Sunday, October 3, 2010

Defense Spending Hits Wall in Taiwan


Defense News

Defense Spending Hits Wall in Taiwan


TAIPEI — Taiwan’s military is spending money, but little of it is for new procurement programs, sources here said.

The problem? Taiwan is facing more than $13 billion in bills for arms released by the U.S. government since 2007.

The overall defense budget has dropped since 2008 — from $10.5 billion to a proposed $9.2 billion for 2011, submitted to the legislature Aug. 30. The new budget represents 16.6 percent of the national budget and 2.7 percent of the gross domestic product.

The government is also, due to increasing economic hardship, borrowing money to finance the 2011 national budget — something that is relatively unheard of in Taiwan, sources said.

Equipment in the pipeline includes 12 P-3C Orion maritime patrol aircraft, 30 AH-64 Apache attack helicopters, 60 UH-60 Black Hawk utility helicopters, 330 Patriot Advanced Capability-3 air defense missiles, two Osprey-class mine hunters, upgrades for four E-2 Hawkeye aircraft, 60 Harpoon anti-ship missiles, 218 AIM-120 advanced medium-range air-to-air missiles and 235 Maverick air-to­ground missiles.

To make matters worse, Taiwan’s defense budget is wrestling to pay costs associated with reform policies — including a major streamlining and troop reduction — now being implemented.

“The most challenging and difficult time will be in the next three years for the military,” a former Taiwan defense official said. 

Drawdown, Reorganization 

The military faces a drawdown from 270,000 to 215,000 troops and a transition to an all-volunteer force by the end of 2014. It will also reorganize key commands and introduce more civilians into the Ministry of National Defense (MND).

Despite the financial struggle, the MND has big procurement plans for the next 10 years that will test not only Taiwan’s budget, but the political will of Washington in its attempts not to upset Beijing.

The list includes 66 F-16C/D fighter aircraft, six C-27J cargo aircraft, upgrades for 145 aging F-16A/B fighters, upgrades to two Dutch-built diesel submarines and six French-built La Fayette frigates, two more U.S.-built Newport-class tank landing ships and eight new diesel submarines — a longstanding request.

Taiwan’s Air Force has also been considering buying T-50 Golden Eagle attack jet trainers from Korea Aerospace Industries, Seoul, to replace aging AT-3 Tzu Chiang attack trainers and F-5 fighters used for training.

Despite the new arms and equipment flowing into the armed services, there are increasing signs the military is suffering from low morale.

Taiwan military officials warn that morale is in decline due to the government’s closer ties with China, corruption investigations, military downsizing, reduced budgets and growing concern the U.S. will cut arms sales to Taiwan to placate China.

China and Taiwan signed the Economic Cooperation Framework Agreement on June 29. Many see the historic agreement as a sign of Beijing’s greater influence over Taipei and possibly the first step toward unification.