Now the Real Work Begins: The U.S.-Japan Alliance after the Upper House Elections

When Prime Minister Fumio Kishida assumed office in September 2021, he had a reputation for caution, and—following on the heels of Prime Minister Yoshihide Suga’s brief tenure in office—there were widespread concerns in Washington about a return to weak, revolving door leadership in Tokyo. But Kishida has defied expectations. He quickly joined the G7 in imposing sweeping sanctions on Russia following the invasion of Ukraine, and has provided robust support to Kyiv—including, for the first time, a package of nonlethal security assistance. He has sought to rally the Indo-Pacific region to the cause, pushing back against Beijing and Moscow’s deepening alignment and warning in a speech in Singapore in June that “Ukraine today could be East Asia tomorrow.” He has sustained a high diplomatic tempo, hosting the Quad—the leaders of Australia, India, and the United States, along with Japan—in May, joining the NATO leader’s summit for the first time in June, and meeting regularly with leaders in Southeast Asia. His leadership was instrumental to the successful launch of President Biden’s Indo-Pacific Economic Forum (IPEF) in Tokyo in May. After nearly a year in office, Kishida has reinforced Japan’s place as the United States’ most critical ally in the Indo-Pacific.

With the Liberal Democratic Party’s (LDP) strong victory in the Upper House election on July 10, Kishida is now poised to take up a potentially transformative national security agenda—one he largely deferred until after the polls. He is not constitutionally required to call another election until September 2025, a three-year period of stability that represents a rare window of opportunity. The assassination of former prime minister Abe could complicate Kishida’s management of the LDP, but his position is firm after decisive victories in two national elections over the last year.

As a first order of business, Kishida plans to issue three key documents by the end of 2022 that will together put his stamp on Japan’s strategic course: a new National Security Strategy, only the second since Abe’s inaugural document in 2013; the National Defense Program Guidelines (NDPG), last issued in 2018, which sets out Japan’s defense strategy; and the Mid-Term Defense Program, which accompanies the NDPG and serves as the five-year procurement plan to support the defense strategy.

As the deliberations on these documents accelerate in the second half of 2022, three issues will be a particular focus for the alliance—Japan’s plans for increased defense spending; its consideration for the first time of long-range “counterattack” strike capability; and the launch of a new bilateral “economic security” agenda, aimed at promoting cooperation on critical technologies, supply chain resilience, export controls, and other areas central to the economic competition with China. Taken together, the agenda for Washington and Tokyo in the months ahead offers considerable opportunity for a deeper and more integrated relationship.

Perceptions in Tokyo of a deteriorating security environment form the backdrop to these deliberations on national strategy. Japanese officials describe the regional security environment as the worst since World War II, pointing to Chinese pressure in the East China Sea and tensions across the Taiwan Strait; the deepening political alignment between Moscow and Beijing; and renewed provocations from North Korea. While Kishida is likely to seek opportunities in the months ahead to stabilize ties with Beijing, his intent to strengthen the foundations of Japanese security is unlikely to change with Abe’s passing.

Increased Defense Spending

In his meeting with President Biden in May 2022, Prime Minister Kishida committed “to fundamentally reinforce Japan’s defense capabilities and secure the substantial increase of its defense budget needed to effect it.” Following Russia’s invasion of Ukraine, Japanese public opinion has shifted solidly in favor of greater spending on defense. Recent polling indicates sizable majorities support increases, and the LDP placed an unusually heavy emphasis on defense and national security during the election campaign. In a May poll by the Asahi Shimbun, a record-high 64 percent of respondents said Japan should strengthen defense capabilities. Even the LDP’s more dovish coalition partner Komeito has called for growing the defense budget, although it is divided over the size of such an increase.

Japan’s challenging fiscal picture will place constraints on the pace of growth, and an increase to 2 percent of GDP within five years—as recommended by the LDP Research Commission on National Security in May—is unrealistic for a country that spends just 1.1 percent today. The LDP itself is divided over how to fund such growth, with fiscal conservatives arguing that it should be paid for with tax increases—a political nonstarter for Prime Minister Kishida. The passing of former prime minister Abe, the principal advocate of the 2 percent target, will complicate Kishida’s ability to manage this debate and could result in less ambition. But substantial annual increases, well above the 1–2 percent annual growth of the Abe years, are likely in the years ahead. The Defense Ministry’s initial budget request for FY 2023 will be released in August.

