Tokyo Report

Japan Considers State Financing for Defense Exports

The Japanese government will back Japanese firms involved in defense exports with financing.

Japan Considers State Financing for Defense Exports
Credit: Wikimedia Commons

The Japanese government is looking to bolster state financing for the country’s growing weapons exports. According to an exclusive report by Reuters based on Japanese government sources, Prime Minister Shinzo Abe’s government plans to “convene an advisory panel to consider specific proposals to create a way to finance military sales by Japanese firms and fund defense industry cooperation abroad.” The move would be in line by other policy moves by the Abe government to move Japan away from its post-Second World War pacifist stance toward becoming a more normal military power in Asia. Japan recently lifted its self-imposed ban on weapons exports and has since concluded several defense development cooperation agreements with countries both in and outside of Asia.

The new financing arm would allow for considerable growth in Japan’s weapons exports. According to Reuters, current plans involve modeling this government-backed body in a way such that it would provide concessional financing for defense projects. The body would likely model itself financially and bear regulatory resemblance to the Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation Agency (JICA). Based on current reports, the process remains in flux and is being kept relatively quiet by the Japanese government. The issue of Japan’s growing defense cooperation with a range of countries including the United States, India, France, and the U.K. remains sensitive as Tokyo and Beijing continue to have cold bilateral ties. Additionally, given the current political uncertainty in Japan, the government will likely conclude this process in early 2015.

Owing to recent economic news indicating that Japan has entered a period of economic recession despite a series of bold economic reforms by Shinzo Abe, the country will head to the polls in the coming weeks to vote in a new government. This election will likely not threaten the dominance of the Liberal Democratic Party, Shinzo Abe’s party. The election will further serve as a referendum on Abe’s efforts at domestic economic reform and determine if the Japanese government will remain on schedule regarding incoming sales tax increases. Japanese consumer spending and demand took a major hit following a scheduled rise in the sales tax this year. While the LDP and Abe will likely survive the coming elections, Abe’s efforts to normalize Japan’s military posture — particularly his government’s decision to controversially reinterpret Japan’s constitutional ban on self-defense — have been polarizing in Japanese society.