politics

Japan’s weapons-makers now open for business

21 Comments
By David McNeill for EURObiZ Japan

Often dubbed a hawkish nationalist, Prime Minister Shinzo Abe has lived up to his billing. Since he returned to power in late 2012, Japan has seen two consecutive rises in defense spending, as well as a record third request for ¥5.5 trillion, currently under deliberation.

In July, he pushed through a controversial reinterpretation of the nation’s constitution, allowing Japan to come to the aid of its U.S. military ally. Earlier this year, Abe relaxed Japan’s four-decade de-facto ban on arms sales abroad.

The decision to relax the arms export rules caught many in the European defence industries by surprise, according to Michel Theoval, EBC senior vice-chair and president of aerospace and defence firm GHT. “They were not at all prepared,” he says. “They thought it would take much more time; that it would be much more controversial.”

But Theoval says the Japanese side — especially the politicians — now want to move quickly.

To put the changes in context, Japan’s defence budget still takes up only about 1% of Japan’s gross domestic product (GDP), lower than China (1.3%) and a quarter of US defence spending, according to Japan’s Ministry of Defense. By comparison, NATO’s minimum budget requirement is 2% of GDP. Still, whether Abe’s changes are viewed as dangerous sabre rattling or — as his supporters insist — a necessary recalibration of Japan’s dysfunctional defence posture, few analysts have been left with any doubt that a new sheriff is in town.

The impact on Japan’s biggest military contractors has been striking. Shares in 20 of the largest — including Mitsubishi Heavy Industries (MHI), Mitsubishi Electronics and Kawasaki Heavy Industries — are up over 70% since Abe came to power, according to Goldman Sachs. The decision to loosen Japan’s rules on collaborating with European and American companies, meanwhile, has created “interesting possibilities”, in the words of Lance Gatling, a leading Tokyo-based military analyst and broker. He predicts a string of small-scale tie-ups.

So far, however, the emphasis has been on “small”. One of the first collaborative projects announced is between Japan’s main military research lab, the Technical Research and Development Institute, and Britain’s Defence Science and Technology Laboratory, to develop chemical and biological protective suits for the battlefield. A steady stream of executives from the big European defence contractors has made its way to Japan since the guidelines were relaxed, but nobody has landed a big fish yet.

In business terms this is “disappointing”, accepts Bjorn Kongstad, policy director at the European Business Council in Japan. “Everyone is looking into it because there could be business opportunities,” he says. “The government was hoping there would be cooperation between Japanese and European countries, but it is fair to say that those projects have not taken off in the way some people had hoped.”

One reason is that Japan is carefully negotiating a series of bilateral agreements to prepare the groundwork. A key concern is potential sales of weapons or components to third world countries. That’s a stumbling block in drawn-out negotiations with India, for instance, over nuclear technology with potential dual applications (energy and military).

“Japan seems to be saying, ‘OK, let’s try a small step, then we’ll try another one,’ says Robin Wilson, former chairman of the EBC Defence Committee.

Japan’s top business lobby, Keidanren, says the government will continue to tread carefully before giving a green light to export or collaborative agreements with overseas partners. “Still, the fact that we can cooperate with foreign companies is important,” adds Satoshi Tsuzukibashi, head of the lobby’s Defence Production Committee. He says the relaxed defense guidelines will create “a change in mindset” in the domestic defence industry.

MHI and a delegation of contractors — including Mitsubishi Electronics, Kawasaki Steel, Hitachi, Fujitsu, Toshiba and NEC — dipped their toes in these new waters in June, when they booked their places at the Paris-based biennial Eurosatory, one of the world’s biggest defence and security industry trade shows. On their first appearance at the event, they brought with them tank engines, radars, missile technology and other high-tech goodies.

Japan’s decision to tour abroad for military contracts has raised eyebrows, yet Japan is hardly the only ostensibly pacifist country with a large defence industry. Peace-loving Sweden is the world’s third-largest weapons exporter per capita, after Israel and Russia. Sweden’s anti-tank missiles and other items have ended up in Saudi Arabia, Pakistan and other countries with spotty human-rights records, say critics. Germany sells more weapons than any other country besides the United States and Russia, according to The Economist.

Domestic contractors here have been insulated from this global arms market because for years they had a single customer — Japan’s Self-Defense Forces (Air, Ground and Maritime). That has left a lot of domestic weaponry overpriced and noncompetitive, says Narushige Michishita, a security specialist at the National Graduate Institute for Policy Studies in Tokyo. The government wants to modernise Japan’s arsenal and have a bigger say in global defence contracts, such as missile defence and the F-35 series of fighter planes [from Lockheed Martin, chosen by the Ministry of Defense], he says.

Some of the strongest contractors are also keen to spread their wings. MHI and Kawasaki Heavy Industries — which together make the Soryu-class submarine, the world’s largest diesel-electric submarine — have been shopping the technology abroad. MHI also builds the guidance system and rocket motor for the Patriot air and missile defence system developed by Raytheon, one of the world’s largest military contractors. “The new rules pave the way for shipments of both prototypes and mass-produced items,” says the Asian Nikkei Review.

Led by Abe and bureaucrats at METI (Ministry of Economy, Trade and Industry) and the Ministry of Defense, Japan is slowly laying the groundwork for an industry that can punch its weight abroad. In July, Japan signed a deal with France that paves the way for joint development of military equipment. Germany and Italy are also knocking on Japan’s door. Outside Europe, Japan has forged an agreement with Australia to collaborate in developing submarine technology, which involves the possible purchase of up to 10 Japanese-made submarines.

