Media watch: Is Japan bankrupting itself just to make the U.S. happy?

Aegis Ashore system

We’ve already written about the huge amount of money that Japan plans to spend for defense in the coming years. We’ve also written about how Japan will acquire all the new hardware it says it needs. What we didn’t write about—at least not in detail—is how Japan seems to have been suckered into buying all this stuff from the U.S. government under provisions that are disadvantageous to Japan. 

All this equipment and weapons that Japan has pledged to buy in order to bring its defense capabilities in line with NATO countries will be supplied by the U.S. under its Foreign Military Sales (FMS) program. Under FMS, the purchasing country does not buy military equipment from the manufacturer, but rather from the U.S. government itself. And the U.S. government adds a margin to the prices charged by the manufacturer as if it were a wholesaler. The purchasing countries, in principle, cannot haggle over this price. They have to pay what the U.S. charges. The ostensible reason for this middle man tactic is that the equipment often contains parts that are classified, and so the U.S. government has to check them. 

According to national security journalist Shigeru Handa, during a recent radio interview on the show Rojo no Rajio, Japan has questioned neither this system of transaction nor the demands of the U.S. as to what Japan should buy. Moreover, Japan must follow onerous loan terms when purchasing this equipment. 

As everyone now knows, Japan’s goal is to double its defense spending to 2 percent of GDP over the next five years, which means the defense budget will soar to ¥11 trillion. This development is based on the determination of the late Shinzo Abe, whose dream was to give Japan the military capability of a “normal country,” regardless of the Japanese Constitution’s denunciation of war and militarism. The U.S. government has been pressing Japan for decades to increase defense spending and modernize its “self-defense” capabilities, and Japan has done so within limits that were mostly shaped by politics. Abe got his chance to finally assert his prerogatives when Donald Trump became president. Trump, who prides himself on his supposed sales acumen, came to Japan shortly after becoming president and played golf with Abe. He coerced the then prime minister into buying tons of hardware that Japan must now pay for. And that is basically why the defense budget has to be increased, because the deal is already made.

As Handa points out, Japan was preparing for this eventuality during the administration of Barack Obama, who supposedly “persuaded” Japan to join the Trans-Pacific Partnership trade agreement, which made it politically OK for the ruling Liberal Democratic Party to approve huge defense purchases from the U.S. Trump essentially said to Abe, Why don’t you buy even more? And Abe agreed, without consulting the Diet. 

These purchases are still politicially sensitive, which is why FMS is translated in Japanese as Foreign Military Assistance, not Sales. That makes it sound as if the U.S. is donating this hardware to Japan, but nothing could be further from the truth. 

When Japan signs an FMS contract, the price listed is only an estimate, and Japan is required to start payments even before the items are delivered. Invariably, the price goes up and Japan has to pay the difference. Only the U.S. can void the contract, and for any reason. So, essentially, the price is anything the U.S. says it is.

Handa mentions as an example the Aegis anti-missile system, which is being bought from the U.S. through FMS. Originally, the system was to be set up on land, but residents of the sites selected objected strongly, since in the event of a conflict, the enemy would surely target the Aegis facility, so now the plan is to place the system on a large ship. Consequently, the cost of the system went up considerably, and will probably go up even more, since there are bound to be various improvements in the system by the time Japan is able to use it. For one thing, Japan will have a special ship built by Lockheed Martin since there is none in the Japanese fleet that can handle the Aegis setup, and that might take 30 years. Present Marine Self-Defense Forces ships are 180 meters long, maximum, but in order to hold the Aegis system, a ship would need to be 210 meters long. Handa, laughing as he said it, pointed out that, with all this hardware, “the ship might be too heavy to move.” 

A Dec. 24 Asahi Shimbun article went into more detail. The budget plan for fiscal 2023 includes ¥1.47 trillion for FMS payments, which is ¥1 trillion more than the payments in fiscal 2022 and double what they were in 2019, the year Japan spent the most on FMS so far. Auditors have complained in the past that much of the hardware that was being paid for still had not been delivered in accordance with the contract, and that even under those circumstances, the U.S. had not given Japan a final price. The Defense Ministry says that the amount of undelivered equipment in 2021 cost about ¥12.3 billion, and that ¥40 billion worth of other equipment was still being price-adjusted. In particular, the prices for two items, the Aegis missile system and the Osprey troop carrier, are constantly going up even as their delivery dates are continually being postponed. 

One military expert told Asahi that weapons sold through FMS are a “black box.” In addition to the purchase price, Japan also has to pay for maintenance and tech support from the U.S., thus making it hard to determine exactly how much Japan needs to spend on new hardware. Asahi says that the 2 percent of GDP target, which was simply announced by the Cabinet, is a means of addressing all these unknowns: Just set a high target because, in truth, the Japanese government doesn’t know what it’s going to spend in the end since everything is up to the U.S. The expert says that the logical thing to do would be for Japan to decide exactly what it needs and construct a budget based on those needs, but that’s not what they’re doing. They’re just buying whatever the U.S. wants to sell and then paying whatever the U.S. wants to charge.

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