LDP forces push defense spending request higher despite Finance Ministry concerns

By Masashi Nakata and Hirotaka Kuriyama / Yomiuri Shimbun Staff Writers

21:00 JST, November 27, 2022

Liberal Democratic Party members have been putting their weight behind the Defense Ministry’s calls to increase defense spending, fending off the Finance Ministry’s desire to rein in the budget.

Chiefly for this reason, the defense expenditures related to the equipment and other costs for the Self-Defense Forces for the next five years are likely to exceed the ¥40 trillion level.

Prime Minister Fumio Kishida, whose Cabinet is suffering from a decline in its approval rating, has not come to the forefront of the debate despite being the head of the LDP.

Lying behind the call for a sizable increase in a short period is a growing sense of crisis that a half-hearted increase would not be enough to realize a drastic reinforcement of Japan’s defense capabilities within five years, given a contingency, such as an emergency in Taiwan.

Defense spending has long been held down to around 1% of Japan’s gross domestic product, which is lower than the international level. This has forced the SDF to make do with a budget that is deemed inadequate for an organization tasked to be prepared for contingencies.

The shortage of ammunition, parts and components is serious, making the securing of sustainment ability an urgent task. The budget for the development and purchase of long-range missiles will also be necessary for the SDF to have the counterattack capabilities to destroy an enemy’s missile-launching sites for self-defense.

According to the Defense Ministry’s initial plan, the budget for ammunition purchases would increase from about ¥2 trillion in the current Medium Term Defense Program to ¥5 trillion, while outlays for standoff missiles, the key component of the counterattack capabilities, would increase by about 25 times to ¥5 trillion. The plan also included ¥3 trillion each for cybersecurity and drone-related spending, about 30 times the current amounts.

The Defense Ministry, which had more often than not been on the losing end of budget negotiations with the Finance Ministry, has been bullish because it is backed by a support group led by LDP lawmakers representing the interests of the ministry and defense industry, not to mention members of the Abe faction, the party’s largest.

According to a party official, Koichi Hagiuda, chairperson of the LDP’s Policy Research Council has been encouraging the Defense Ministry not to make “easy concessions” in budget negotiations. Hagiuda was a close aide to late former Prime Minister Shinzo Abe, a prominent advocate for a large increase in defense spending.

On Thursday, the Abe faction compiled a proposal saying that “measures should be surely taken to secure the amount that the Defense Ministry has compiled.” Their tactic is to pressure the Finance Ministry with a budget request rather high until the last moment, and then “allow a certain amount of a cut at the very end,” the party official said.

On Tuesday, Finance Minister Shunichi Suzuki hosted Defense Minister Yasukazu Hamada for a meeting at the Finance Ministry.

“It is necessary to closely examine the contents of the next Medium Term Defense Program from the viewpoint of its effectiveness and feasibility,” Suzuki reportedly told Hamada.

After the meeting, Hamada said emphatically to reporters: “We have amassed the necessary content. We will try to secure the necessary budget.”

How to secure stable financial resources?

The prime minister is determined to drastically strengthen defense capability, but he has not shown any stance of taking the lead in discussing specifics of the matter.

Since the securing of stable financial resources for a substantial increase in defense spending will involve measures such as tax hikes, Kishida is paying close attention to how the discussion unfolds.

An official close to Kishida said the prime minister “is up to his neck with other political matters that he cannot afford to confront the debate on the country’s defense capabilities.”

Since October, three members of the Kishida Cabinet have been forced to resigned: Daishiro Yamagiwa, who was the minister in charge of economic revitalization; Yasuhiro Hanashi, who was the justice minister, and Minoru Terada, who was the internal affairs and communications minister.

The prime minister’s position has also been made more difficult by the Abe faction and LDP lawmakers representing the interests of the Defense Ministry and industry. These forces have been suppressing the discussion concerning a stable revenue source as that would bring up tax increases.

“It is important to discuss the issue by putting a lot of time into it, not such a short span as one or two months,” said Hiroshige Seko, secretary general for the LDP in the House of Councillors and a member of the Abe faction, during a press conference on Friday calling for putting off the discussion of tax hikes.

A likely scenario is for the time being to cover the increase in defense spending by issuing government bonds, given the severe economic situation. By the end of the year, the focus will be on whether Kishida will venture into specific tax items that would be considered for possible increases in the future.