How the F-35 May Hurt U.S.-Japan Ties

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How the F-35 May Hurt U.S.-Japan Ties

Japan’s defense ministry took a chance opting for the F-35 stealth fighter to replace its aging fleet. But soaring costs could undermine one of America’s closest alliances.

In December, Prime Minister Yoshihiko Noda relaxed Japan’s ban on exporting weapons and related-technology. The self-imposed ban, a legacy of Japan’s postwar pacifist movement, was introduced in 1967. While not a law, it prohibited Japan from selling weapons to communist states, countries subject to U.N. embargoes, and nations involved in international conflicts. In 1976, it was expanded to all countries, although the United States was granted exemptions.

Noda’s relaxation allows Japan to participate in international joint development and production of military equipment and technology with a limited set of countries. Additionally, it enables transfer of finished equipment to countries where Japan’s military deploys during U.N. peacekeeping operations. This includes helmets, protective vests, and heavy machinery.

While in principle, Japan can now export weapons, this isn’t likely as the government aims to assist in peaceful activity. Quite simply, the new standards allow Japan to do more with some countries, but it will continue to abide by the 1967 ban.

Important is the motivation, which was economic. The ban restricted Japanese companies from joining production of equipment and technology with other countries. Not being able to enjoy the benefits of economies of scale, domestic production costs have been extremely high. Worse, although Japan is technologically advanced, developing state-of-the-art defense equipment is expensive, leaving Japan to buy expensive overseas equipment. This has fueled fears that Japan’s hi-tech weaponry is falling behind. Faced with these expensive costs against a declining defense budget, the Defense Ministry desperately wanted the relaxation.

Another factor was the state of Japan’s defense industry. Although companies like Mitsubishi Heavy Industries (MHI), Kawasaki Heavy Industries, and Ishikawajima-Harima Heavy Industries (IHI) depend on defense contracts for only a small percentage of their revenue, their subcontractors depend on such contracts for almost their entire revenue. With limited contracts, these subcontractors were shrinking and some collapsing. This prompted the Defense Ministry and the Ministry of Economy, Trade and Industry to push for the relaxation to expand the production markets.

This brings us to Japan’s choice of its next generation fighter for its Air Self-Defense Forces. Relaxing the ban allows Japanese companies to join joint development projects. This proved timely, given that the government was deciding on its next generation fighter to replace Japan’s 40-year-old fleet of McDonnell Douglas F-4 Phantom fighters. Although two other options existed that are currently available and promised to involve Japanese companies in production at a much higher rate (Boeing’s F/A-18E/F Super Hornet and BAE Systems’ Eurofighter Typhoon), the Defense Ministry chose to procure 42 Lockheed Martin F-35 Lightening II Joint Strike Fighters.

This decision was due to it outscoring the other jets in terms of cost, ease of maintenance and repair and, most importantly, its performance capabilities. Specifically, its stealth technology and situational awareness capabilities. What it didn’t score highly on was the level of participation of Japanese firms. While companies like MHI and IHI will assemble the F-35 and Mitsubishi Electric Corporation will be responsible for wiring, there’s little opportunity for Japanese firms to contribute technology or obtain new technology.

Although the F-35 was the only 5th generation jet, the Defense Ministry’s choice was a gamble. Ongoing problems with the plane, such as cracks in the fuselage, fuel concerns over not only its performance and safety, but successful completion of its development. Persistent problems mean falling behind the development schedule and increases in the final cost. Worse, U.S. defense spending cuts and the European debt crisis could lead to reduced orders or even participation by some of the planes’ developers since four of the partner nations are EU members. Fewer orders or resources could lead to further spikes in costs.

The U.S. government is applying “Foreign Military Sales” (FMS) rules, which gives the United States the power to decide prices and delivery dates. This matters because U.S. officials promised delivery by FY2016 for a total price of 1.6 trillion yen, according to the Asahi Shimbun, but under FMS rules has the ability to change both. A delay in delivery and/or an increased price will negatively affect Japan’s security. The relaxation of the export ban was motivated by rising costs and a collapsing defense industry. With this relaxation, the Defense Ministry sought domestic licensed production of its next aircraft, which would also facilitate technology transfer to Japan. Despite this, the Defense Ministry chose a jet that will offer little involvement of Japanese firms beyond assembly. With Japan’s current fighter fleet of F-4s possibly reaching their operational limit by the end of 2016, any delay in the F-35 will mean a serious gap in Japan’s air defenses. This comes at a time when both China and Russia are making rapid progress in their development of 5th generation stealth fighters and enhancements in their air capabilities, fueling Japan’s sense of vulnerability. To counter both countries’ advances and maintain deterrence, Japan needs its new jets as promised. Without them, it has to depend on its aging jets with fewer capabilities.

While the Defense Ministry is responsible for choosing the F-35, officials are concerned about its delivery and price. In February, Defense Ministry officials told the U.S. government there’s a possibility of cancelling its order if things change. This followed news that the United States delayed, Italy reduced, and Australia and Canada were rethinking their acquisition plans. All of these will increase the F-35’s cost. The Defense Ministry also requested the U.S. review its FMS-based acquisition program so Japan’s defense industry can have deeper involvement in the jet so as to acquire technical know-how.

The alliance has dealt with broken promises before, and relations suffered. We saw this most recently in 2009, when Prime Minister Yukio Hatoyama reneged on a 2006 Japanese promise to relocate troops from Okinawa to Guam, contingent on relocating Futenma to a replacement facility in northern Okinawa. The U.S. came down hard on Hatoyama. It was only after he stepped down that alliance relations could be reset and the process of rebuilding trust could begin.

The F-35 may very well be delivered on time and on cost. However, this doesn’t appear to be the case right now. Although the U.S. can’t be held legally responsible for changes in price or delivery dates under FMS rules, there will be political damage. The U.S. needs to think about how to manage this damage with its closest ally in the Asia-Pacific if the F-35 can’t be delivered as promised.

Worse, what to do if Japan cancels all or part of its order? Japan has a shrinking budget and needs new fighters. Any changes will put Japan in a precarious situation. While the other options available to the Defense Ministry weren’t 5th generation fighters, it nevertheless had other options better suited to aid its collapsing defense industry. Japanese officials are counting on the U.S. to deliver on its promise, much like the U.S. counted on Japan to deliver on its 2006 promise. Hatoyama showed the alliance how not to renege. Is the United States prepared to do any better regarding its F-35 promises?

Jeffrey W. Hornung is associate professor at the Asia-Pacific Center for Security Studies in Honolulu. The views expressed in this article are those of the author and do not reflect the official policy or position of the Asia-Pacific Center for Security Studies, the U.S. Pacific Command, the U.S. Department of Defense, or the U.S. government.