A sunk submarine deal shows how difficult it is to secure buy-in
Three years ago this month, Mr Itsunori Onodera, Japan's defence minister of the time, sat down with me to explain his nation's plans to build a military industrial complex. He sketched out a vision of arms exports and joint weapons development with friendly states. The sub-text was that all this could also reduce Japan's costs of maintaining its own defence while feeding into the nation's economic revival.
About 11 months later, the Shinzo Abe government officially lifted its ban on defence exports that had stood since the end of World War II. But even before that, his government had initiated steps to export defence equipment, starting with a proposed sale of ShinMaywa US-2 amphibious military aircraft to India that was dressed up as the transfer of a search-and-rescue plane.
It is one thing to state your intent, quite another to see it to fruition. Five years after the US-2 sale was mooted, it is still to be clinched. But a far more serious setback has occurred and that is Japan's loss of a massive contract to build submarines for the Australian navy, a contract that went to the French company DCNS.
That the Japanese, with their proven technology, were outdone by an untested French machine with deliveries to start from about 2030 says something about both Australia and Japan. The Japanese Soryu submarine - prematurely perhaps - was regarded as a cinch for Japan until the change of government in Australia last September saw prime minister Tony Abbott evicted in a party coup led by Mr Malcolm Turnbull.
A lot of the reassurance Japan had begun to feel about the contract going its way was built on the close personal ties between Mr Abbott and Mr Abe, the Japanese premier. Both were exceedingly inclined to please Washington and even then many thought that the Aussie turn to Japanese equipment was borne more out of strategic reasons rather than the mere efficiency of this weapon system. Comforted by this special relationship, the Japanese were a bit slow about promising to build the submarine in Southern Australia - a key issue for the country at a time when manufacturing jobs are under stress.
Still, even when things were at their rosiest, there were many Japanese officials who were sceptical that the deal would go through. Defence contracts, especially when they involve billions of dollars - this one was for A$50 billion (S$50.4 billion) - involve not only buy-in from the defence forces that will use the system but also, especially in robust democracies, softening the popular ground through working on both sides of the parliamentary divide, the media, and even local communities. These are not areas where Japanese defence contractors excel in, unlike their counterparts in the car trade or consumer electronics, who, over the past half-century, have become dab hands at working the ground.
Thus, when Mr Turnbull emerged to lead Australia, things began to look shaky. The Silver Fox, as he is called, is not so neuralgic about China as his predecessor and perhaps less inclined to show off to the world the "strategic fit" between his nation and Japan. What's more, having enjoyed a surge of popularity since evicting the gaffe-prone Mr Abbott, Mr Turnbull has seen his popularity steadily slide. Today, his Liberal Party runs neck and neck with the Labor Party of Mr Bill Shorten, another master of backroom intrigue.
When the French agreed to build all 12 submarines in Adelaide early in the game, the scales began to tip their way. It was only this February that the Japanese seemed ready to match that gambit. Importantly, the French manufacturer apparently also has promised to assist in transitioning the submarine programme from a conventional vessel to a nuclear-powered one, should Canberra choose to go that route in the future.
The political compulsions of the deal were evident in the fact that Mr Turnbull chose to make it public from Adelaide, where the Barracuda-class subs will be built, as well as the nationalistic tone he set.
"Over decades to come, the submarine project alone will see Australian workers building Australian submarines with Australian steel here," he thundered. "Fifty years from now, submarines will be sustained and built here. Surface vessels will be built here because of the commitment we have made to this great national endeavour of building Australia's navy of the 21st century."
He went on to add that the recommendation of the experts who oversaw the process had been unequivocal: "The French offer represented the capabilities best able to meet Australia's unique needs."
There is much being made, even by respected commentators in Australia, about the China factor influencing the deal. China had indeed cast a cold eye on this strategic Australia-Japan relationship and publicly warned Canberra against doing the submarine deal with Japan. However, that by itself should not have mattered overmuch.
If China, indeed, is the factor for Australian defence planners to go for long-range submarines, why would Canberra listen to Beijing on that score?
However, the sequence of events shows that Mr Turnbull chose to make the government's decision public 10 days after a trip to Beijing and this suggests that China matters in his calculations, although perhaps in a different way. And that suits both parties.
To Beijing, it comes as a signal from him that he is willing to take its concerns on board. But equally, keeping on the right side of China also makes for good politics - the July 2 election he has called is going to be a close one and Beijing, with its increasing propensity to reach out to the Chinese diaspora, will see no reason to send hints to Australian-Chinese - some 4 per cent of them are of Chinese ancestry and many were born in China - that it is displeased with the Turnbull government. The Chinese vote, though largely clustered around Sydney and Melbourne, could be a factor in several marginal constituencies.
The loss of the submarine contract may not be quite as lethal to the long-term strategic relationship between Tokyo and Canberra as some surmise. But Japan has a way to travel before it can become a credible weapons exporter.
Attention will now turn to India as the next potential buyer of the Soryu. There has been some movement on this in the months past and while Prime Minister Narendra Modi is even closer to Mr Abe than Mr Abbott was, it does not look, for now, as though Japan will be any more successful in India than it has been in Australia.
The Indian submarine fleet is now overwhelmingly of Russian origin, while a new batch of conventional boats is being built in Mumbai by no less than DCNS. The US-2 deal for the amphibian aircraft should have come through months ago and it will probably come to fruition at some point. But, when it does, it will be more of a testament to the solid strategic relationship between Japan and India rather than a need-based military purchase. The Indian Navy, which will operate the US-2, is not very keen on the machine and sees it as expensive. It needs no more than a dozen of these flying boats.
The original plan was that the US-2s India needs would be made within the country, and the manufacturing capacity installed for the purpose used to export the machine to third nations. But overseas interest for the US-2 has been noticeably wan. Even for the Indians, accurately translating the engineering manuals of the craft - which runs into thousands and thousands of pages - is a headache in itself. If that's the case with a small but complicated aircraft, imagine the complexity of a modern submarine.
Still, there is no denying that the loss of the Aussie deal would make Japan all the more eager to sell to India. The South Asian power has a bigger defence appetite, and ambition, than Australia. So it may well yield enough on price and technology transfers to make it attractive to New Delhi.
Beyond all this is another concern to foreign governments where Japan is concerned. Will Mr Abe's policy of "proactive contributor to peace", as he calls it, outlive him? What, for instance, if another Yukio Hatoyama, with a renewed emphasis on a non-aggressive defence policy, should suddenly emerge? It is a valid fear.
It will take at least two successive Japanese administrations with an unwavering commitment to defence exports before any serious government will accept them as a supplier of platforms meant to last decades. Everyone knows that many older Japanese bureaucrats, born in the immediate aftermath of World War II, are leery about these policies. Younger ones, of course, are noticeably more enthusiastic, while many in their 40s are coming round to accept Mr Abe's approach as necessary and even imperative.
There is little doubt that if the Japanese set their mind to it, they will ultimately prevail in their ambitions. Their strengths in robotics and electronics, the expertise their firms have gained in operating overseas, their reputation for producing durable goods of quality, will all stand them in good stead. Except that in defence, the ball game is slightly different and hence, will take them more time.
A version of this article appeared in the print edition of The Straits Times on May 13, 2016, with the headline 'Japan and the art of defence exports'. Print Edition | Subscribe
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