November 9 2022

Advisory Panel to Comprehensively Discuss Defense Capabilities as National
Strength (Third Session)
Summary of Funabashi Statement

Yoichi Funabashi, PhD
International House of Japan
Global Council Chairman

You cannot protect a country without protecting its people

Defense of Sea Lanes and Merchant Fleet Protection

Sea transport accounts for 99.59% of Japan's trade (on a tonnage basis), and the Japanesemerchant fleet accounts for 60% of imports and exports. About 96% of the sailors on
board the Japanese merchant fleet are foreigners. The Japanese self-sufficiency rate formarine transportation is only 2.3%.

Before the Second World War, Japan not only neglected the protection of its merchant
fleet, but also forced private shipping companies to transport troops deployed overseas,
recruited civilian sailors, and sent them to war. During the Pacific War, the death rate
among civilian sailors was 43%. (*)

In the event of an emergency, the role of the Japanese merchant fleet, which supports thecountry's maritime logistics infrastructure, is vitally important in maintaining people'slivelihoods.

1Sea lane defense and protection of merchant fleets are indispensable not only from anational security perspective, but also from the perspective of human security, and should
be positioned as an issue of extreme high priority in the drastic strengthening of defense
capabilities.

In order to realize a drastic strengthening of defense capabilities, we must reaffirm thefollowing two principles:

1) The nation cannot be protected unless its people are protected.
1) Security is only as strong as its weakest link.

In the case of Japan, protecting its people has been put on the back burner. Our priorities
before the war, which included an emphasis on combat but neglected logistics,intelligence, and the civilian population, led to our defeat. This should be taken as a
cautionary tale.
We must know that the weakest link in the chain is and always has been the defense of sea
lanes and the protection of the civilian merchant fleet.

The government should develop a doctrine for protecting commercial fleets in times ofemergency, and clarify the roles of the Self-Defense Force and Coast Guard in protecting
merchant fleets.

In this section, we would like to touch more specifically on the need to re-enforce the"home maritime logistics infrastructure" that has supported Japan as a maritime shipping
nation, as well as the challenges of protecting the merchant fleet under the newgeopolitical situation.

1 Taiwan contingency preparedness
In the event of Sino-Taiwanese relations becoming further strained and leading to a2

Taiwan contingency, commercial merchant vessels bound for the Middle East and Europe
would be forced to make significant changes in their routes and would likely choose to
take detours. Even if they find new routes, however, the risk to safe navigation in thewaters east of Taiwan, the Philippines, and Indonesia until they reach the Indian Ocean is
likely to increase. There will also be a need to transport Japanese citizens from Taiwan. Itis necessary to urgently define the respective roles of the SDF and Japan Coast Guard
merchant fleet escorts in these waters.

2 Expand deployment of armed guards on Japanese-flag vessels and simplification ofprocedures
Currently, the deployment of armed guards on Japanese-flag vessels is limited to thosecarrying crude oil, wheat, soybeans, salt, iron ore, coal, naphtha, liquefied petroleum gas,and methanol. However, armed guards should also be allowed on container ships, carcarriers, and other general cargo ships for the protection of people’s livelihoods. Foreigncompanies that are contracted to provide security services tend to shy away from
deploying armed guards to Japanese-registered vessels because of the cumbersome laws
and regulations related to armed guards. Regulations should be relaxed and proceduresshould be simplified.

3. Reconstructing the ship-building industry
Japan imports 76 million tons of LNG annually (second in the world). Therefore, we haveto operate a total of 1,000 LNG carriers every year. LNG carriers are the lifeblood ofJapan's energy economy and security. Despite this, Japan has not built any LNG carriers
domestically, and will rely on China and South Korea for ships built after 2020. TheInternational Energy Agency (IEA) predicts that even if we achieve carbon neutrality in2050, we will still use about half of the current amount of natural gas. We have no choice
but to use LNG for the long term. Japan's Sixth Strategic Energy Plan also sets renewableenergy at 36-38%, nuclear power at 20-22%, and LNG at 20% by 2030. A system forbuilding LNG carriers in the country must be established.
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The shipbuilding industry in Japan, an island nation, is the foundation that supports themaritime logistics infrastructure for national security, economic security, and humansecurity. The government should work on rebuilding the shipbuilding industry, including
marine equipment, as a national project.

Promote the Joint Use of US-JP Military Bases
The Achilles’s heel of Japan’s defense capability is the uneven distribution of US militarybases in Okinawa, which has resulted in an excessive burden being placed on the residentsof Okinawa. Despite the fact that deterrence is becoming more essential, it remains difficult
to talk about national security as a Japanese citizen from the same perspective as anOkinawa resident. In the face of the Senkaku and Taiwan contingencies, overcoming thisAchilles heel must be prioritized as an urgent task.

