surplus by fiscal 2020 remains elusive, while the combined debts of national and local governments have topped ¥1 quadrillion.

Defense spending has increased five years in a row since Abe returned to the government’s helm, with the fiscal 2017 defense budget hitting a record ¥5.125 trillion. The Defense Ministry’s requests for fiscal 2018 include ¥47.2 billion to buy the SM-3 Block IIA, an improved interceptor missile being developed by the United States and Japan, to be deployed aboard Maritime Self-Defense Force Aegis destroyers, as well as ¥20.5 billion to obtain the PAC-3 Missile Segment Enhancement, an improved version of the Air Self-Defense Force’s Patriot Advanced Capability-3 surface-to-air guided interceptor missile. The Standard Missile-3 interceptors installed on the Aegis ships, tasked with stopping missiles in the outer atmosphere, and the PAC-3 missiles deployed at SDF bases constitute the two layers of Japan’s ballistic missile defense system.

The ministry is also requesting introduction of the so-called Aegis Ashore system, a land-based Aegis missile defense system. The expense needed for design of the program will be specified when the draft budget is formulated at the end of the year, since it requires consultations with the U.S. There are estimates that each Aegis Ashore unit will cost at least ¥80 billion, with two needed to cover the whole country.

Appropriate measures indeed need to be taken to better defend the country against possible missile attacks from North Korea, which has been rapidly upgrading its ballistic missile capabilities. However, the threat of North Korea’s ballistic missile and nuclear weapons programs should not be an excuse for an unchecked expansion in defense spending. In the face of the tight fiscal situation, each request needs to be carefully weighed for its cost-effectiveness.

Efforts must be maintained to trim defense spending in areas where cuts are possible. The Defense Ministry reportedly considered giving up the introduction of U.S.-made Global Hawk unmanned surveillance drones when it became known that the cost of buying three of the aircraft shot up to ¥63 billion, compared with the initial estimate of ¥51 billion, but it eventually set aside ¥14.4 billion in the fiscal 2018 request for the purchases. Under the government’s limited fiscal resources, priorities have to be set among the defense spending items to focus on those essentially needed.

Fiscal 2018 is the final year of the current medium-term defense buildup program. Defense spending during the period is capped under the program at a total of around ¥24.67 trillion for the five years since 2014. There are views, however, that defense expenditures will face upward pressures in the years beyond now that Abe has ordered new Defense Minister Itsunori Onodera to review the longer-term outline of the defense program, adopted in 2013, on grounds of “increasingly severe” international security circumstances surrounding Japan — believed to include North Korea’s nuclear and missile programs. The recent “two-plus-two” meeting of Japanese and U.S. foreign and defense ministers also called for Japan to play a greater role under the bilateral security alliance and beef up its defense capabilities. Such moves will need to be carefully weighed against the nation’s fiscal constraints.