This growth will be welcome in the Pentagon—but the devil will be in the details of how Japan chooses to spend these added resources. The LDP Research Commission identified several foundational areas for additional resourcing, including munitions stocks, equipment maintenance, resilient communications networks, and housing infrastructure for SDF personnel (to increase the attractiveness of service in a force that struggles with recruitment). All of these areas have a strong logic. But even with increases in spending, Japan’s requirements will almost certainly still exceed available resources—so clear prioritization and a focus on efficiency will be critical. In particular, should Japan choose to place a heavy emphasis on developing indigenous capabilities, some of the benefit of increased resources could be lost.

One example of such risk is Japan’s next-generation F-X fighter aircraft program. Intended to replace the Air Self Defense Force’s aging F2 fleet, the program will receive its first significant budget outlay in the next fiscal year, with major programmatic decisions potentially on tap by December 2022. Japan has traditionally approached major defense acquisitions as largely a choice between purchasing U.S. equipment or developing it indigenously. In the case of F-X, the Defense Ministry is seeking to develop critical components of the aircraft indigenously, in a “Japan-led” program with international partners; this approach won little interest from U.S. industry and could raise cost and timeline risk for the program. Press reports last week that Japan and the United Kingdom are exploring a merger of the F-X and Tempest fighter jet programs could signal a positive evolution in Japan’s approach toward a cooperative acquisition program with an international partner—but the ultimate terms of the cooperation bear watching in the months ahead. The alliance can ill afford a high-cost or delayed program that sacrifices capability for indigenous production.  

The difficulties surrounding cooperation on the F/X program point to a larger vulnerability in the U.S.-Japan alliance—the virtual absence of meaningful defense industry cooperation. Beyond the allies’ cooperation on missile defense—co-development of the SM-3 Block IIA sea-based interceptor—there are no examples of successful collaboration on next generation capabilities. Many of the reasons for this absence are structural on both sides and not easily changed. Japan’s defense industry is notoriously inefficient, and no firms in Japan consider defense a major business line; continued policy restrictions on the export of lethal equipment limit profitability and drive up acquisition costs. In the United States, cumbersome technology release and export control policies impede cooperation. But both capitals should recognize the strategic benefits that would flow from deeper U.S.-Japan defense industry and armaments cooperation—such as a nascent effort on unmanned aerial vehicles—and place greater emphasis on developing this element of the alliance agenda. In addition to promoting interoperability and supporting deterrence, defense industry cooperation builds a critical constituency for the alliance and serves to anchor it more deeply in each country. But it will not happen without leadership from the top in both countries that forces resistant bureaucracies to look for and pursue opportunities to collaborate. 

Counterattack Capability

Within the larger debate over the defense budget, a particular focus for Japan’s security planners in the coming months will be the possible acquisition of enhanced hangeki nouryoku (counterattack capability)—the capability to strike targets at long range on an adversary’s territory after Japan has been attacked or an attack is imminent. The “strike” debate in Japan is not new, but the latest iteration reflects an evolution in Japanese thinking about deterrence, and the capabilities the country needs to sustain it. Polls by NHK indicate that support for acquiring such capabilities has grown from about 40 percent in 2020 to 55 percent in 2022.

Japan began down the path of stand-off strike capabilities several years ago, with its decision in 2018 to acquire the Norwegian-made Joint Strike Missile and the U.S. Joint Air-to-Surface Standoff Missile - Extended Range; both are air-launched cruise missiles, the former with a range of about 300 kilometers, and the latter about 900 kilometers. These capabilities, though significant at the time, are now viewed in Tokyo as inadequate to the growing deterrence challenge facing Japan. Kishida’s national security team judges that Japan needs the capability to hold at risk fixed military infrastructure in North Korea and on the Chinese mainland at longer ranges, beyond 1,500 kilometers, and to do so from ground- and sea-based platforms. To accomplish this objective, Tokyo was initially focused on extending the range of an existing indigenous system—the Type 12 anti-ship cruise missile. But the timeline for doing so extends into the early 2030s, a pace that Tokyo appears to have concluded is too slow. It is now considering international options that it can bring online much sooner, before the end of the decade.

