East Asian naval developments—sailing into rough seas

Marine Policy 26 (2002) 121–131

East Asian naval developmentsFsailing into rough seas Anthony Bergin* Australian Defence Force Academy, Australian Defence Studies Centre, University College, Canberra ACT 2600, Australia Received 25 September 2001; accepted 22 November 2001

Abstract Naval programs are back on the agenda in East Asia, after a lull in defence spending in the wake of the Asian financial crisis. The region is facing increased tensions at sea unless there is a new focus on maritime confidence-building measures. The region does, however, need to tread warily with naval cooperation, lest it stimulate controversy and tension, while gradually moving to exploit those opportunities for building confidence at sea. r 2002 Elsevier Science Ltd. All rights reserved. Keywords: East Asia; Navies; Naval cooperation

1. Introduction East Asia is returning to a business-as-usual footing on defence in the wake of the Asian financial crisis. Naval programs are back on the agenda, with countries finding the resources to replenish the funding for their navies’ expansion. This is renewing concerns about the level of maritime strategic competition now facing East Asia and the wider implications of this. The region is facing increased tensions at sea unless there is a new focus on maritime confidence building measures. To date, there is little sign that countries are willing to step back from their current postures. The first part of the paper paints the bigger picture of regional defence spending in recent years, the second part examines naval programs and the third what, if anything, can be done to encourage naval confidence and trust building.

2. East Asia defence spending There has been no real peace dividend in East Asia. Relatively high levels of defence expenditure are still the norm. It remains the second-largest regional arms market after the Middle East and North Africa. Military spending across the region is recovering along with most Asian economies. Further increases in defence expenditures can be expected. This is dependent, however, on *Tel.: +61-2-6268-8861; fax: +61-2-6268-8840. E-mail address: [email protected] (A. Bergin).

continued economic growth and the state of the US economy (see principally [1,2] and generally [3,4]). The main enhancements involve highly capable surface combatants, submarines (in many cases secondhand, but with upgraded combat and propulsion systems), significant numbers of multi-role fighter aircraft, anti-ship missiles, national command, control and communications systems, information warfare capabilities, electronic warfare systems and rapid deployment forces. For most of the 1990s, the countries of East Asia had experienced high rates of growth. This came to a halt in 1997–1998. For some 18 months between late 1997 and early 1999, several Asia Pacific countries lived in the shadow of the worst economic crisis in recent memory. In 1998, Japan, Republic of Korea (ROK), Indonesia, Malaysia, Philippines and Thailand experienced negative economic growth with the rate of decline reaching 13.7 per cent in Indonesia, 8 per cent in Thailand, 7 per cent in ROK and 6.4 per cent in Malaysia. Between 1997 and 1998, real defence expenditures declined in Thailand (39 per cent), Indonesia (31 per cent), Burma (18 per cent), Malaysia (17 per cent) and the Philippines (7 per cent). Defence spending also declined in Japan, South Korea and Pakistan. While the economic calamity that hit many parts of East Asia in 1997–1998 significantly affected regional defence budgets, the evidence now suggests that the lull has not been permanent. Defence programs are alive and well in East Asia and, as we shall see in the next section, naval programs retain a high priority.

0308-597X/02/$ - see front matter r 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 3 0 8 - 5 9 7 X ( 0 1 ) 0 0 0 4 3 - 4

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2.1. Southeast Asia

2.2. Northeast Asia

In Southeast Asia, ASEAN combined spends around US $13.8 billion on defence, nearly double that of Australia that spends US $7.6 billion on its defence budget (all figures quoted are in constant 1995 US dollars or real terms). Over the last decade Australian defence funding remained relatively constant in real terms. Funding for 2001–2002 and 2002–2003 is programmed to increase by US $250 million and US $500 million respectively. The Australian Defence White paper released in December 2000 estimates that defence spending will need to grow by an average of about 3 per cent per annum in real terms over the next decade and states that the government is committed to meeting that funding requirement. If that commitment lasts, defence spending over the decade is expected to increase in Australian dollars by a total of $23.5 billion in real terms, compared to total defence spending had the defence budget been held flat in real terms over the decade. Overall defence spending in Southeast Asia saw a modest increase in 2000, but not all Southeast Asian militaries received real budget increases. If the state of the global economy remains strong then these modest increases can be expected to continue and could possibly quicken in pace and momentum. Indonesia’s defence expenditure contracted 38.8 per cent in 1998/99 and is now still only at 1995 levels. Defence expenditure grew by 34.3 per cent in real terms in FY99/00, from a very low base in 1998 and this was followed by a further growth of 5.8 per cent in FY 2000. It will be difficult, however, given its formidable economic problems, for Indonesia to continue funding increases of this order. Indonesia’s FY 2000 was shortened to a nine month period and when annualised its defence spending is around $2.5 billion in real terms. Thailand has entered a very difficult economic period and defence spending at $2.6 billion remains well below pre-downturn levels. Malaysia’s defence budget in 2000 was $1.97 billion, a decline from 1999 of 0.1 per cent in real terms. It remains well below pre-downturn spending which was $2.49 billion. The Philippine defence budget, at just under $1.5 billion, is roughly on par with the previous years level. Vietnam, not hit as hard by the financial crisis, has been averaging economic growth of around 6 per cent and its military budget is estimated at slightly above $1.6 billion. Singapore maintained its economic growth through the Asian crisis and has increased its defence spending. Singapore allocated $4.3.billion in real terms to defence for the fiscal year commencing 1 April 2000. This is on par with the previous year’s allocation and comprises 4.5 per cent of GDP. Defence represents a quarter of all government outlays in Singapore. Its defence budget is around twice that of other ASEAN states.

