November 21, 2022

Advisory Panel to Comprehensively Discuss Defense Capabilities as National
Strength (Fourth Session)

Summary of Funabashi Statement

Yoichi Funabashi, PhD
International House of Japan
Global Council Chairman

The Minister of Finance will join the Four Ministers' Meeting of the National
Security Council to form the Five Ministers' Meeting.

In order to maintain peace, deterrence must be strengthened, and warfighting and defense
capabilities must be constantly improved.
To that end, it is necessary to sustainably strengthen national power through economic
revitalization and fiscal resilience as well as increase defense spending. Moreover, as thescope of defense and security expands, the whole of government and the whole of society
must work together as one.

In order to meet these challenges, the government should add the Minister of Finance tothe so-called four-ministerial meeting (Prime Minister, Foreign Minister, Defense
Minister, and Chief Cabinet Secretary) of the National Security Council (NSC), the core
body for national security policy-making, and make it a five-ministerial meeting.

1Article 2 (11) of the Act for Establishment of the National Security Council stipulates that“the council shall deliberate on the following matters and, if necessary, express its opinion
to the Prime Minister.'' The Council shall deliberate on "the basic policies of foreign,defense, and economic policies related to national security and important mattersconcerning these policies.” In addition, Article 5 states that "the Minister of Foreign
Affairs, the Minister of Defense, and the Chief Cabinet Secretary shall deliberate"(*) theabove eleven. I propose that the law be amended to include the Minister of Finance.

The establishment of a five-ministerial meeting would contribute to a shared sense of
mission among ministries and agencies regarding foreign and defense policy issues, aswell as to a deeper understanding at the center of government regarding the nationalsecurity implications of government’s financial statecraft.
In the area of national security, a bipartisan and "trans-silo" approach is of the utmostimportance. A nation that can make sober decisions about the budget and funding
priorities for national power and defense spending based on strategy and national interest,
in other words, “raison d’état”, will be able to win peace.
Defense spending is not a temporary expense but a permanent expense. In particular,
under the geopolitical situation in which the strengthening of defense capabilities will
inevitably become a long-term issue in the future, the government has decided to
implement a three-pronged approach to “drastically strengthen defense capabilities” byfocusing on “content, scale, and funding.” By showing a willingness to tackle this headon is implicative when considering the future of the national security policy-making
process.

The Ministry of Finance must go beyond simply vetting and assessing requests for
defense and security spending and become a stakeholder that can work with related
ministries and agencies in exploring to optimize resource mobilization and spending. On2

the other hand, rather than simply presenting a "shopping list," the Ministries need toconstantly and critically review priorities, feasibility, cost-effectiveness, efficiency, andrationalization (scrap-and-build) for equipment, deployment and R&D, as well as work
together to overcome financial vulnerabilities. This "three-pronged" approach of "content,scale, and funding" should not be a temporary or exceptional measure, but should be partof a permanent and systematic policy-making process.
However, in order for the Ministry of Finance to play a meaningful role at the core of thenational security policy community, it must also further update and innovate its mission,expertise, and organizational culture. The Ministry must dramatically strengthen our
expertise in economic security, including intelligence functions related to global financeand investment (“follow the money”), and nurture their professionals to be more globallycompetitive. There is also an urgent need to strengthen closer cooperation between theMinistry of Finance and the departments in charge of foreign affairs, defense and crisis
management.
Given the aforementioned, I propose the establishment of a five-ministerial council with
the Finance Minister added to the core of the National Security Council (NSC).

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Articles 2 and 5 of the National Security Council Establishment Act stipulate as follows:

Article 2 (Deliberation Matters)
11. Basic policy on foreign policy, defense policy, and economic policy related to national
security, and important matters concerning these policies (excluding those listed in thepreceding items)3Article 5 (Members)
2. Matters listed in Article 2, Paragraph 1, Item 11: Minister of Foreign Affairs, Ministerof Defense, and Chief Cabinet Secretary4