Whatever capability Japan chooses to acquire, it will challenge the existing framework of the alliance. Tokyo’s acquisition of long-range strikes would represent the symbolic end to the “spear and shield” division of labor in the relationship, and—if employed effectively—will require a far deeper degree of integration in military planning, intelligence sharing, and operations. In supporting Japan’s development of this capability, Washington is likely to have to make significant decisions related to technology release and information sharing, and will need to take on deeper bilateral coordination to effectively integrate Japanese capabilities with those of the United States. Alliance managers in the U.S. government strongly support the prospect of Japan’s emergence into a more capable partner, but bureaucratic inertia and a slow-moving decisionmaking process has the effect of signaling ambivalence to Japan. Washington cannot afford ambivalence; U.S. strategy in the Indo-Pacific demands a strong Japan, and perceptions of U.S. ambivalence would encourage Japan’s indigenous instincts. In addition to an ongoing bilateral dialogue on military requirements, the months ahead warrant high level, consistent focus from leadership at the State and Defense Departments to enable Japan’s acquisition of this capability on its desired timeline. 

Economic Security and the “2+2”

The first ministerial-level meeting of the Economic Policy Consultative Committee (EPCC)—the so-called Economic 2+2—will convene in late July 2022. Launched by President Biden and Prime Minister Kishida in January 2022, the EPCC is led by the U.S. secretaries of state and commerce and Japan’s ministers of foreign affairs and economy, trade, and industry. The body was created to focus on a broad range of issues related to economic security and the technology competition with China—export controls, supply chain resilience, and the protection of critical technologies. These issues are among the most important confronting the alliance today and are critical to the competition with China and to ensuring the capacity to resist economic coercion.  The launch of a senior-level forum dedicated to addressing them at a strategic level is a positive development.

Not surprisingly for a new forum, its objectives and work plan are still being defined. The division of labor with other bilateral mechanisms—such as the Commerce- and METI-led Japan-U.S. Commercial and Industrial Partnership, and a bilateral trade dialogue led by the U.S. Trade Representative—is similarly unclear. Some rationalization of these efforts is likely needed, but the Economic 2+2 deserves pride of place in the bilateral relationship—it will be a high-profile platform with a unique ability to drive interagency work on issues that are among the most important in the strategic competition with China. It should be more than just an annual meeting—it should focus on supply chain resilience and export controls, and drive a concrete work plan with outcomes and deliverables from each meeting. And since many of the issues the Economic 2+2 addresses are also important to other alliance relationships—particularly the Republic of Korea—the two governments should consider multilateral engagements with the same principals.

Looking Forward: Command and Control 

Looming on the horizon is a structural issue for the defense alliance. A more capable Japan—with long-range strike capabilities, growing cyber capacity, and significant investments in areas such as space—demands new thinking about how the U.S. military and Japan’s Self-Defense Forces interact and coordinate operations. Some of the existing structures of the alliance are vestiges of an increasingly bygone era. U.S. Forces Japan is the best example—though staffed with professionals dedicated to the alliance, it has no operational command authority and serves primarily as a steward of U.S. bases in Japan. Operational cooperation with the Self-Defense Forces is largely devolved to component commands in Japan, most prominently the Seventh Fleet in Yokosuka and the Third Marine Expeditionary Force in Okinawa. This structure is arguably inadequate to supporting an alliance with the Japan that is emerging; the relationship will likely demand a joint operational command structure, resident in Japan, that is far more integrated than what exists today. Japan’s own consideration of a new joint operational headquarters, similar to a U.S. combatant command, provides an opportunity to reconsider the U.S. command structure in Japan. With Japan poised to make significant decisions on national security in the months ahead, the time to reimagine the institutions of the alliance is now.    

Christopher B. Johnstone is the Japan Chair at the Center for Strategic and International Studies in Washington, D.C.

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