Resilience or Retrenchment?: Japanese Security in the Era of Fiscal Austerity

Abstract

The advanced industrialized world has entered an era of fiscal austerity, with profound implications for international security and the global balance of power. Japan’s predicament is particularly dire: public debt has risen to historically unprecedented levels, and defense expenditures have continually declined for a decade. Nonetheless, we show that Japan is primarily unique for being early – other developed democracies will soon face comparable, long-term fiscal pressures due to three principal factors: financial crises, demographics, and elevated levels of pre-existing debt. As an early mover, how has the Japanese defense establishment responded to fiscal austerity? Consistent with existing accounts of Japan’s reemergence as a more muscular military power, we find that defense spending is characterized by relative resilience, receiving increasingly high priority within the domestic budgetary process. Japanese defense policymakers have also taken advantage of austerity to rationalize the allocation of funding among its services and priorities. However, fiscal austerity is increasingly limiting Japan’s options. The recent buildup of military hardware is attributable to various life extension measures and expenditure shifts from procurement to equipment maintenance, calling into question the quality and long-term viability of Japanese military forces. As these measures run their course over the coming decade, Japan faces the prospect of a sharp reduction in its military capabilities.