Japan Prepares to Enter the Arms Market
MILITARISM, 12 May 2014
Bruce Einhorn and Matthew Philips – Business Week
Keenly aware of the trouble that came with ambitious generals and an expanding munitions industry, the Japanese government has long banned most weapons exports. That policy helped buttress Japan’s pacifism, but it also hindered the growth of the country’s defense industry. Because it couldn’t sell parts overseas, Japanese defense companies missed out on chances to develop tanks, fighter jets, and other weaponry with the U.S. The ban “has resulted in an isolated Japanese defense industry that produces very small quantities at very high cost,” says Lance Gatling, president of Nexial Research, a defense consulting company in Tokyo.
Japan’s Asian neighbors have taken advantage of its absence from the export scene. South Korea exported $3.4 billion worth of arms in 2013, up from $1.2 billion in 2010. China last year passed France and Britain to become the world’s fourth-largest arms exporter, behind only the U.S., Russia, and Germany, according to the Stockholm International Peace Research Institute.
In April [2014], the government of Japan’s conservative prime minister, Shinzo Abe, lifted a ban from the 1970s that restricted arms exports. The country’s contentious relations with China, which claims Japanese-controlled islands in the East China Sea, made getting rid of the ban politically much easier for Abe, even though a recent poll suggests most Japanese citizens don’t support loosening export restrictions. The old policy “was too strict,” says Tsuneo Watanabe, director of policy research and senior fellow at the Tokyo Foundation. “The voice of pacifism is getting lower because of tensions with China.”
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Abe’s policy change is part of a larger strategic shift. Since 1945, the Japanese have focused on the defense of their home islands. The task of policing the rest of Asia fell to the U.S. Now, Japan sees itself as an active participant in the region’s effort to thwart China’s expansion. It considers the Southeast Asian states as potential partners in this stand-off with China, and it wants to be able to sell arms to those countries, too.
The opportunities for Japan to grab market share won’t be in building entire weapons systems such as jet fighters or aircraft carriers. Japanese companies have a competitive edge in building high-end components, particularly electronics. “You may have fighter jets and warships from different manufacturers, but the electronics inside those ships and planes have to be able to communicate and share data with each other,” says Robbin Laird, a defense industry consultant with International Communications & Strategic Assessments in Arlington, Va. “What you really care about are the electronics inside, and that’s what Japan does best.”
One of the most important tests of Japan’s new role will be the F-35 program, the Pentagon’s most expensive weapons project ever. The country is buying 42 of Lockheed Martin’s (LMT) joint strike fighters. Almost all will be assembled at a Mitsubishi Heavy Industries (7011:JP) plant being finished in Nagoya. Japan now has the chance to make components for the F-35 that other countries may be able to use.
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One interesting opportunity for Japanese arms exports is India, now the biggest foreign buyer of U.S. arms and possibly the world’s largest market for weapons over the next 20 years. The country has had bad experiences buying Russian and French weapons. The Japanese could compete, especially if they do better by the Indians, says Dean Cheng, an East Asian military analyst for the Heritage Foundation. “It sounds funny, but customer service matters just as much when you’re buying weapons as it does when you’re buying a car.”
Story: An Arms Race Gets Into Gear and Other Predictions for Asia in 2014
The bottom line: Japan plans to be a competitor in the crowded global arms industry, but China and Korea have a big head start.
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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau.
Philips is an associate editor for Bloomberg Businessweek in New York.
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The Japanese public debt exceeded one quadrillion yen (US$10.46 trillion) in 2013, more than twice the annual gross domestic product of Japan. It is an extraordinary amount of debt in terms of GDP, which is the world biggest debt. (Source: “Japan’s Public Debt”, Wikipedia)
Japan’s tax revenue as percentage of GDP was 28.1% in 2012. (Source: “The List of countries by tax revenue as percentage of GDP”, Wikipedia)
Japan raised the rate of VAT from 5% to 8% from April 2014. Its economy grew at a 5.9% annualized rate in the first quarter. (Source: “reuters.com/article/2014/05/15/japan-economy-gdp-idUST9N0N204E20140515”)
Nonetheless, Japan’s long term constant and satisfactory rate of economic growth (therefore, the tax revenue as well) will not be expected because of the rapid decrease of the population. Japan’s population growth rate is – 0.1%, estimated in 2013. (Source: indexmundi.com) Japan’s median age is 44.6 in total in the year 2010, the world second oldest. (Source: The List of median age by countries, Wikipedia)
As such, one of the reasons why Japan decided to enter the military weapon market is obvious. In other words, Japan, in its attempt to increase the government revenue, decided to kill people of other nations and states by selling “made-in-Japan weapons” to those who are highly likely to cause armed conflict. So far Japan has been well-known for the high quality of civilian industrial products. From now on, this country will also be well-known for the high quality of military weapons. Weapons are the new tools of the Japanese trade. Japan has begun to introduce the new source of the revenue in exchange for blood of people (probably, mostly innocent people) of other nations and states in the world.
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Article 9 of the Constitution of Japan stipulates:
“Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.
“In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.”
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Did the Japanese government have decided to interpret the second paragraph of Article 9 in the new way as follows?
“In order to accomplish the aim of the preceding paragraph, weapons of land, of sea, and of air forces, as well as other war potential, will be sold to foreign nations and states. The right of belligerency of the state will not be recognized.”
Does the above new interpretation, if introduced, mean a de facto amendment of this “Peace” Constitution?
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Why did Japan, instead of deciding to sell military weapons, not decide to develop and sell alternative energy technology and products, for example, and/or any other civilian or peace purpose technology and products? These technology and products are also very profitable, both in the short and long term. Choose peace. Choose to sell peace technology and products.