Taiwan’s Defense Transformation and Challenges Under Ma Ying-Jeou

Publication: China Brief Volume: 11 Issue: 7

The third anniversary of Taiwan’s landmark 2008 presidential election, which brought the Kuomintang (KMT) back to power, is approaching. Since Ma Ying-Jeou’s inauguration in 2008, Taiwan has made significant progress in improving relations with China and in expanding cross-Strait economic interpenetration. A review of the Ma administration’s record on national defense, however, suggests that the administration faces substantial challenges ahead in fulfilling its promises on national defense. As part of his campaign platform and subsequent declarations, President Ma pledged to implement the following objectives in his defense policy agenda:

·         Transform Taiwan’s military to an all-volunteer force within 6 years;
·         Restructure the military to a leaner, smarter, more elite force;
·         Commitment to defense spending at not less than 3 percent of GDP [1].

Indeed, Mr. Ma’s vision to reform Taiwan’s defense establishment, both in terms of strategic outlook and composition, is proving to be much more difficult and costly than perhaps expected. The ramifications of this trend are two-fold: both for cross-Strait security dynamics and for President Ma politically as he looks toward earning a second term in office.

Defense Transformation

The Ma administration’s goal is to transform Taiwan’s armed forces (currently a hybrid system of conscription and volunteer service personnel) into an all-volunteer military.  Volunteer military personnel, with their longer service terms (4 years versus 1 year for conscripts), should improve professionalism and proficiency, yielding a more effective force.  Military pay and benefits would be substantially increased, to help attract and retain quality personnel for voluntary service (United Daily News [Taiwan], August 1, 2008).

As part of this plan, the overall force size would need to be significantly reduced and organizationally restructured, in order to make the volunteer force affordable.  Nominally, total strength will be reduced from 275,000 to 215,000 (of which combat forces would only constitute 147,000), but actual head count reduction will be much closer to 20,000, since many of the personnel billets to be eliminated are often unfilled—which have caused numerous units to be chronically under-strength (China Times, April 5, 2010). The objective of this initiative is a smaller but better-trained, more experienced, more fully-manned and equipped force with increased overall fighting power as well as expanded capacity to take on other mission roles, including humanitarian assistance/disaster relief (HADR) operations.

The Ministry of National Defense (MND) has begun the process of force rationalization by freezing a number of general officer billets, which has helped to accelerate retirement of flag and field-grade officers.  The target is to cut number of general officers by 101 by 2014, to 292.  Yet, the pace of force cuts will ultimately be limited by the budgetary cashflow available to pay for retirement/severance of personnel.  The current level of Personnel expenditures may not be sufficient to fully fund the planned aggressive personnel redundancies whilst also funding new volunteer recruitments.

A key campaign promise of President Ma is to move to a voluntary military service system slated for 2014.  Yet, the cost associated with such transformation has made it impossible for MND to adhere to the original plan of phasing in recruitment of volunteer personnel over the next three years.  With government unlikely to allocate more fiscal resources to defense in the near term, MND has had to scale back recruitment goals through FY2013.  Even then, there will not be enough funding to fully support these more modest quotas. The 2011 Personnel budget, for example, can only support 5,000 additional volunteer personnel, less than half of the target of 11,000 (already reduced from 15,000) (Liberty Times [Taiwan], October 23, 2010). Yet, MND is still $131 million short of what is needed to fund this relatively modest goal.

The budget projected for FY2014 (10.4 billion) will only provide a $155 million increase over FY2011 level.  Since each volunteer personnel has a cost on average of an additional $17,331, this relatively small increase would only support 9,000 more volunteer soldiers, equal to merely 20 percent of the FY2014 recruitment objective (Apple Daily, September 29, 2010).

There can be little doubt that the volunteer force initiative is in serious trouble.  In late-March, even Premier Wu Den-Yih cautious regarding the government’s ability to provide the necessary budget resources to ensure transition to an all-volunteer force by 2015 (China Times, March 29).  Given the political imperative to make good on this popular campaign promise, the only available alternative, it appears, would be to increase the share of Personnel expenses as a percentage of total defense spending, at the expense of available funding for Operations and Maintenance and/or Military Investment.  Yet, even that may no longer be a viable option.

