Arming East Russia

Tim Huxley, Susan Willett

• Publisher: Routledge
• Year: 2020
• Topic: Politics & International Relations
• eBook ISBN:
  9781136061486
• Subtopic: Military & Maritime History
• Index: Politics & International Relations

During the 1990s, military spending, arms procurement and defence industrialisation have all increased rapidly in East Asia. Although these developments do not constitute an arms race, they nevertheless have important implications for suppliers of defence equipment, for arms control and for regional stability. This paper assesses trends in the defence spending of East Asian states, particularly in the light of the economic crisis, which began in mid-1997. It also focuses on three closely-related issues: the nature of the regional market for defence equipment; defence industrialisation; and the effect of trends in defence procurement and industrialisation on East Asian states' military capabilities, and on the regional military balance.

chapter 1

Defence Spending and Economic Crisis

Defence spending in East Asia grew by some 40% between 1985 and 1996, though some states increased their spending more quickly than others, and some geared expenditure to their economic performance.¹ The economic crisis which began in July 1997 has reduced spending in the region’s hardest-hit countries, leading to the cancellation or postponement of major procurement programmes.

Defence Spending in South-East Asia

South-east Asian governments spend much less on defence than their North-east Asian counterparts. In 1997, for example, South Korea’s defence spending of $14.8 billion was almost as large as the combined total spending ($16.1bn) of Indonesia, Malaysia, Singapore and Thailand. Nevertheless, the dollar value of defence spending grew significantly across the sub-region between 1985 and 1996. In Indonesia, expenditure increased by 44%, in Malaysia by 47%, by 61% in Myanmar, 65% in Thailand, and by 125% and 144% in the Philippines and Singapore respectively.² Vietnam was the only major South-east Asian state not to increase its defence spending substantially; in fact, the withdrawal of Soviet aid caused it to fall by some 70%.³ Since mid-1997, the economic crisis has reduced growth and cut state revenues, forcing several South-east Asian governments to curtail their defence spending for the duration of the downturn. The depreciation of local currencies against the dollar has substantially reduced the international purchasing power of remaining procurement funds.

Table 1 East Asian Defence Spending, 1985, 1993-1998

(1997 US$m)	1985	1993	1994	1995	1996	1997	1998
China	28,273	29,909	30,412	34, 345	36,176	36,551	36,709
Indonesia	3,334	3,662	3,608	4,592	4,797	4,812	4,894
Japan	30,612	45,569	49,003	52,378	45,502	40,891	36,990
South Korea	8,962	13,097	13,386	15,030	16,172	14,768	9,652
Malaysia	2,513	3,172	3,301	3,665	3,695	3,377	3,222
Myanmar	1,252	1,747	1,914	1,961	2,012	2,167	2,059
Philippines	675	1,165	1,255	1,420	1,520	1,422	973
Singapore	1,692	2,929	3,276	4,141	4,258	4,624	4,276
Taiwan	9,171	13,149	12,058	13,708	13,868	13,657	13,887
Thailand	2,669	3,530	3,886	4,179	4,939	3,326	2,041
Vietnam	3,418	786	1,043	949	970	990	735

Source IISS, June 1999

In Thailand, economic problems had affected defence budgets even before the crisis. In mid-1996 and April 1997, the government’s concerns over a ballooning current-account deficit led Bangkok to freeze spending at 1995 levels, forcing the procurement of submarines and a communications satellite to be postponed.⁴ Following the crisis, more stringent constraints were imposed. Austerity measures required by the International Monetary Fund (IMF)’s recovery package cut 24bn baht from the Bi05bn defence budget planned for the 1998 fiscal year, commencing in October 1997.⁵ The 1998 procurement budget fell to a mere $200 million; equipment already bought had to be paid for at unexpectedly unfavourable exchange rates, preventing little new procurement beyond spare parts.⁶ After protracted negotiations, the US in early 1998 allowed Thailand to cancel its 1996 order for eight F/A-18 fighter aircraft, without incurring financial penalties beyond the $75m down payment already made.⁷ Plans to buy armoured vehicles, transport helicopters and aircraft, airborne early warning (AEW) aircraft, air-defence radar and in-flight refuelling tankers were deferred, as were plans to upgrade F-16 fighters.⁸ Payment for even minor purchases, such as Israeli unmanned aerial vehicles (UAVs), was rescheduled.⁹

Table 2 East Asian Defence Spending as a Percentage of GDP, 1985, 1993-1998

	1985	1993	1994	1995	1996	1997	1998
China	7-9	5-3	5-3	5-9	5-7	5-...

Table of contents

• Cover
• Title Page
• Copyright Page
• Table of Contents
• map & tables
• Glossary
• Introduction
• Chapter 1 Defence Spending and Economic Crisis
• Chapter 2 International Defence Suppliers and the East Asian Market
• Chapter 3 Defence Industries in East Asia
• Chapter 4 Changing Military Capabilities and the Regional Balance
• Conclusion
• Notes