Stressed Security Environment In North-East Asia And Focus On Defence Spending – Analysis
With Donald Trump’s return to a second term as American President, the issue of transactional relationship with the US alliance partners is likely to figure prominently at the Oval Office. This could mean demand for greater defence burden-sharing by its allies and security partners in East Asia – Japan, South Korea and Taiwan. Trump could also demand Tokyo cough up more cash for hosting US troops, besides a renewed push for it to further jack up defense spending.
During most of the post-War years, Japan and South Korea remained stable US allies. That looks threatened during Trump’s second term. With a maverick and mercurial Trump at the Oval Office, Shigeru Ishiba heading a minority government in Japan and on the edge and political instability in South Korea following the short but misguided martial law promulgation by Yoon Suk-Yeol in South Korea, there seems to be a political paralysis leaving a leadership vacuum in the Indo-Pacific.
The previous leaders of the US and Japan, along with Yoon Suk-Yeol of South Korea (now in trouble) focused on strengthening alliances and regional stability through cooperation whereas Trump’s approach to foreign policy looks prioritising transactional relationship.
During the post-War years, US security policy in Asia depended on a network of allies, with Japan and South Korea the two most reliable. These two allies remained as the most reliable allies of the US which helped it maintain peace in the Indo-Pacific and further its interests. This scenario in the present context with three new leaders in all three nations amidst domestic political priorities taking precedence means the strength of these ties is under test as well as scrutiny. This threatens to unsettle American interests and jeopardize its supremacy in the region, posing a new challenge to Trump.
The foremost in this matrix of alliance relationships, the treaty with Japan is a central pillar of US policy on Asia. Mohammed Soliman, non-resident senior fellow in the National Security Program at the Foreign Policy Research Institute observes that the relationship shares similarities to the ties the UK has with America, akin to an Asian “special relationship.” He further argues that Tokyo’s strategic position in countering China’s growing regional influence is a modern-day parallel to Britain’s role in countering German dominance in Europe during the last century. It is also one of the four largest economies in the world and regularly tops foreign investment charts in the U.S., pouring in funds into at least 39 states.
Among other issues the focus on imposing tariff on its trading partners has already hit international headlines. This coincides with Trump’s isolationist stance and stress on Make America Great Again (MAGA) as his signature policy stance that threatens to spin the world upside down. Though the main target on the tariff would be China, other important trading partners shall equally face the heat.
As regards Japan, it is already facing the heat as it continues to face threats from North Korea and China and preparing itself to adapt to the new situation despite the security guarantee provided by the United States. Japan has already breached its self-imposed threshold of breaching 1 per cent of the Gross Domestic Product (GDP) on defence spending. Japan already planned to push its defence spending to about $68 billion, or 2 per cent of the GDP in fiscal 2022, as concerns grew over Russia, Chinese and North Korean activity in the Indo-Pacific region.
In December 2024, the Cabinet approved another record $8.7 trillion ($55.1 billion) for fiscal 2025 – a 9.4 per cent year-on-year increase. By this, Tokyo took another significant step to hike defense spending to 2 per cent of the GDP by fiscal 2027. But the road ahead is looking increasingly bumpy. The government faces growing political uncertainty about how to secure future budget hikes. The government is unable to halt rising inflation and the yen’s diminishing value erodes Japan’s plans for its largest military build-up in post-war history.
Thus it transpires that with the falling yen Japan enters into a new era of crisis as it gallops in its pursuit of finding funds for increased defence spending. Japan is unlikely to be deterred from its determination to allocate more money as it faces the most severe and complex security environment since World War II. When Fumio Kishida was Prime Minister, he had pledged in 2022 to meet the 2 per cent GDP goal by fiscal year 2027. Since then the yen has plummeted in value from about 140 yen per $1 in November 2022 to about 161 per $1 in July 2024, its lowest value in nearly four decades. Currently, the $1-yen ratio hovers between 155-161 range.
Japan’s total defense budget for 2024 was approximately $56 billion, about 1.6% of its 2022 GDP. That budget was a 64% increase from its $34 billion defense budget in fiscal year 2022. Much of Japan’s defence budget is used for weapons procurement as well as aircraft, such as Tomahawk cruise missiles or F-35 Lightening II fighter jets, and other military assets. Japan imports most of these from the US in deals that are typically conducted in the stronger American dollar. Such an arrangement puts more pressure on Japan to protect the value of the yen.