Operational Readiness & Training

President Ma’s political priorities have also helped catalyze important changes in the training and operational readiness of Taiwan’s armed forces.  Foremost of these was the official incorporation of disaster relief and prevention missions into the military’s core missions.  This decision was made in the immediate aftermath of the politically as well as physically devastating Typhoon Morakot disaster in August 2009. The public backlash against the government’s response to Morakot prompted the Ma administration to fast-track the legislative process through parliament and amend the Disaster Prevention and Rescue Act in July 2010 (Military News Agency, July 13, 2010). This initiative empowers the armed services to proactively engage in disaster prevention and relief operations and to mobilize reserve forces as needed, essentially mandating HADR operations as the new mission priority for Taiwan’s military.

The most immediate effect has been a subtle but noticeable change in the military’s planning and operational focus away from more traditional combat-oriented missions, toward increasing emphasis on HADR-related objectives.  Not to an insignificant extent, this shift in priorities has been driven by the perception amongst Taiwan military officers that the present political leadership attaches much greater importance to disaster prevention and rescue work than maintaining proficiency and readiness for combat operations.

Taiwan’s military has performed rather well over the past 18 months (Youth Daily News, October 29, 2010).  This has helped the Ma administration’s public standing, in addition to improving the image of Taiwan’s armed forces and partially easing the latter’s long-strained relations with the civilian political leadership under Ma Ying-Jeou.  In the last two years, Taiwan’s military deployed more than 600,000 personnel and thousands of vehicle/ship/aircraft sorties for natural disaster prevention and rescue/relief/recovery missions [2].  Fuel, equipment, spare parts, consumables, and reserve funds are being expended at an aggressive rate, which over time could only adversely impact operational readiness of Taiwan’s combat forces.  This is compounded by the fact that, as HADR operations become an ever more important part of its core mission, Taiwan’s Operations and Maintenance budget has declined sharply since FY2009 [3]:
 

                   Operations & Maintenance Budget          percent Change YoY

2009             $3.4 billion                                              N/A

2010             $2.6 billion                                            -24.8 percent

2011             $2.4 billion                                            -6.74 percent

 

Despite initial attempts to reduce the frequency of large-scale, live-fire exercises from annual to bi-annual basis (presumably as goodwill gesture amidst atmosphere of rapidly warming cross-Strait ties), Taiwan has decided to revert back to conducting field training exercises (FTX) yearly, starting in 2011 (Military News Agency, March 15). No explanation has been given, although it is generally understood that senior military leaders are concerned about the effect that a reduced training tempo could have on proficiency and readiness.The step was also taken as part of the decision in Fall 2010 to move up the start of the annual troop training cycle by 3-4 months (from February/March to October/November).  This is so that the services could better focus resources and energy on disaster preparedness and relief during the peak tropical storm season of summer and early-autumn months.  Under the new schedule, unit-level training would begin in late fall each year, followed by combined arms and multi-unit training early the following year.  This would allow combined-arms field exercises and joint operations training to be completed by late-June, before the typhoon season commences.  For example, the field training exercise portion of this year’s Ha Kuang-27 exercise was held in mid-April, before the computer-simulated command post exercise in July (Youth Daily News, March 16).Resources and Defense ModernizationIn March 2009, Taiwan’s Ministry of National Defense (MND) published its first Quadrennial Defense Review (QDR), the first such document intended to provide a roadmap for the force modernization plans over the following decade [4]. Taiwan also completed— with U.S. assistance—a classified evaluation of its mid- to long-term defense requirements, known as the Joint Defense Capability Assessment (JDCA).  Yet, Taiwan’s defense capability is unlikely to receive the scope of modernization prescribed in these documents, given the very tight budget resources.According to figures released by a senior parliamentary Foreign Affairs & National Defense Committee (FANDC) member in late-October 2010, there could be a substantial shortfall in Military Investment (procurement) budget projected for the FY2011 to FY2014 period [5]:

FMS (Already Approved)    FMS (Planned But Pending*)         Total Budget Required

$6.9 billion                         $6.3 billion                                  $13.3 billion

*Includes:  Newport-class LST ($155 million); F-16C/D ($5.4 billion); Submarine design ($404 million); F-16A/B upgrade ($370 million).

The total amount of the budget earmarked for Military Investment per the current MND budget plan (as authorized by the Executive Yuan’s budget projection for FY2011-2014) is $11.4 billion.  This means that, based on MND’s current Military Investment plans, the Taiwan military could be $1.8 billion short, if the requested FMS sales materialize.  This budget crunch could soon impact major procurement programs already committed to by Taiwan.  For example, MND is considering postponing the purchase of the final batch of Patriot Advanced Capabilities-3 (PAC-3) missile systems.  Notified to Congress in late-January, 2010, this package included ground systems for three PAC-3 fire batteries and 114 PAC-3 missiles, valued at $2.81 billion.