The American and Japanese governments have agreed to “promote joint/shared use toenhance interoperability and deterrence, build stronger relationships with local
communities, and strengthen the Self-Defense Forces’ force posture, including in Japan’s
southwestern islands” (Japan-U.S. Joint 2+2, August 2017). The joint use of bases by Japanand the U.S. has a legal basis in Article 2 of the Status of Forces Agreement. At present, thefacilities and areas available for Japan-U.S. joint use are 29 out of 76 U.S. military facilities
nationwide, and 68 out of 130 Japanese facilities. It is necessary to establish a frameworkthat enables prompt joint use of these assets as needed. For example, a framework shouldbe established for joint use of ammunition storage at Kadena Air Base and for joint use of
SDF facilities in the Nansei Islands by the U.S. military. In practice, even if the possessionof missiles with counterstrike capability is necessary, it is meaningless unless theirdeployment sites are secure. In addition, pre-stocking of ammunition is essential to ensure
the ability to continue fighting.
Meanwhile, the U.S. Marine Corps and the U.S. Army are developing ground-launchedshort and medium-range missiles, and are expected to deploy their own missile units to U.S.
military bases in the Nansei Islands and elsewhere. Current Commandant of the Marine
4Corps General Berger stated that US forces would be “very dispersed among [their allies]”
and that US “presence and the credibility of our forces will reassure allies and partners.” Itis time for the joint use of U.S. military bases and SDF facilities to move forward in earnest.
This is not only a kind of operational cooperation in the form of increased interoperability
through regular joint training with U.S. forces, but also strategic coordination in the formof shared decision-making to enhance deterrence by strengthening U.S.-Japan joint
counterstrike capabilities. A 2018 report by Richard Armitage and Joseph Nye noted thatthe US and Japan should recognize that they have entered an era where they can no longer
have the luxury of having separate bases. Joint use of bases contributes to "maximizing thealliance's combat effectiveness, political sustainability, and resource efficiency.” It is about
improving interoperability, the political significance of integrated operations that do not“decouple” Japan and the US, and cost reductions through streamlining and avoidingduplication The key is whether the joint use of bases and facilities in Okinawa can berealized, and above all, the idea itself must be accepted and supported by the residents ofOkinawa.
Japan's 21st century defense capability will only be developed into a combat & sustained
defense capability through the integration of security perspectives from the mainland andOkinawa.
As for the Futenma base relocation issue, it is time to conduct a full-scale review in lightof new strategic challenges from China. This should include the Taiwan contingency, thestrategic significance of Japan-US joint use of bases, and above all, whether the relocation
to the new base to Henoko is the correct way to address it, whether it will be finished intime, and how cost-effective it may or may not be.

Clearly define the roles of the Maritime Self-Defense Force and Japan Coast Guard
in a contingency
In Japan, there has never been a coordinated drill between the Maritime SDF and theCoast Guard in preparation for a contingency. This means that the government is not
fulfilling its "national preparedness" in the face of the growing risk of a Senkaku or Taiwan5

contingency. Even if the government increases defense spending while failing to takeinitiative on these issues, it cannot hope to "fundamentally strengthen the defensecapability”.

Article 80 of the Self-Defense Forces Law stipulates that the Prime Minister "may, in theevent of an order to mobilize all or part of the Self-Defense Forces and when he deems it
especially necessary, bring all or part of the Japan Coast Guard under the control of theMinister of Defense" (paragraph 1), and in such cases, "the Minister of Defense shallcommand the Japan Coast Guard as provided by Cabinet Order" (paragraph 2). Without a"Cabinet Order," there is no way to conduct contingency drills, but this is the height ofpolitical and administrative inaction.

In relation to this point, the Japanese government's official document (from May 11, 1999)
states that even under the "control" of the Minister of Defense, "the Japan Coast Guard willcontinue to carry out its original duties as stipulated in the Japan Coast Guard Law", andthat “it is not correct to point out that it contradicts Article 25 of the Japan Coast Guard
Law, which stipulates the non-military nature of the Japan Coast Guard.”As soon as possible, the government should establish a clear policy and plan for thedivision of duties and roles between the SDF and the Coast Guard in peacetime, crisis
management, and contingency operations, as well as for joint operations with the US
military. Most urgently of all, the division of roles between the SDF and the Coast Guardin a contingency must be clarified. A "Cabinet Order" should then be enacted.

The public will broadly bear the finances.
In asking the public for an increase in defense spending, it is important to have the public
accept it with a sense of ownership, and to have the public broadly bear the financial burden.

For the next five years, it would be realistic to think of the financial resources required to6

increase defense and defense-related spending as a combination of spending cuts, theissuance of government bonds, and tax increases. In increasing defense-related spending,however, the feasibility and cost-effectiveness of past defense spending, particularly on
R&D and system development, should be examined. Additionally, A thorough scrap-andbuild process should be conducted to determine what should be prioritized and what shouldbe eliminated in the scale of defense force enhancements.

However, given that strengthening defense capabilities is a long-term and sustainabletask, the primary source of revenue for increased defense and defense-related expenditures
should be a permanent source of revenue through tax increases. In doing so, consideration
should be given to raising the individual income tax while taking into account the burden
capacity.

Many people recognize the need to strengthen Japan's defense capabilities. This is thetime to for the government to create a national security state that can weather contingencies
and crises together with the people who hold a sense of ownership.

・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・（＊）According to a survey by the Japan Martyred Sailors Honoring Society, 60,643
sailors lost their lives during the Pacific War. Casualties in the war included 20% of theArmy, 16% of the Navy, and 43% of sailors.
（＊＊）Richard L. Armitage and Joseph S. Nye, et. al, More Important Than Ever:
Renewing the US-Japan Alliance for the 21st Century, the Center for Strategic andInternational Studies (CSIS). The report also stated that “eventually, all U.S. forces in Japan
should operate from Japanese-flagged bases,” as that would signal that they are “workingto minimize the burden on host populations while maximizing warfighting capabilities andaddressing burden sharing concerns.”

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