Japan has been struggling for some time now to combat its weakening currency from further fall. Japan hopes to implement “greater efficiency” in its pursuit of increased defense spending by re-examining expenses, developing long-term contracts and making bulk purchases. The Japanese government also proposed tax increases to fund its military build-up, but public opinion without proper debate could dent the government’s popularity, thereby impact on political stability. The taxpayers would not definitely rejoice any proposal for hiking tax. This dichotomy between government’s need to find money through tax increase and the hesitation by people to shoulder additional tax burden is always a challenge for the government to find a middle path. The average peoples are more concerned about their own personal life and less concerned about the stressed security environment surrounding Japan.
Japan’s military build-up is billed as a defensive measure in an increasingly unstable geopolitical arena. The 2024 Defense White Paper reiterated many of the same sentiments expressed in the 2023 edition, including concerns over North Korean missile launches and possible nuclear tests, the Russian invasion of Ukraine and an increase in Chinese activity in the skies and waters around Japan. The White Paper warned that a situation similar to Russia’s aggression against Ukraine may occur in the Indo-Pacific region in future, particularly in East Asia.
There are also concerns about heightened tensions between China and Taiwan, exemplified by a series of military drills and frequent violation of Taiwan’s airspace after Taiwan President Lai Ching-te took office on May 20, 2024. The White Paper noted: “Stability in the situation surrounding Taiwan is important not only for the security of Japan, but also for the stability of the international community, and Japan must continue to monitor the situation with even greater vigilance”.
North Korea is another bother. Pyongyang is engaged with actively improving its nuclear and missile technologies and focusing more on intelligence, surveillance and reconnaissance. Additionally, North Korea’s military activities and missile firings many of which have flown over Japan’s airspace pose an even more grave and imminent threat to Japan’s security than ever before. They seriously undermine the peace and security of the region and the international community.
Japan hopes to deter these threats based on its dependence on the alliance relationship with the US, besides developing its own defence capabilities and expanding diplomatic ties with European and Asian countries. By doing this, Japan needs to adhere to its Constitution’s basic precepts of maintaining an exclusively defence-oriented policy and not becoming a military power that poses threats to other countries.
Despite hurdles and being a minority government, the Cabinet of the government headed by Shigeru Ishiba approved on 27 December 2024 a record budget worth 115.541 trillion yen ($732 billion) for fiscal 2025. The government is aware however that it could face challenges in the ordinary Diet session soon. In the past years when the Liberal Democratic Party-Komeito combine coalition government enjoyed a solid majority, it had no difficulty in passing the budget bills. The situation is not the same now since its dismal performance on 27 October 2024 elections to the Lower House. Now it needs the support of the opposition parties to pass the budget.
Managing the economy and raising funds through tax hike, issuance of new government bonds etc. are priorities for the Ishiba government. The government needs to have a revenue forecast in place for proper economic planning. Issuance of government bonds might not be enough and the government still may have to pay a quarter through government debt.
Japan has an aging population with over lakh centenarians. This means the government shall have to allocate funds for social security spending, such as pensions and medical care. These will take up about one-third of total expenditures. The bill sets aside 38.277 trillion yen for social security, an increase of 555.8 billion yen in the 2025 fiscal year. Similarly, defence spending will exceed 8 trillion yen for the first time, at 8,669 trillion yen, an increase of 751.9 billion from the 2024 budget.
However, what is eminently significant in the 2025 budget is that by approving a record 8.7 trillion ($55 billion) defence budget, Japan commits to accelerate building up its strike-back capability with long-range cruise missiles and starts deploying Tomohawks to fortify itself against growing threats from China, North Korea and Russia.
In fact, the Cabinet-endorsed draft budget marks the third year of Japan’s ongoing five-year military build-up under the National Security Strategy adopted in 2022. The defence spending is part of the more than 115 trillion yen ($732 billion) national budget bill. A parliamentary approval is needed by March for its enactment.
As planned, Japan is preparing to deploy US-made Tomahawks late in fiscal year 2025 as part of its ongoing efforts to acquire strike-back capability with long-range missiles that can hit distant targets. The budget allocates 940 billion yen ($6 billion) for the so-called “standoff” defence system that also includes long-range missiles, satellite constellation and other arsenals. The cost includes 1.8 billion yen ($11.4 million) for the purchase and addition of equipment to launch Tomahawks from an Aegis-class destroyer.
Japan has plans too to reinforce its missile defence system. For this, Japan plans to spend another 533 billion yen ($3.37 billion) that includes purchases of interceptors and a mobile reconnaissance radar to be placed on Okinawa, where more than half of About 50,000 American troops are based. Under Japan’s planned defence strategy, it aims to eventually double its annual defence sending to around 10 trillion yen ($63 billion), making it the world’s No. 3 military spender after the US and China.
