Taiwan’s Defense Budget: Promises Made, Promises Not Kept
Photo Credit: Central News Agency
By John F. Copper

Taiwan’s Defense Budget: Promises Made, Promises Not Kept

Jul. 26, 2018  |     |  0 comments

Since early 2016 when Tsai Ing-wen became president and her party, the Democratic Progressive Party (DPP), took control of the legislature, Taiwan’s defense spending has been below par. It has also been lower than Tsai promised.

From the United States perspective, Taiwan appears no different from the NATO nations that President Donald Trump labeled free loaders during his recent trip to Europe. None, he charged, met the US guideline of allocating 3 percent of GDP to defense.

This on top of the fact the US suffers from a serious and vexing balance of trade deficit with European countries, which Donald Trump attributes to their protectionist trade practices.

On the heels of Trump’s European trip, the Ministry of Defense in Taiwan announced that in the two years since Tsai and the DPP have been at the helm, the defense budget has averaged 1.84 percent of the GDP — a record low for military spending.

This flies in the face of pledges President Tsai made during the campaign and regular promises since then to increase spending to 3 percent of GDP or more — some made face-to-face to US officials.

Moreover, the timing is bad: it comes at a time when China has been intimidating Taiwan with shocking displays of its military prowess and Taiwan has been talking back with hate Mainland China language, and as a result cross-Taiwan Strait tension has been way above anything seen in a decade.

Adding insult to injury as far as the Trump administration is concerned, in 2017 America witnessed an increase in its trade deficit with Taiwan to a number not seen in more than three decades and the Tsai administration has not taken any steps to fix this.

Then, as if putting frosting on the cake, Taiwan’s foreign exchange position reached USD  457 billion in May 2018 — a record high. Taiwan also has the sixth largest foreign exchange reserves in the world.

The evidence seemed strong Taiwan was fleecing the United States.

How to illuminate all of this?

One explanation is that Taiwan’s low defense spending is part of a decades-long trend. Its defense spending had declined early on owing to America guaranteeing Taiwan’s security. It also decreased as the intensity of the Cold War subsided.

Military spending fell in the 1990s after the defense budget was opened to public scrutiny. The public felt the money could be better spent elsewhere.

But during recent administrations there have been special reasons for the government being penny-pinching with the military — reasons Trump’s America can hardly suffer.

President Chen Shui-bian did not like his military. It was staffed at the top by ethnic Mainland Chinese — those who moved to Taiwan after the war with Chiang Kai-shek and ruled Taiwan — whom Chen detested. In addition, the military supported the Nationalist Party or Kuomintang (KMT) that opposed him at every turn during his eight years as president.

The first year Chen was president Taiwan’s defense spending fell below 3 percent for the first time. It dropped regularly after that during his time in office while he provoked China causing cross-Strait tension to soar.

It did not recover after the KMT’s Ma Ying-jeou became president in 2008. In fact, it remained below 3 percent.

Ma’s position was that the likelihood of conflict with China was reduced substantially because of his deft management of cross-Strait relations (better than in 60 years he claimed). This was true; the Taiwan Strait was no longer one of, or the, foremost flashpoint in the world (place where a war might break out involving major powers using weapons of mass destruction).

Nevertheless, China’s defense spending was booming (double digit increases annually) making Taiwan more vulnerable. In 2014 a Ministry of Defense report stated that China “would be able to take Taiwan by force before the end of 2020.” Various exercises and computer simulations confirmed this to be true; some “proved” it was already a reality Taiwan had to face.

But President Ma also declared that he would never ask the United States to fight for Taiwan. This did not make sense unless Washington was willing to provide Taiwan with much more advanced weapons than the Obama administration had discussed or was likely to provide.

During the election campaign in 2015 and early 2016, candidate Tsai Ing-wen spoke often of increasing defense spending. While on her visit to the US, she so pleased American officials Washington shifted from a policy of favoring the KMT to a neutral (if not pro-DPP) stance that helped Tsai win voters.