The principal reason for the possible procurement funding shortfall lies with the level of inadequate defense budget.  Even though President Ma repeatedly reiterated his commitment to allocating not less than 3 percent of GDP to defense, Taiwan’s direct defense spending has not reached that level since he came to office in 2008.  Direct defense spending is defined as the three principal MND budget categories (Personnel, Operations and Maintenance, and Military Investment), plus the National Security Bureau (NSB) component.

On the contrary, Taiwan’s defense spending as a percentage of GDP has actually been in decline since 2009; the inflation index provides additional context as to the change in purchasing power [6]:

                                       2009            2010          2011
Direct Defense Budget* 2.48 percent/2.40 percent/2.16 percent
Total Defense-Related** 3.05 percent/2.98 percent/2.73 percent
Inflation (CPI) +4.47 percent/+5.48 percent/ +6.07 percent (YTD)

*Personnel, Operations & Maintenance, Military Investment, and NSB only

**Also includes dependent housing, base rehabilitation and manufacturing funds

FY2011 direct defense spending is nearly 30 percent below the level President Ma promised as part of his national defense policy agenda.  Even counting the non-direct military expenditures, total defense-related spending for FY2011 is still about $1.17 billion short of the commitment promised by President Ma.

Direct defense spending has also been declining in absolute terms over the three fiscal years (FY2009-2011) after the Ma administration assumed control of government budget allocations [7]:

                  (A)                  (B)               (C)                 (D)
2008: $11.8 billion +16.4 percent 4.4 percent +0.73 percent
2009: $11.1 billion -5.62 percent +6.9 percent -1.93 percent
2010: $10.3 billion -7.08 percent -4.1 percent +10.82 percent
2011: $10.3 billion -0.007 percent +4.4 percent +4.92 (forecast)

(A) Direct Defense Budget
(B) Percent Change YoY (Direct Defense Budget)
(C) Percent Change YoY (GDP Growth)
(D) Total Gov. Budget

With shrinking resources, it has become extremely difficult for Taiwan’s military to meet the simultaneous demands of defense transformation; increasingly active HADR operations; and servicing of payments for the $13 billion in arms sales backlogged from the past decade but finally released by the United States starting in October 2008.

Conclusion

President Ma has made important breakthroughs in cross-Strait reconciliation, as well as in broadening and deepening the synergistic nexus between China and Taiwan.  The next step for Beijing going forward is formal political dialogue, which Chinese authorities have been applying increasing pressure for the Ma administration to start. Taipei has been trying hard to stall as long as possible, because issues of sovereignty are politically sensitive in Taiwan.  Moreover, perhaps Mr. Ma realizes that he has yet to assemble the bargaining chips he would need at the peace talks table.  While President Ma has been urging the Obama Administration to support Taiwan with such follow-on defense sales as new F-16C/D fighters, diesel-electric submarines, and F-16A/B fighter upgrades, his government’s track record on maintaining an adequate (or even stable) level of resources to defense has been dubious.  Mr. Ma’s inability to make good his commitment on defense spending, which would likely lead to significant delays or even failure of a key campaign promise (all-volunteer force) could also have more direct political implications, particularly as the KMT heads into the 2012 election cycle.

Notes:

1. Ma Ying-Jeou/Hsiao Wan-Chang 2008 presidential campaign platform:  Defense Policy, http://2008.ma19.net/policy4you/defence.
2. Various reports, Military News Agency, September 2009-December 2010.
3. Defense and National Security Report, Annual Report 2008, 2009, 2010 (Rosslyn, VA:  U.S.-Taiwan Business Council, January 2009; January 2010; January 2011).
4. Quadrennial Defense Review 2009 (Taipei, Taiwan:  Ministry of National Defense, March, 2009),  http://www.mnd.gov.tw/qdr/en_menu.htm.
5. Press release by Legislator Lin Yu-Fang (Taipei, Taiwan:  Legislative Yuan, 27 October, 2010).
6. Central Government Budget FY2009, FY2010, FY2011 (Taipei, Taiwan:  Director-General of Budget, Accounting and Statistics, Executive Yuan, January 2009; January 2010; January 2011).
7. U.S.-Taiwan Business Council, Op. cit.