Will Japan be a big player in the global arms industry? Probably not, at least for now. For one thing, 70 years of pacifism means its weaponry is not battle tested — a major selling point for U.S. and Russian military contractors, says Robert Dujarric, head director, Institute of Contemporary Asian Studies, at Temple University, Japan Campus.

For another, Japan has little experience in the global military marketplace and cannot offer the same sales support as its competitors. “When the US sells arms to Japan or [South] Korea, it’s implicitly part of the bigger package of American military support,” Dujarric points out. “Japan can’t offer protection.”

Still, it is clear that Prime Minister Abe has changed the game, even if it isn’t quite clear yet what the rules are.

© Japan Today

©2019 GPlusMedia Inc.


21 Comments
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Manufacturing even more Weapons of Mass Destruction and flogging them to the world so that more people can slaughter more people.

This kind of business ought to be as illegal as selling illegal drugs.

1 ( +10 / -9 )

A huge leap backward for Japan as a nation and for mankind's future as a viable species on our withering planet. The world does not need more horror and calamity. The world will always desperately need more compassion and understanding. Japan under Abe is apparently no longer able to provide us with the latter.

5 ( +9 / -4 )

Ha! Love it! We are against war! ...but if you're for it, we have what you need to vanquish your enemies!

I was surprised about Sweden, but hey, killing will always be good business. Pretty sick really.

1 ( +3 / -2 )

Great idea targeting 3rd world nations for weaponry, what could possibly go wrong? Gooooo Japan.

-4 ( +2 / -6 )

This was the main motivation behind Abe's push to change the constitution. He wanted a slice of the international arms sales market and now that Europe has snubbed him off Japan will be focussing on supplying smaller and less developed countries with arms just get their slice of the bacon.

-3 ( +4 / -7 )

Sweden Pacifism is not the same as neutrality forced by self-preservation.

Obviously if they are 3rd per capita in arms exports they are not pacifist.

https://en.wikipedia.org/wiki/Sweden_during_World_War_II

3 ( +4 / -1 )

its weaponry is not battle tested

Meaning not yet "drenched in blood."

Let's keep it that way. We have enough gore already.

-2 ( +0 / -2 )

oh my! Don't let the gundam activate yet! The evas are not yet tested! nooo!

1 ( +1 / -0 )

if it makes money ... everyone else is doing it so why not Japan.

anyway how do we order ? I want an aircraft carrier, will call it HMS Aitakatta, crewed by those AKB girls ...

1 ( +2 / -1 )

I just can't beleive what is happening to japan, going in the wrong direction

-3 ( +2 / -5 )

Let the Eva's and Gundam's out already

0 ( +1 / -1 )

What is that photo of and what does that have to do with this article? Did Japan suddenly complete a domestic fighter program and sold some exports? Why not use a photo of the flying boats that Japan actually sold to India?

0 ( +2 / -2 )

I can't wait to see the itsy bitsy spider drones...

0 ( +0 / -0 )

Well it is Japan's right to sell arms as the U.S. has no objections. Hopefully Japan has no ulterior motive.

-3 ( +0 / -3 )

Well it is Japan's right to sell arms as the U.S. has no objections.

You're saying that Japan needs US permission to sell her own arms?

1 ( +1 / -0 )

if it makes money ... everyone else is doing it so why not Japan.

That kind of thinking is exactly why they shouldn't do it. They lose their moral high ground. How do you convince other countries to stop fighting when you're selling them weapons.

Just look at the US. It lost it's moral high ground a long time ago. How do you tell Russia and China to stop taking land/resources and be taken seriously when that's what you've been doing for decades (albeit less overtly in the case of the US). To them it's like "you're doing it so why not us."

0 ( +1 / -1 )

Manufacturing even more Weapons of Mass Destruction and flogging them to the world so that more people can slaughter more people. This kind of business ought to be as illegal as selling illegal drugs.

Get your head out of the sand, I suppose you would prefer if everyone used their fists instead? Arms dealing has been going on ever since man invented weapons and will continue on as long as people want to kill one another.

Unless you prefer to speak Chinese that is.

-6 ( +0 / -6 )

@MrBum Unfortunately Putin and Xi won't listen to Japan anyways. That moral high ground is about as powerful as the UN General Assembly.

As for selling weapons: no better way to make sure you got a good product for dealing with your own enemies. And the EU will come around: it takes a LONG time to build up an effective arms industry. Nukes would have been cheaper...

0 ( +1 / -1 )

Well it is Japan's right to sell arms as the U.S. has no objections.

Gee, I guess it's only OK if the US is on board with the plan? Is that what you're saying?

-1 ( +1 / -2 )

Asian2014Oct. 15, 2014 - 12:52PM JST Well it is Japan's right to sell arms as the U.S. has no objections

The United States as been pushing Japan to do so for decades. Ad you really should think about how SKorea benefits.

0 ( +1 / -1 )

When it comes to military movements, China is the teacher, whose Suntze Art of War teaches you how to conquer your enemy without actually fighting, whose philosophy says be sure you attain three objectives by one single move. In that Japan is a good student, by going militarization you stop China from taking a chance, thus peace is maitained without firing a bullet; by relaxing weapon sales you earn a lot of money, that's one objective, you lower Jieitai's procurement cost through mass production, that two objective, by supplying weapons to peace loving middle east nations you help them stop the onslaught of sisi, that's three objective. Wonderful move.

0 ( +0 / -0 )

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