Defense Strengthening What is the source of funding?

October 12, 19:25

Russia's invasion of Ukraine, tensions over the Taiwan Strait, and North Korea's successive missile launches.

The environment surrounding Japan's security is changing rapidly.

While the government has set out to drastically strengthen its defense capabilities within five years, the Ministry of Defense has made the largest ever budget request, including the mass production of weapons with the "counterattack capability" in mind against enemy bases.

At the government's panel of experts, which began on September 30, there was discussion of revising the conventional framework for defense spending.

As Japan's defense system is about to undergo major changes, we covered the behind-the-scenes discussions within the government and ruling parties about the burden of defense spending and financial resources.

(Economics Department reporter Akihiro Shiraishi Political Department reporter Yusuke Senoue)

Largest budget request ever

Annual budget request for the next fiscal year's budget.



The Ministry of Defense received the most attention this year.

In its basic policy announced in June this year, the government stated that it would "dramatically strengthen its defense capabilities within five years."



Based on this, the Ministry of Defense requested a budget of 5,559.8 billion yen, the largest amount ever (excluding duplicate accounting with the Digital Agency).



It adopted an unusual request method that included a large number of "item requests" that did not specify the amount, such as the mass production of "stand-off missiles" that could attack from outside the enemy's range.

Debate on increased defense spending

On the 30th of last month, the first meeting of the "Expert Panel for Comprehensive Consideration of Defense Capability as a National Power" was held at the Prime Minister's official residence, marking the start of full-scale discussions within the government on strengthening defense capabilities.

The following 10 people were selected as experts, including defense experts such as the former vice-minister of defense, financial institutions, scientific researchers, and the media.

・Ryuhiro Kamiyama, Council for Science, Technology and Innovation ・Member


・Yuri Okina, Chairman, Japan Research Institute


・Tsuneo Kita, Advisor, Nihon Keizai Shimbun Inc.・Takeshi Kokube, Chairman

,


Sumitomo Mitsui Financial Group


Vice Minister)


・Kenichiro Sasae, President of the Japan Institute of International Affairs (Former Vice Minister for Foreign Affairs)


・Hiroshi Nakanishi, Professor, Graduate School of Law, Kyoto University


・Kazuhito Hashimoto, President, Japan Science and Technology Agency


Yoichi Funabashi, Chairman, Global Council, International House of Japan


Juichi Yamaguchi President of Yomiuri Shimbun Group Headquarters

At this meeting, the government will discuss how to drastically strengthen defense capabilities, the scale of defense spending increases, and the direction of financial resources.



When considering a significant increase in defense-related spending, the government is referring to NATO = North Atlantic Treaty Organization's "defense-related expenditure" calculation standards.



Following Russia's annexation of Crimea in 2014, NATO has set a goal of increasing "defence-related spending" among member states to at least 2% of GDP within 10 years.



Furthermore, with Russia's invasion of Ukraine in February this year, Germany will establish a new fund of 100 billion euros, or about 14 trillion yen in Japanese yen, to increase its defense budget, and apply for NATO membership. Sweden has also indicated a policy of increasing its defense budget to 2% of its GDP.



However, NATO's "defense-related expenditures" include coast guard costs, UN peacekeeping (PKO)-related costs, and pensions for veterans, which are not included in Japan's defense budget.

Japan's GDP ratio is 1%

On the other hand, Japan's defense budget is 5.4005 trillion yen in the initial budget for FY2022.



0.96% of GDP.



Furthermore, Japan's "defense-related expenditure" calculated by the government based on NATO standards is approximately 6.1 trillion yen, or 1.09% of GDP, including the Japan Coast Guard's budget of 223.1 billion yen.



In order to increase the defense budget to 2% or more of GDP, it is necessary to increase the defense budget by more than 5 trillion yen.

Consideration of a new framework for defense

The Ministry of Finance is responsible for rigorously assessing budgets and keeping expenditures as low as possible.



