The Maritime Top Line: Defense Budgets in the Pacific Littoral

By Mira Rapp-Hooper
Saturday, March 28, 2015, 4:00 PM

In recent years, analysts have devoted much attention to the fact that China continues to increase its defense spending by double-digit percentages annually. They have also focused on fiscal constraints in the United States, and how these may impact Washington’s ability to sustain its presence in East Asia. Less well documented, however, is what these trends have meant for other countries in the region. With a rising superpower rapidly expanding its defense capabilities, we might expect its neighbors to follow suit. But is this actually happening? This issue of the Asia Maritime Transparency Initiative investigates.

Richard Heydarian argues that the Philippines has begun a defense overhaul under President Benigno Aquino III, implementing a 2012 act to modernize the Armed Forces of the Philippines. The aim of this initiative is to develop Manila’s minimum deterrence capability, and to improve its maritime domain awareness in the waters in its Exclusive Economic Zone (EEZ)---a priority that became especially urgent after Manila was ejected by China from the Scarborough Shoal in 2012. The Philippines’ defense spending increased from $1.24 billion in 2004 to $2.3 billion in 2009 and $3.47 billion in 2013. As a percentage of GDP, however, it hovers around just 2.5 percent. But Aquino has also taken steps to ensure that these funds are being used to beef up Manila’s maritime capabilities, and has seriously pursued peace negotiations with leading rebel groups. The Philippines’ Air Force and its rather paltry Navy have been the beneficiaries of these bumps, but establishing minimum deterrence at sea will still be a major challenge for Manila.

Vietnam has boosted its defense budget more than any other country in South East Asia, note Murray Hiebert and Phuong Nguyen, with a 113 percent increase between 2004 and 2013. Hanoi still spends just two percent of GDP on defense, however. A major turning point for Vietnam came when the Central Committee of the Communist Party released a maritime strategy, making its sovereignty and economic claims at sea major national security priorities. As in the Philippines, the Air Force and the Navy have benefitted the most from these modernization efforts. For many of its big-ticket aircraft and vessels, Vietnam has turned to Russia, with whom it maintains close defense ties dating back to the Cold War. In something of a realignment, however, Vietnam increasingly sees its security interests as tied to those of the United States and Japan, as a consequence of China’s increased assertiveness in the South China Sea. Washington has provided a maritime security assistance aid package to Hanoi, and both the United States and Japan are furnishing it with vessels. As is the case in the Philippines, however, a key question is whether Vietnam will be able to absorb this aid and make good use of its new acquisitions.

Further to the north, defense budgets are more static. Despite mounting pressure around the Senkaku Islands, Japan’s defense spending has remained relatively fixed, as Michael Green demonstrates. Japan has historically had a self-imposed, informal defense spending limit of approximately one percent of GDP, and despite passing a record FY 2015 defense budget, this cap remains in place. As a percentage of government spending, defense is just 2.5 percent, and Tokyo also has placed a cap on how much it can spend over the five-year period 2014-2018. Despite these limits, Tokyo has clearly reoriented its defense spending to prioritize so-called “grey zone” contingencies---conflicts that lie somewhere between peace and full-scale war, like the Senkakus. This has meant modest cuts to the Ground Self Defense Forces budget and modest increases to the Air and Maritime Self Defense Forces budgets. Procurement patterns in the JASDF and JMSDF underscore the grey zone mission even more clearly, with new purchases such as Global Hawk UAVs, a bulk purchase of P-1 maritime patrol aircraft, 30 new amphibious assault vessels, and a continued emphasis on Tokyo’s Aegis destroyer capability. Even the JGSDF is being reoriented towards a maritime mission, with far fewer tank purchases and a new unit modeled on the U.S. Marines. Look for several more indications this spring and summer that Shinzo Abe’s government is prioritizing the maritime mission, despite the fact that topline numbers won’t budge.

Taiwan faces a rising military juggernaut just across the Strait, but Taipei’s spending has also languished, and stands at just around two percent of GDP. As Bonnie Glaser and Anastasia Mark note, this is despite the fact that ROC President Ma Ying-Jeou pledged to spend no less than three percent. Significantly improved Cross-Strait relations mean that many in Taiwan do not regard China as a proximate military threat, and Taipei has prioritized social spending. Taiwan is also transitioning to an all-volunteer military, which is a costly endeavor. Yet recent projections suggest that if Taiwan was left to defend itself from an attack by the mainland, it might only be able to hold out for one month’s time, and the United States is the only country willing to sell Taiwan major arms. With a presidential election rapidly approaching, the Democratic Progressive Party (DPP) has pledged to increase defense spending if returned to power. But when the DPP was last in power, defense spending actually fell. Regardless of which party wins the election, Taiwan can’t be expected to keep pace with China’s spending. But, Glaser and Mark argue, if it wants the United States to continue to provide for its defense, it must make an earnest effort to do the same.

All four of the countries examined see China’s growing maritime capabilities as a threat to some degree. In the case of Taiwan and Japan, this has resulted in a reorientation toward the maritime domain, with both attempting to make similar budgets go farther without actually increasing spending due to domestic constraints. In Vietnam and the Philippines, in contrast, defense spending has been overhauled, as both play games of catch up with their air forces, navies, and coast guards. Will Taiwan and Japan’s domestic constraints on higher spending be eroded in the coming years as China’s military reach continues to grow? This is certainly possible, but either way, these four budgets remind us that to understand littoral states’ spending priorities in maritime Asia, we must look deeper than the top line.