A possible deal for Tokyo to sell amphibian aircraft to India could finally kick-start exports of Japanese defence technology.
KOBE • In Japan last week, I was privileged to be allowed a visit to ShinMaywa's aircraft manufacturing plant in Konan, a corner of the city of Kobe. Four years ago, on the sidelines of the annual Shangri-La Dialogue, Defence Minister Itsunori Onodera had sketched out to me the broad contours of what could potentially be a Japanese military industrial complex, including weapons exports, and I was curious to see where that vision had advanced.
As it turned out, my timing might have worked out just nice.
Kawasaki Heavy Industries, it was revealed during my trip, is in talks with the United Arab Emirates for a potential sale of Japan's latest transport aircraft, the C-2 - a massive military plane that has an endurance twice that of the United States-built C-130 and can carry four times its payload. And just this Tuesday, Mr Arun Jaitley, the second most powerful minister in India's Cabinet after Prime Minister Narendra Modi, concluded his last overseas engagement as defence minister with a trip to Tokyo.
Buried in the long press release that followed on Wednesday was a line filled with meaning: "The (two sides) noted the effort made by both countries regarding the cooperation on US-2 amphibious aircraft."
Japan's arms exports industry could be stirring to life, finally.
With Asia emerging as the top weapons-importing region, there is no reason the market should be left to US, European and Israeli vendors. Japan, after all, has first-rate defence technology in a variety of fields.
Besides, with its massive economy treading water against the background of an ageing society, this could provide just the boost needed to kick growth into higher gear.
But intentions are one thing and practical realities quite another. Japan eased a ban on weapons transfers in early 2014, but not a lot has happened since. Mr Onodera lost the defence slot in 2014, and returned to it only last month. A defence industry reluctant to advertise its wares for fear of a public opinion backlash - few people abhor war as much as the Japanese do - a phlegmatic government machinery, and dismal in-house marketing skills within the defence contractors all contributed to ensure that the policy did not get much traction.
Nothing underscored the Japanese defence industry's weakness in penetrating foreign markets as clearly as the failure to clinch a deal to build its Soryu submarines for the Australian navy - despite the vigorous backing of Prime Minister Shinzo Abe and equal endorsement from his Aussie counterpart at the time, Mr Tony Abbott.
When Australian negotiators asked for certain classified information, the manufacturer had by law to refer each request back to the Japanese Ministry of Defence (JMOD), which frequently declined to reveal the data, or took too long to respond.
Not surprisingly, an untested machine from France's DCNS was chosen over the Soryu for the A$50 billion (S$54 billion) contract.
CULTURE OF NOT SHARING
It is said that, privately, some sections of the Japanese security establishment celebrated the loss of the deal because they were so protective of the Soryu's technology and were leery about sharing it.
"The biggest obstacle is the culture in Japanese companies where employees simply have no training in marketing arms overseas," Mr Tetsuo Kotani, a senior fellow at the Japan Institute of International Affairs in Tokyo, told me. "Companies are leery of attracting negative public opinion. That is why we lost the Soryu deal. Frankly, I haven't seen any change in the culture of Japanese companies since."
This is where the Jaitley trip to Tokyo, which comes ahead of Mr Abe's visit to India next week, could assume significance.
Asian diplomatic sources in the Japanese capital, and officials from ShinMaywa, which manufactures the amphibian aircraft, say there is renewed interest in the plane deal.
First mooted about six years ago, a potential sale to India of between a dozen and 15 pieces of the US-2 amphibious search-and-rescue aircraft made by ShinMaywa was talked about as a landmark first for the Japanese defence export industry.
"They are very keen to supply to India amphibious aircraft, which they don't share with most people," then Indian foreign minister Salman Khursheed told my colleague Nilanjana Sengupta and me during his visit to Singapore in June 2013. "Of course, to keep within their law, they will not have on that particular model of aircraft given to India any lethal equipment or any weapons. But the craft itself is very important."
Yet, early in the game, it was evident that there were too many hurdles, despite the swiftly advancing Indo-Japan strategic relationship. Price was one - the Japanese apparently were asking US$133 million (S$179 million) apiece for the four-engined turboprop. That could possibly have been negotiated, and the Japanese were later said to have cut the figure to about US$110 million, the price at which JMOD buys it, but the bigger issue was Japanese reluctance to weaponise the aircraft.
In the end, despite manufacturer ShinMaywa opening a New Delhi office in anticipation of winning the deal, it remained in limbo.
A NEW OPPORTUNITY
Several factors are pushing the US-2 deal forward now. For one thing, the Andaman and Nicobar Islands - the administrative headquarters Port Blair is 1,400km from the Indian mainland - are gaining salience in the Indian strategic calculus because of their proximity to South-east Asia, which has emerged as a theatre of Big Power rivalry.
An amphibious plane such as the US-2 is ideal for the navy and coast guard, for various functions. Not only is it useful for anti-piracy, anti-poaching and search-and-rescue operations, it can double as a landing craft for rapid deployment forces as well. Properly outfitted, it could even carry torpedoes for anti-submarine warfare.
Second, there is a new urgency. China announced a year ago that it had built the world's largest flying boat, the AG600, amid moves to consolidate its presence in the South China Sea and push farther afield into the Indian Ocean. The AG600 made its maiden flight in May and increases the pressure on India to have matching capabilities.
Third, the Indians are acutely aware that optics matter in international relations. A defence deal like the US-2 sale suggests a closer strategic embrace that radiates across the Asian region, which the Japanese now freely refer to as the Indo-Pacific. As for Japan itself, pressuring China occasionally does not hurt its cause, if for no other reason than to convince Beijing to ease up a bit on Tokyo.
From the looks of it, the Indians might go for a scaled-down order, perhaps no more than six pieces. At that number, manufacturing the planes in India - which New Delhi would like under Mr Modi's Make in India policy - would not be feasible. ShinMaywa officials say they might, however, be able to assemble the planes there, as well as conduct the maintenance and overhaul subsequently.
The company also has little to offer by way of "offset" - a sort of compensation by the manufacturer that takes place mostly in the form of placing a minimum percentage of value addition in the ordering country. People with knowledge of the negotiations say a via media could lie in Japan offering offsets elsewhere - Mr Abe's prime purpose on this visit is to inaugurate work on a Japan-funded high-speed railway stretching from Ahmedabad to Mumbai .
"We are ready to step up and move rapidly on the security relationship with India in every possible way," a senior official in Japan's National Security Policy Division told me. "People should not read too much into the failure of the Soryu deal with Australia. It was too big a deal for a country with such a short history of weapons sales."
So then it appears that the US-2 could indeed be the deal that will see Japan rise to its feet in the field of defence exports. Much will depend on whether Mr Onodera told Mr Jaitley this week that Tokyo is not averse to having weapons loaded on to the aircraft.
As I walked around the US-2, whose dimensions are about the same as those of a Boeing 737, what impressed me the most was not its ability to land amid 3m-high waves or its short take-off capabilities (it needs only 280m at full power). Instead, it was the information that the craft can scoop up 15 tonnes of water from the sea or a river in just 20 seconds and be on its way again. That's the kind of equipment that should come in handy for fighting forest fires, natural or man-made.
At the end of the day, nothing is quite as virtuous as turning a sword into a ploughshare.
We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.