Thursday, October 8, 2009

Taiwan Defense Budget Drops 6%

Defense News


Taiwan Defense Budget Drops 6%


TAIPEI — An 6 percent cut to the 2010 defense budget announced by Taiwan’s Cabinet will hamper efforts to complete several pending arms deals and to pay for a costly military restructuring, analysts say.

The proposed cut to $8.9 billion, down from $9.5 billion for 2009, would represent 16.6 percent of the total government budget at 2.9 percent of gross domestic product (GDP), compared with 17.6 percent of the total budget at 2.6 percent of GDP for the 2009 defense budget.

The budget still has to be approved by the legislature.

Though the 2010 budget is about 3 percent of GDP, the 6 percent drop will complicate issues for defense planners who are juggling new arms deals, including a $6.4 billion U.S. package released last October, defense analysts in Taipei and Washington say.

Another factor impeding arms deals is a plan to implement a costly, all-volunteer recruit system and a major restructuring of the military within the next five years.

The downsized budget may also hamper plans to procure new F-16C/D fighters and put pressure on the military to cut back on planned midlife upgrade programs for its F-16A/Bs, Indigenous Defense Fighters, La Fayette frigates and Hai Lung (Sea Dragon) submarines.

Last October, the U.S. released a $6.4 billion arms package to Taiwan that included 30 AH-64D Apache attack helicopters, Patriot Advanced Capability air defense units and UGM-84L Harpoon missiles.

Taiwan also is awaiting the deliv­ery of 12 P-3C Orion maritime patrol aircraft, released in March for $665 million, and the expected release of 60 UH-60M Black Hawk utility helicopters for $600 million. There are also plans to procure six C-27J Spartan cargo aircraft.

The budget decline poses the question of how Taiwan can afford all the new toys in light of a rapidly shrinking economy and plans for a major restructuring of the military. A U.S. defense analyst on Taiwan issues questioned the wisdom of creating budgets that do not reflect reality.

“On top of the fact that transitioning to an all-volunteer military is expensive, why is the defense budget not increasing significantly for personnel costs to achieve that proclaimed priority?” he asked.

“Then there is the hardware, with six notifications to the U.S. Congress last October to procure programs. What about funds for the military to buy more ammunition? What about increasing funds for the military to carry out the added new priority of rescue and recovery work?”

Indications have risen that the new Chinese Nationalist Party (KMT) administration under President Ma Ying-jeou does not want to irritate China with increased defense spending.

During the recent Typhoon Morakot crisis, Ma announced during an Aug. 18 press conference that “now our enemy is not necessarily people across the Taiwan Strait, but nature,” suggesting the military needs to restructure to deal with threats from Mother Nature and not the Chinese military.

The U.S. defense analyst said the recent typhoon was partially responsible for the reduced defense spending. The proposed “pre­Morakot defense budget” under the first Cabinet was shaved by $200 million. “So there was a reduction from the 2009 budget, and now an­other cut after the storm.” 

Since 2000, Taiwan’s defense budget has experienced numerous traumas because of political infighting.

In 2001, the Bush administration released a massive arms deal that included eight submarines. But a special budget for the arms became a political football in the legislature, where members of the then-opposition KMT refused to approve it in an attempt to weaken then-President Chen Shui-bian of the pro-independence Democratic Progressive Party (DPP).

It worked, but also aggravated relations with Washington and hurt defense planning. Defense budgets were the lowest in history during Chen’s administration (2000-2008), a former Taiwan defense official said.

For 2007, under intense U.S. pressure, Taiwan reversed negative trends in defense spending with a defense budget of $9.2 billion. It had plummeted from a high of $12.9 billion for 2000 to $7.8 billion for 2006. It was not until the DPP lost both the presidency and the legislature to the KMT in 2008 that U.S. arms deals resumed in earnest.