However, regarding the request for an increase in defense spending, a senior official said, "I have no hesitation in allocating the necessary budget to drastically strengthen our defense capabilities." rice field.



On the other hand, he questioned the Ministry of Defense's requests for the deployment of tanks.

A senior official of the Ministry of Finance


said, "Will increasing the budget on the line of the existing defense thinking really lead to a drastic strengthening of our defense capabilities? The government as a whole will closely examine the projects of other ministries and agencies from the perspective of 'security.' , we need a framework that leads to the strengthening of comprehensive defense capabilities and national power.”

The Cabinet Secretariat, which oversees the Advisory Council, believes that it is necessary to incorporate the perspective of security into projects under the jurisdiction of other ministries and agencies other than the Ministry of Defense, given the country's limited human and financial resources.



One of them is "Science and Technology Research".



The initial budget for FY2022 is 4.2198 trillion yen for science and technology.



Of these, the Ministry of Education, Culture, Sports, Science and Technology accounts for 48.8% and the Ministry of Economy, Trade and Industry accounts for 15.2%.



On the other hand, the Ministry of Defense is 164.5 billion yen, 3.9%, the sixth largest by ministry.

Within this research budget, the Ministry of Defense is conducting technological research to strengthen information gathering capabilities in outer space using artificial satellites and to respond to cutting-edge cyber attacks. I am looking for



On the other hand, research institutes such as Japanese universities and private companies are also conducting research and development of cutting-edge technologies such as space development, artificial intelligence (AI), and quantum computers.



The Ministry of Education, Culture, Sports, Science and Technology and the Ministry of Economy, Trade and Industry are conducting projects to support research on these advanced technologies, but there is almost no cooperation with the Ministry of Defense in these research fields.



The government is considering whether it is possible to introduce in Japan the same system that the United States has invested in cutting-edge technological research from the perspective of national security, and that military research has encouraged economic growth in the private sector.



For example, in 2020, when the new coronavirus spread worldwide, then-President Trump launched Operation Warp Speed.

An American pharmaceutical company has succeeded in developing a vaccine for the new corona at an unusual speed by investing a huge research budget from national defense budgets in research and development of vaccines.



In the United States, if infectious diseases spread in the country or chemical weapons are used in the country, if vaccines and therapeutic drugs cannot be developed quickly, the lives and property of the people cannot be protected, and security and military measures will be taken. Research and development of such drugs is also regarded as part of national security, as it will hinder national security.



The government believes that if Japan expands the framework of the security field to include science and technology, and the research and development of universities and private companies are mutually linked, it will not only lead to the strengthening of defense capabilities, but also the development and derivation of science and technology in cutting-edge fields. We believe that the use of consumer products that we have developed will lead to economic growth in Japan.



Although such an idea had been in the government for a long time, it did not develop into a full-fledged discussion.



Behind this is opposition from academic institutions that avoid military research.



In July this year, the Science Council of Japan announced that regarding scientific research that could be diverted to military use, ``It is difficult to simply separate pure scientific research from research that can be diverted to military use, and it is realistic to make a uniform judgment on how to treat it. No,” he said.



It has been pointed out that the response to military research has changed, but the Science Council of Japan criticized the statement made in 1950 that ``we will never conduct scientific research for the purpose of war''. I can't deny it," he reiterated, stating that his position on research for military purposes has not changed.



As such, the barrier between science and technology and defense research remains high.



A government official familiar with these areas also said:

Government official:


“The mutual utilization of defense and civilian research is by no means an easy discussion in Japan. It is a discussion that will change the paradigm of science and technology research since the war. Drastic reinforcement of defense capabilities is unthinkable without the use of private companies and the use of public infrastructure, not only in the field of science and technology, but also in areas such as public works projects, etc. We must proceed with discussions on what is necessary and must be done by all ministries and agencies in order to fundamentally strengthen defense capabilities.”

