[2017-08-02]
Japan is strictly prohibited from rearmament and remilitarization by its “pacifist constitution” and from increasing defence spending either in the budgetary expenditure or covering it through financial management and banking operation by related domestic laws.
However, Japan’s snowballing defence spending arouses serious concern among the international community.
Breaking through ceiling on defence spending
Japan built the “Self-Defence Forces” with the ground, naval and air forces in July 1954 in disregard of the constitution banning the maintenance of armed forces, including its cost in the state budget as defence cost. And it limited its ceiling to 1 percent of GNP in the “defence progrmme guidelines” in October 1976.
But the current authorities have escalated the disbursement of defence expenses in the regular budget during their tenure of office, increasing it to 5 125.1 billion yen for the 2017 fiscal year, the fifth year after they came to power.
They have cunningly expanded the military budget by using the “additional budget” in addition to the regular one.
The defence spending they additionally disbursed in this way amounted to 119.7 billion yen in 2013, 211 billion in 2014, 191.7 billion in 2015 and 170.6 billion in 2016, with a 12 percent growth rate in the past five years.
If it grows at this rate it will not only exceed the five-year budget limit of 24.7 trillion yen for the 2014-2018 mid-term defence programme but also break the one percent of GNP limit soon.
Besides, Japan creates an enormous amount of “hidden defence spending” by dispersing and hiding the expenses to be included in defence spending in other items.
After all, Japan’s “less than one percent of GNP for defence spending” has been reduced to a scrap of paper.
Excessive issue of bonds
Article 4 of the law on finance enacted in 1946 bans Japan from issuing government bonds, given that reckless financial management paved the way for the war of aggression in the past.
The sitting authorities, however, issued the largest ever amount of bonds worth 50 trillion yen for the budget for the 2013 fiscal year (including additional budget of the previous year) and over-issued deficit bonds every year by even enacting legislation on exceptional issue of public bonds against the law prohibiting the issue of government bonds in the ordinary session of the diet in 2016. As a result, the sovereign debt stemming from the bond issuing amounted to 1 071. 56 trillion yen in the 2016 fiscal year which ended last March.
The point at issue is that it is not simply due to the slackened discipline in financial management or economic policy failure.
In the mid-20th century Japan was intent on fighting aggressive wars by increasing government debts including bonds to 160 billion yen, which was more than double the total public expenditure, during the four-year Pacific war.
Therefore, the reckless financial expansion seems to be aimed at establishing a financial order and setting a precedent for the government to secure a huge amount of financial resources needed for war in case of emergency in a short time by issuing bonds.
Bank chained to power
The Bank of Japan (Central Bank) was granted “independence of finance over the state financial policy” (Article 5 of Japan’s law on banks) through the reform of monetary system after its defeat in World War II on the basis of the remorse for its service as a supplier of expenses to the war mongering government in the past.
However, Abe replaced its governor with his close associate to launch “drastic monetary easing” and forced the bank to follow the government policy to buy government bonds en masse.
As a result, the Bank of Japan began to buy in bonds in April 2013, gathering nearly half of long-term bonds worth about 600 trillion yen by the end of 2015 and about 35 percent of the total amount issued till the end of last year to become the largest bond possessor and fund supplier.
It buys over 100 trillion yen-worth securities on annual average according to the decision of the October 2014 monetary policy. In the past 2016 financial year alone it printed money worth 120 trillion yen for bonds.
It reminds people of what the bank did in the past by excessively issuing government notes worth 500 million yen between 1932 and 1936, 4.1 billion yen from 1937 to 1941 and 36.3 billion yen from 1942 to August 1945.
Japan’s growing defence spending should be a wake-up call to the international community.
By Han Jong Chol PT
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