The Japanese government decided to boost defense spending in 2022, despite the declining Japanese economy and questions over how to cover the additional costs.

Why is the Liberal Democratic Party-Komeito coalition government increasing defense spending even as Japan’s economy declines? One reason is the close relationship between defense contractors, which earn huge profits when the government purchases weapons and military equipment, and the Liberal Democratic Party (LDP), which received donations from them. We traced this relationship from the end of the Cold War to the present day.

Japan plans to spend a total of 43 trillion yen on defense over the five years from fiscal 2023 to fiscal 2027, 1.6 times more than the amount budgeted under the previous plan.

Former Prime Minister Fumio Kishida’s cabinet made the decision in 2022. Cabinet decisions, made by ministers of the cabinet, do not need to be deliberated in the Diet.

The administration argues that Japan must prepare for an attack from China or North Korea, or build up a credible deterrent.

But does defense spending need to increase to accomplish that?

Yukio Ozaki, a politician known as “the father of constitutional government” in Japan, criticized increased military spending in a 1937 Diet session.

“If we accept the increase this time, military spending will continue to grow going forward, causing the public to feel anxious about their livelihoods,” Ozaki said.

“If it become necessary to maintain military capabilities equal to or greater than those of our adversaries, will Japan be able to keep up?” he continued. “National defense involves more than just one’s own country; even if we expand our military capabilities, our national defense will be jeopardized if the other parties surpass us.”

Ozaki’s words ring true today.

With many in Japan already worried about how to make ends meet, increased defense spending risks putting pressure on the government budget that must also support citizens’ livelihoods. How much will taxes increase to cover the extra spending? Uncertainties abound.

With the Japanese economy in decline, there is no way Japan could win an arms race against China.

So why increase defense spending at risk of repeating the mistakes of Imperial Japan?

Tansa decided to investigate the close relationship between the LDP and defense contractors.

Value of orders to Mitsubishi Heavy Industries 4.6 times greater than previous year

In December 1989, Soviet Union leader Mikhail Gorbachev and US President George H. W. Bush held a summit on the Mediterranean island of Malta, during which they declared an end to the Cold War. We investigated the following three points for the period from 1990, when Japan began to navigate the new international order, to the latest data from 2023. See the table at the end of the article for the data.

1. The total value of orders placed by the Ministry of Defense with military contractors for equipment such as fighter jets, ships, and fuel (top 20 companies for each year)

 

2. Donations to the National Political Association, the LDP’s conduit for donations, from the top 20 defense contractors (latest data is from 2022)

 

3. Political involvement and policy requests from defense contractors and related companies, including Keidanren

The total value of orders received by the top 20 companies for each year amounted to 36.42 trillion yen over the 33-year period.

Meanwhile, corporate donations totalled 12 billion yen — a completely different scale compared with the value of the orders placed to defense contractors.

In 2023, Mitsubishi Heavy Industries received purchase orders from the government worth 1.68 trillion yen, a 4.6-fold increase from the previous year. IHI, NEC, Hitachi, and Fujitsu also received orders worth three to four times more than in 2022. The administration’s December 2022 cabinet decision to approve three policy documents on defense and increase defense spending by 60% by 2027 fueled the increase in orders.

Prime Minister Ishiba: “Raise taxes for companies benefiting”

How is the government going to fund its increasing defense spending? During the LDP leadership election in September 2024, Prime Minister Shigeru Ishiba made the following comment about raising taxes to cover defense spending on an NHK program (NHK is Japan’s public broadcaster).

“We should seriously consider receiving [higher taxes] from corporations benefiting from the increased defense spending,” he said.

In an Oct. 15, 2024, appearance on an NHK program — a day that coincided with election results for the Diet’s lower house — Ishiba commented, “It is only natural to consider that individuals and corporations who have the ability to bear the burden should contribute.”

However, will defense contractors and other corporations agree to bear this burden?

Japan’s defense contractors, together with Keidanren, have for many years made policy requests that prioritize their profits to an astonishing degree. It’s difficult to imagine they would easily agree to anything that hurts their bottom line.

From the next article, we will report on defense contractors’ policy requests, as well as the value of the orders they received and their donations to the LDP.

Company name	Order value(1990-2023)	Donation total(1990-2022)
Mitsubishi Heavy Industries	11,618,243,000,000(JPY)	820,460,000(JPY)
Kawasaki Heavy Industries	5,178,598,000,000	149,530,000
Mitsubishi Electric	3,806,040,000,000	778,650,000
NEC Corporation	2,799,537,000,000	649,300,000
IHI Corporation	1,931,087,000,000	369,890,000
TOSHIBA	1,569,897,000,000	811,822,000
Fujitsu Limited	1,369,822,000,000	583,400,000
Komatsu Ltd	1,019,940,000,000	212,600,000
Hitachi	745,011,000,000	1,153,790,000
SUBARU CORPORATION	637,572,000,000	572,630,000
Japan Marine United Corporation	580,826,000,000	8,700,000
The Japan Steel Works	547,635,000,000	16,290,000
DAIKIN INDUSTRIES	500,578,000,000	142,200,000
ITOCHU Corporation	477,196,000,000	811,975,000
Oki Electric Industry Co.	449,252,000,000	83,500,000
ENEOS Holdings	385,057,000,000	300,590,200
COSMO ENERGY HOLDINGS COMPANY	299,902,000,000	25,524,600
JECC Corporation	287,933,000,000	0
Nakagawa Bussan Co.	265,016,000,000	0
MITSUI E&S Co.	261,066,000,000	82,470,000
Nissan Motor	248,857,000,000	984,230,000
Hitachi Zosen Corporation	201,547,000,000	89,660,000
ShinMaywa Industries	172,129,000,000	13,800,000
Idemitsu Kosan Co.	148,220,000,000	77,117,400
Mitsubishi Corporation	130,588,000,000	837,920,000
SKY Perfect JSAT Holdings	122,100,000,000	0
Sumitomo Corporation	107,623,000,000	786,190,000
GS Yuasa Corporation	107,200,000,000	20,850,000
ANA HOLDINGS INC.	92,800,000,000	158,000,000
ISUZU MOTORS LIMITED	92,385,000,000	569,780,000
Sumitomo Heavy Industries	82,452,000,000	93,950,000
Japan Aerospace Exploration Agenc	75,400,000,000	0
GE Aviation Distribution Japan Co.	56,900,000,000	0
KANEMATSU CORPORATION	56,500,000,000	70,730,000
Nisshinbo Holdings Inc.	35,300,000,000	21,780,000
YAMADA CORPORATION	31,901,000,000	0
NOF CORPORATION	30,040,000,000	4,860,000
High-speed Marine Transport Co.	25,000,000,000	0
Fujikura Ltd.	24,900,000,000	13,310,000
MCC Corporation	22,834,000,000	0
KAMEI CORPORATION	18,456,000,000	1,995,000
Airbus Helicopters Japan Co.	17,500,000,000	0
Shimadzu Corporation	14,708,000,000	60,930,000
HANWA CO.	11,100,000,000	5,680,000
JFE Holdings	11,088,000,000	730,140,000
KURARAY CO.	10,000,000,000	1,294,800
Okura & Co.	9,000,000,000	6,100,000

Note: Figures are compiled from data in Ministry of Defense and Defense Equipment Agency documents, etc.

(Originally published in Japanese on October 24, 2024. )

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