Japan’s F-2 Fighter Replacement Program and The Politics of Alliance Management

As the world is reeling from the immediate crisis of the covid-19 pandemic and its still unknown economic, political, and strategic long-term impacts, Japan is in the early stages of its F-2 fighter aircraft replacement process. A weighty decision at any time, let alone in days like these.

Procurement of big-ticket weapons systems like ships or aircraft is always a hugely public, political, and contentious affair. Each step in the decisionmaking cycle inevitably involves thousands of jobs, many more thousands of components and subsystems, and national pride. A leading-edge fighter aircraft or sophisticated submarine is seen as a physical testament to a country’s engineering and strategic prowess. Ego and honor co-mingle with debate over radar cross-section and gas turbines. In Japan’s case, there is also the need to weigh the operational and technical needs of its ally, the United States, against its own sovereign requirements.

Against this backdrop, the U.S. is soon set to renegotiate its Host Nation Support agreement (HNS) with Japan. HNS negotiations, long the province of bean counters and career bureaucrats, involve granular arguments over who pays for a base, the salary of local employees, and other such minutiae. Though esoteric, they are vitally important. They provide the financial foundation for day-to-day operations and sound alliance management.

Mixing these two quiet but vitally important alliance negotiation with concerns over a major weapons purchase is always a potential recipe for alliance conflict. It is also where Japan and the United States find themselves with the coming replacement for Japan’s F-2 fighter, the notional F-3.

Japan and the U.S. have been in this position before. The F-2’s development process was a bitter affair that coincided with the height of U.S.-Japan trade tensions in the late ‘80s and early ‘90s. The U.S was concerned that Japan’s drive for a wholly domestically produced aircraft would result in a turkey. Japan, in turn, was disappointed with what it saw as a U.S. power move to prohibit Japanese access to sensitive defense technology.

The resulting compromise was the F-2, a “Goldilocks” solution that suited both sides in the benign international security environment that was the 1990s. Japan was left dissatisfied with the performance of its new fighter, and the U.S. was frustrated that Japan spent bundles of yen (and considerable political capital) merely to procure a slightly enhanced F-16.

With the fractious security environment that is East Asia today, neither side has the time or luxury to engage in a repeat of such past alliance spats, handing countries like China a propaganda victory—or worse, a leg-up on capability.

With Japan indicating a delay to the program, reporting suggests that Japan has decided on a clean-sheet design, and it remains unclear who the major foreign partner will be in its development. Indeed, there is even discussion of involving the United Kingdom, a newfound exercise partner of Japan, and its next-generation “Tempest” fighter aircraft.

On its own, this is not the making of a major alliance crisis. Major weapons procurement decisions are routinely delayed or reevaluated, and behind the scenes, spats between allies on major procurement activity are nothing new. With its focus on protecting its small domestic defense industry and developing and spin-off technologies, Japan is no different.

The possibility of a significant alliance disagreement though, stems from the fact that these delays and fraught negotiations are occurring as the United States is set to open a separate negotiation with Japan, the renewal of the U.S.-Japan HNS.

In the case of South Korea (and its similar Special Measures Agreement, or SMA), U.S. insistence that South Korea must not simply double its previous SMA contribution, but multiply it by 500 percent has meant that South Korean employees of U.S. Forces Korea are furloughed as of Wednesday, April 1.

This reality puts Japanese Prime Minister Shinzo Abe and his HNS team in a bind. As if the Covid-19 pandemic and the postponement of the 2020 Tokyo Olympics were not enough, Japan must also contend with a Washington seeking higher demands of its allies and a major weapons procurement program in its infancy—with both the U.S government and U.S industry keen for a larger slice of the pie.

To be sure, Abe has played this difficult hand as best he could. He has attempted to buy goodwill and play the good alliance partner with Washington by doubling down on Japan’s foreign military sales (FMS) from the U.S., including big-ticket items like fighter jets. But his repayment in kind has been a request for a 400 percent increase on current costs for hosting U.S forces, a marginal improvement over the 500 percent increase asked of South Korea. Whether an opening gambit or a serious proposal from the U.S side, there should be no doubt that Japan is watching the U.S.-South Korea SMA negotiations carefully.

Japan’s efforts to increase its U.S. FMS has also run into opposition from Japanese defense companies, many of which operate with razor-thin margins. The F-3 is a once-in-a-generation tender, and there is no doubt that Japan, Inc. will clamor for the greatest possible piece of the action. Who can blame them?

At the core of the F-3 issue for Abe and his team will be walking the high-wire act of the demand for the greatest possible access and autonomy for Japanese industry (and the national security establishment), with haggling from the U.S side; Washington’s priorities are managing the trade deficit, managing an economy now ravaged by the effects of Covid-19 and ensuring the closest possible alliance framework with Japan.

What might be ordinary delays and debate between close allies, in an ordinary weapons program and in an ordinary time, may now have the potential to mutate into a rift between the United States and Japan in a very un-ordinary time.

Coming on the heels of the near-implosion of the Japan-South Korea general security of military information agreement (GSOMIA) and with this major pandemic scything across the region, Washington’s strong-arming is ill advised and ill-timed. The United States needs its allies and friends more than ever.

Though there is no need to sound the alarm yet, Japanese and U.S. negotiators at the working level (and once progressed at the highest levels) must make swift and mutually agreeable progress, ignore the political background noise, and outline the division of industrial labor between the United States and Japan (if any) on the F-3’s development. Taking on board the lessons from the FS-X debates, both sides must be sure to avoid spillover into other critical areas of alliance management, including the HNS negotiations, and publicly and privately act with the unity of the alliance at the foremost priority.

In this vein, we recently convened a track 1.5 working group of officials and industry experts from the United States, Japan, and Australia, as part of the CSIS Alliance Interoperability Series, with the view to release our findings, and to consider the political-military and technical issues that the F-3 debate raises. Our study will also incorporate findings from a similar workshop discussion on the FMS process and to act as a datapoint for officials from the U.S.-Japan F-3 dialogue to draw upon.

Our findings and recommendations on a possible path forward will be outlined in a briefing to be published in the weeks ahead, which we hope will serve as a useful guide for alliance managers. As our data will demonstrate, while there some disagreement over the appropriate level of industrial collaboration, consensus over capabilities and missions is strong. It is our hope that this consensus can keep F-3 negotiations on track and prevent any alliance friction between the U.S. and Japan at this time of deep global uncertainty.

Patrick G. Buchan is director of the U.S. Alliances Project and fellow of Indo-Pacific Security at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Benjamin Rimland is a research associate with the CSIS U.S. Alliances Project.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Patrick Gerard Buchan

Benjamin Rimland