Japan Tackles Perils To Building, Selling Its Own Next-Gen Fighter

We offer a rare discussion of the Japanese effort to develop a next-generation fighter aircraft. Ryo Hinata-Yamaguchi, a Reservist in the Japanese Self Defense Force and doctoral candidate at the Australian Defense Force Academy, and his co-author Eddie Walsh discuss the hard slog Japan faces as it develops, builds and then tries to sell its own fifth generation fighter.

Last year’s decision to acquire the F-35 reinforces Japan’s commitment to its strategic alliance with the United States. But it would be naive to think that Japan’s interest stems solely from a desire to help Washington just when other prominent F-35 partners appear unwilling or unable to commit to the troubled program.

For Japan, the F-35 delivers more than a fighter capable of facing off head-to-head with the latest Chinese and Russian-made adversaries. It also provides access to stealth and other next-generation (NGEN) capabilities that Japan’s defense contractors need to advance development of their own NGEN fighter.

While the F-35 provides Japan with the means to radically shift the diplomatic and military balance of power in Asia-Pacific, Japan will need to make a risky break with its past if it hopes to produce indigenous NGEN fighters. Such an effort would simultaneously require Japan to emerge as a unilateral military superpower and major exporter of military aircraft. Although there are preliminary indications that the Japanese Government may be willing to move in that direction, the program is certainly no fait accompli. While Japan can probably overcome the technical and legal hurdles facing the developing of a NGEN fighter, it remains a serious question as to whether the country will be willing to bear the steep political and diplomatic costs required.

Core Challenge

It certainly is no secret that Japan has been actively pursuing an indigenous NGEN fighter in parallel with its efforts to import them from the United States or Europe. Japan has publicly contracted Mitsubishi Heavy Industries (MHI) to lay the foundation for this fighter under the Advanced Technology Demonstrator (ATD-X) project.

Mitsubishi Heavy Industries (MHI) recently announced it has begun assembling a full-scale ATD-X fighter test model. While this marks an important milestone in Japan’s efforts to produce its own NGEN fighter, the program still has a long way to go, including overcoming some major technical hurdles.

There is little doubt that buying the F-35 will help close the gap between Japan’s R&D program and established NGEN fighter programs abroad. With time, Japan’s skilled workforce and manufacturing capabilities probably are sufficient to overcome the rest.

However, bringing the NGEN fighter development program to fruition requires more than technical capabilities. Although Japan remains the world’s third largest economy, it is questionable whether Tokyo can unilaterally support the capital outlay required to develop a peer competitor to the Chinese Chengdu J-20 or the Russian Sukhoi PAK FA — especially after the global economic crisis and last year’s Great East Japan Earthquake. The reality is that producing competitive NGEN fighters probably requires far more funding than Japanese policymakers forecast.

As a result, Japan will need to mirror the approaches used by other NGEN producers, including offsetting development costs with foreign exports. This is the only realistic business model which proves politically and economically viable for building a true NGEN fighter. Since Japan’s current laws prohibit the export of such a fighter, Tokyo therefore needs to relax or rewrite its export control restrictions. Japan’s recent moves in this direction increase the likelihood that the domestic legal barriers to exports will eventually disappear.

It would be a mistake though to assume that the challenges before Japan in developing a NGEN fighter are purely technological and legal in nature. To move the program forward, Japan will need to do far more than to just design a fighter that its military and potential buyers will find attractive. It also will have to overcome the serious political and diplomatic barriers which threaten such an initiative. Nowhere is this more evident than the considerable opposition that would arise should Japan try to export them.

Economic Viability

In order to export its NGEN fighters abroad, there is no doubt that Japan would have to work hard to ameliorate concerns of major foreign powers who would oppose any move by Japan to unilaterally alter the balance of power in East Asia. This could hurt Japanese diplomatic influence, particularly its coveted soft power. Would Japan really be willing to bear such costs?

Let’s assume for argument’s sake that it would. Japan would need to determine whether or not the potential export market for a Japanese NGEN fighter would support the program in the first place.

On face value, the market certainly appears big enough. China’s double-digit increases in military spending have unnerved many emerging and mid-tier powers in the Asia-Pacific region.

While Tokyo is unlikely to sell to clients that counter the interests of its alliance with Washington, there remain a number of countries in Southeast Asia and elsewhere for whom the U.S. cannot serve as a supplier but would prefer a partner solution to be fielded over a Chinese or Russian alternative. This is not Japanese fantasy – South Korea has been eyeing some of these same markets for its KFX program.

Potential export markets include ASEAN members (ex. Indonesia, Singapore, and Thailand), Trans-Pacific Partnership countries (ex. Chile and Peru), and other close regional partners in the Middle East and Central Asia. Over the life of the program, one could even imagine scenarios where more contentious buyers, including Myanmar and Taiwan, could be brought to the table.

The problem for Japanese defense planners though is that defense trade decisions are not made in a bilateral vacuum. Market dynamics must be balanced with larger strategic and political considerations. In this case, the Japanese NGEN program’s potential exports present a far greater destabilizing effect than do the introduction of the fighters into the Japanese military. This is no small concern.

Export Considerations

The emergence of Japan as a major military NGEN aircraft exporter would be a serious threat to existing mid-market players, particularly European military exporters (ex. France, Germany, UK, and Sweden) and upstarts (ex. Brazil, India, and South Korea). Japanese defense planners need to understand how they would react to this challenge.

In some markets, China and Russia are even bigger concerns. Since strategic and diplomatic interests regularly outweigh economic ones, the Japanese will need to determine how far those two would go (including accepting financial losses) to block Japanese exports.

Even the United States could present challenges. The U.S. could play a significant role in the host country’s decision between Chinese, European, Russian, and possibly Korean alternatives. And there are serious questions as to whether the U.S. would want to undermine its NATO allies’ lucrative defense trade interests at a time of economic crisis in Europe and increased tension with Japanese strategic expansion in Asia.

For these reasons, sizing up the potential export market for a next generation fighter is no easy task. In fact, it is one rank with uncertainty. This makes it all the more difficult to make a strong case for the Japanese NGEN program; exacerbating the political and diplomatic gulf between those who oppose and support the program.

Eddie Walsh is a non-resident fellow at Pacific Forum CSIS. He also is a freelance foreign correspondent who writes extensively on diplomacy and defense issues in Asia-Pacific. He can be followed @aseanreporting.

Ryo Hinata-Yamaguchi is a non-resident fellow at Pacific Forum CSIS. He also is a Reserve Specialist with Japan’s Ground Self-Defense Forces and a Ph.D. candidate at the Australian Defense Force Academy. The views expressed are his and do not necessarily reflect those of the Japanese Self Defense Force or the Australian Defense Force Academy.