SPEAKING
FREELY Asian economies at risk from US
funding moves By Christopher
Whyte
Speaking Freely is an Asia
Times Online feature that allows guest writers to
have their say. Please
click hereif you are interested in
contributing.
United States
Congressional leaders have chosen to pass a
six-month continuing resolution (CR) that keeps
government funding at 2012 levels for the
foreseeable future. The stop-gap measure, passed
in the place of a full appropriations bill for the
2013 fiscal year (FY), guarantees ongoing funding
for defense projects for the next half year.
Many defense establishment leaders are not
happy with the move
and it is clear that
there could be negative overflow effects for the
economies of some of America's Asian partners.
On the face of it, it is obvious that the
decision by Capitol Hill politicians to pass the
CR comes alongside a fresh wave of speculation
about a potential government shutdown if the FY
2013 budget can't be agreed upon come October 1.
The CR offsets the issue by providing the
government funds with which to operate even in the
event of a political stalemate.
However,
ongoing funding also means that necessary changes
in funding levels for various defense projects,
many of which involve joint ventures with foreign
government and private sectors organizations, do
not take place.
Appropriators are no
longer to provide oversight for spending and
programs, including those that involve weapons
systems or research at shifting stages of
development, and will likely find themselves
either chronically over-endowed with cash or
dangerously underfunded.
Perhaps most
worrying for many in the defense community is the
knowledge that this dynamic, though sure to end
once the FY 2013 defense budget comes into effect
at the end of next March, leaves the Pentagon
unable to affect the Barack Obama administration
changes originally designed to contribute to
deficit-relief.
Unless new ways to cut
spending are found, the US defense budget,
including those joint ventures with foreign
governments that are currently funded, faces
automatic sequestration and financial slashing
that is unlikely to sync up with strategic
priorities.
But how do America's budgetary
and defense problems affect Asia's economies? In
short, dozens of private sector firms across the
region are financially reliant on anticipated
security-based ventures with local and American
authorities. The CR, in raising important
questions about what place Washington's carefully
planned foreign security commitments should take
in the next half year's political considerations,
could jeopardize pre-investment and expected
returns for projects related to air-space
development, new basing construction and even
troop deployments.
Take Singapore, for
example. The small country on the southeast tip of
the Asian mainland has recently been making waves
in attempting to strengthen its defense
relationship with the US government. Future joint
ventures between the two countries will include
the 10-month long deployment of a new littoral
combat ship (LCS) to a Singaporean base next year,
and officials on both sides have talked about
upping America's naval presence in the future.
However, sequestration or targeted budget
cuts may divert funds from the shipbuilding
program or the Navy's construction allowance,
delaying the deployment of LCS units and forcing
both public and private organizations in Singapore
to alter financial plans to compensate. Such an
event would undoubtedly mean some budgetary pain
for the host economy in the form of trouble for
those businesses planning on catering to the
presence of new personnel and infrastructure.
In some ways, the Singaporean case may
appear like a bit of an over-exaggeration. From
most points of view, it is easy to think that this
sort of cascade effect seems unlikely or would
simply be isolated to a handful of areas. But
America's defense commitments have deep tie-ins
with economies in countries across the
Asia-Pacific region, and the "pivot" policy of
rebalancing towards Asia has seen a lot of US
dialogues aimed at constructing new defense
infrastructure, selling regional partners on
American-made product lines, and laying the
groundwork for joint expenditures on training
exercises and the like.
Take, for
instance, the case of America's most expensive
vehicle line ever, the Joint Strike Fighter. With
the F-35, there is already the precedent of a
dependent relationship between the US defense
establishment and Asia-Pacific economies being the
cause of hardship.
Just last year, as
ongoing Pentagon testing and manufacturing delays
forced the Australian government to consider
deferring delivery of the plane, several local
companies tasked with producing arms and avionics
came forward and said that the costs of
pre-investments made in anticipation of an as-yet
non-existent market of military operators had not
paid off and would force bankruptcy in the near
term.
Not only did those companies suffer
as a result of delayed anticipated US-Australian
defense expenditure, of course. Canberra had to
accept the costs involved in retooling the
national support infrastructure to compensate for
the impact of continued delays.
Though the
Joint Strike Fighter is, perhaps, a special
situation - after all, most American production
lines do not suffer from the sizable issues faced
by the F-35 - the potential for similar
occurrences across Asia seems greater now than at
any time in the past.
A drawdown of
availability of funds for joint international
ventures, particularly an enforced cutback across
a broad range of programs due to sequestration,
could severely impact upon the economic and
political well-being of defense establishments
from Japan to Australia. Sudden slashing could
distinctly hamper the growth of defense-dependent
local economies and slow the development of
multilateral security ties along the lines that
America has been aiming for.
As always,
the game for American legislators will be to
balance the political side of budgetary
feasibility with the maintenance of viable
strategic partnerships. That being said, the
playing field in Asia is different from many of
those America has confronted in the past. The
region is an enmeshing web of power relationships.
The ties that define most stakeholders have far
more liberal boundaries than did those in Cold War
Europe and economic well-being is perhaps the most
important catalyst for political action.
Ultimately, then, it seems fair to assume
that the success of America's strategic vision of
the future is pegged to the nuances of its
partnerships in the region, and that legislators
in Washington are going to need to constantly
recognize the overflow impacts of defense and
other policies on Asian economics.
Let's
just hope, in the next few months, that Pentagon
officials don't approach budget issues with the
same amount of apathy that lawmakers on the hill
clearly have.
Christopher Whyte
is a Scottish defense analyst based in Washington
DC. He received his Master's degree focusing on
international security, South Asian affairs and
media studies from George Mason University. He
works as an editor at e-International Relations
and is a supervisor and analyst for the
geostrategic consultancy firm Wikistrat.
(Copyright 2012 Christopher Whyte)
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their
say. Please click here
if you are interested in contributing. Articles
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