President Tsai faces still another quandary. Her progressive and politically correct administration is ideologically at odds with the Trump administration.

In subsequent months President Tsai made more promises of boosting the defense budget. But when the specifics were examined the increases were incremental, 2 to 3 percent, which most deemed meaningless given the circumstances — namely that the strategic environment suggests Taiwan needs a much more robust defense policy.

China had adopted a policy of intimidating Taiwan. This included cutting the number of Chinese tourists going to Taiwan (that hurt an important sector of Taiwan’s economy) while stopping Tsai’s party members and supporters from going to Hong Kong. It took away four of Taiwan’s diplomatic partners. It engaged in military exercises near Taiwan, including sending its first aircraft carrier on a trip around the island.

Worse, China labeled the Tsai administration a "hostile regime" because it advocated Taiwan’s independence. Accordingly, Chinese leaders promised military action to deal with Tsai.

Taiwan did little more than complain about China’s bullying.

Washington was very aware of the state of affairs and on numerous occasions expressed concern and even alarm that Taiwan was shirking its defense responsibilities.

Pentagon officials warned Taiwan that Washington was disinclined to “spill the blood of US soldiers inasmuch as Taiwan did not appear to want to defend itself,” as witnessed by its low defense spending.

Meanwhile, some US civilian officials informed Taipei that opinion surveys in the US indicated most Americans did not want to get involved in a conflict to protect Taiwan. Americans like Taiwan, but they do not want a war with China.

Some American diplomats even suggested that President Tsai and her supporters resembled President Chen who incensed the United States with statements that the US favored Taiwan and would provide it protection no matter what.

At this time, US defense specialists also pointed out that Taiwan’s military planning was uninspiring. President Tsai announced Taiwan would build 4 to 8 submarines (depending on the cost). But this would require considerable time given Taiwan’s lack of experience in this area. To some experts, this meant Taiwan was delaying doing anything significant. Further, they opined this would not be meaningful in view of China’s 59 submarines (many of them nuclear propelled and in other ways very advanced).

Some pundits even said that President Tsai’s frequently publicized efforts to renovate and stimulate the economy that included a weapons program was unrealistic in view of the fact Taiwan could not hope to market weapons abroad and thus make money to pay for the research needed to develop new and better ones. It was thus a losing proposition that some called “simply talk.”

So, President Tsai, ostensibly to reassure the US she would not drag it into war, recently declared that Taiwan’s defense capabilities are “our responsibility.” But who believed this? Other high officials in Taiwan say otherwise.

The explanations for this are that President Tsai, like Chen Shui-bian (the other DDP president) does not particularly like the military, Taiwan’s economy is barely recovering from a recession (growing at a rate well below the world’s average and the lowest in Asia), and she needs funds to fulfill her progressive agenda (social welfare is the top item in Tsai’s recent budget, ahead of the military.)

Also, she is pressured by the base of her party to promote Taiwan’s independence. An election is coming in November and independence advocates, along with welfare recipients, are going to be critical voters for her party; military personnel are not.

This is only a “mid-term election” for local offices; but it is a critical one as it will likely determine the direction of Taiwan politics and impact the 2020 national presidential and legislation election when Tsai will presumably be running for reelection.

President Tsai faces still another quandary. Her progressive and politically correct administration is ideologically at odds with the Trump administration. In fact, many of her supporters, foreign advisors and the pro-Tsai media deplore Donald Trump, as does the leftist media in the US and elsewhere. And they say so often.

Incidentally, Tsai supported Hillary Clinton during the campaign and even welcomed her supporters to come to Taiwan and raise money. Trump aides remember.

This has prompted some top leaders in President Tsai’s ruling party to warn her that she cannot depend on President Trump to protect Taiwan as seems in the final analysis to be her policy. They opine that Trump does not like her and will play the “Taiwan card” when it is convenient.

Alas, President Tsai has to worry that President Trump will decide freeloading Taiwan is not a true friend or he needs something from China. Either or both seem likely.

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