Recognition that is inconsistent with “increase”

On the other hand, there is also opposition to the idea of ​​discussing the increase in defense spending, including the efforts of each ministry and agency, saying, ``Mamizu is the Ministry of Finance's desire to hold down expenditures.''

A ruling party official said,


"The Council of Experts was created by the Ministry of Finance to prevent an increase in the defense budget, so we must shut it down."

A Ministry of Defense official said,


"The important thing is how much we can increase with fresh water, and it is useless if it is seen as a jumble of numbers."

The Ministry of Defense, which is aiming for a "net increase" in the budget, is also moving to catch up, and there is a gap in recognition within the government, and it will not be easy to keep pace.

A government official said,


“The Ministry of Defense wants to increase its budget and build missiles. I'm not interested in it because it doesn't increase

Focus on financial resources

As the discussion of the "content" of defense progresses, the last big focus is "financial resources."



Within the ruling party, the idea of ​​"deficit-financing government bonds", "construction government bonds" to be used for port development, etc., or "bridge government bonds" to be issued after determining future redemption sources is also emerging.



On the 4th of this month, Liberal Democratic Party policy research chairman Hagiuda told reporters, "From now on, it is unrealistic to finance everything with government bonds."

Liberal Democratic Party Policy Research Chair Hagiuda


: "I think we have to work on it from now on, but increasing the defense budget is not a one-shot story this year, so it's unrealistic to cover all the financial resources with government bonds. I would like to have thorough discussions within the party and within the ruling party, including how to secure permanent financial resources.”

Komeito Secretary-General Ishii also said at a press conference on March 30 that raising taxes to increase defense spending was "one of the options," and it is likely that there will be heated debate within the ruling party over how funding should be financed.

Komeito Secretary-General Ishii


said, "If we continue to steadily develop and strengthen our defense capabilities in the future, we will probably have a structure in which the budget will constantly increase. To cover it all with government bonds is the current financial situation of the country. It would be difficult to do so, and it would require a certain, permanent, and solid source of funding.

Moves to increase taxes in Europe and the United States

Looking at the world, there are various methods of securing financial resources for increasing national defense spending.



Sweden decided to increase the liquor and tobacco tax and introduce a bank tax for major financial institutions, and the United States increased the defense budget in the budget statement announced in March this year, while the public debt In order to stop the expansion, the government plans to raise the corporate tax rate and increase taxes on the wealthy, thereby reducing the fiscal deficit to $1 trillion, or more than ¥140 trillion in Japanese yen, over the next 10 years.



In Japan as well, in addition to discussions at the expert panel, the Liberal Democratic Party's Tax Research Commission is expected to have a full-fledged discussion on how the financial resources should be.



Regarding this, there are proposals to raise the ``three basic taxes'' such as the corporate tax and the tobacco tax, but the proposal to raise the corporate tax is opposed by Keidanren and Keizai Doyukai, saying, ``It should be borne by the whole nation.'' is doing.



Coordination is likely to be difficult because of the interests of the parties involved.



Defense spending tends to be a "permanent expense" that is difficult to reduce once it is increased, and if a large increase is covered by government bonds, it will have a large impact on the future budget formulation of the country.



Why is the government increasing defense spending so drastically?



and who will pay for it.



If we do not answer these questions sincerely and provide detailed explanations to the public, we will not be able to gain their understanding and acceptance.



77 years after the end of the war.



Will Japan's defense spending exceed 1% of GDP, which has been the target so far?



We are now approaching a major turning point.

Economic Department Reporter


Meidai Shiraishi


Joined in 2015


After working at the Matsue Bureau, he is currently


in charge of the Financial Services Agency and the Bank of Japan, and is in charge of the Ministry of Finance.

Political Department Reporter


Yusuke Senoue Joined the

Ministry of Defense in


2005 Cap

Nagasaki Bureau, Economic Department, and Okinawa Bureau