Japan, China, Taiwan and North and South Korea will continue to significantly outspend the Southeast Asian countries. Defence spending remains a high priority for China, although there is enormous uncertainty about Chinese defence expenditures. The official defence budget increased by $1.4 billion in 2000 to around $14 billion. However, some analysts suggest that the real figure in 1999 was around $40 billion. In a speech to the National People’s Congress on 6 March 2001, China’s Finance Minister, Xiang Huaicheng, announced that China would increase defence spending by 17.7 per cent this year, its biggest expansion in real terms in the last 20 years [5]. China continues to develop its air and naval capabilities (see below) and many regional analysts predict that over the next 10 years it will be exploiting advanced weapons and production technologies acquired from abroad that will enable it to integrate naval and air capabilities against Taiwan and potential adversaries in the South China Sea. Experts estimate that 500–650 short-range ballistic missiles may be deployed opposite Taiwan by 2005. Taiwan has a technologically sophisticated military, although one whose long isolation has eroded its quality. Its defence budget has contracted in recent years following the completion of the acquisition of major platforms such as the F-16 and Mirage 2000. Taiwan spends around $11 billion on defence, although the allocation for FY2000–2001 saw a decline in real terms of 12.3 per cent. In April this year the US unveiled a large package of arms that it has agreed to sell Taiwan which would cost the nation about $7.7–$9.3 billion. North Korea, struggling with severe economic problems for several years, continues to devote its very scarce resources to its military forces, spending around $1.36 billion in 1999. In the case of South Korea, despite the economic recovery, it experienced a real funding decrease last year of 0.9 per cent, which followed a sharp decline in 1999. However, it is forecast that the defence allocation will increase by 5.7 per cent in 2001. South Korea spent $14.8 billion on defence in 2000. Japan has a modern military force, more able than any other in Asia to integrate large quantities of new weaponry. Its level of defence spending remains linked to the notional one per cent of GDP cap on military expenditure. Its defence budget for FY 2000–2001 is $50.06 billion and is forecast to decline in real terms by 2.8 per cent for FY 2001–2002 to $48.67 billion. 2.3. South Asia In South Asia, the two principal powers, India and Pakistan continue their mutual hostility and the stability of their nuclear relationship is worrying. Pakistan’s defence budget was just under $3 billion for FY2000,

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and it dropped in real terms by 11 per cent from 1999. It is less than a quarter of Indian defence spending. Pakistan’s failure to match increases in Indian defence spending is a reflection of its weak economic position. Since the 1997 Kashmir conflict, India has increased its real level of defence spending. Last year it was $13.8 billion, an increase of over 20 per cent from the previous fiscal year. This represents about 2.8 per cent of GDP.

3. Naval developments in East Asia In a recent survey in Jane’s Defence Weekly, Malcolm Davis from the United Kingdom’s (UK) Joint Services Command and Staff College, provided an excellent survey detailing how naval programs were now very much back on the agenda in East Asian defence programs [6] (see also [7]). He argues that East Asian naval development has taken off after the brief interlude of the Asian financial crisis and concluded his survey as follows: There is a general recognition by all states of the growing importance of maintaining maritime security to ensure economic growth, given the maritime nature of the region. An assertive China, and growing instability in Southeast Asia suggest that modernisation may accelerate with more sophisticated capabilities appearing in coming years. The emphasis is on blue-water regional power projection maritime capabilities, supported by sophisticated air-power assets. The nature of maritime conflict in the region is therefore changing. Whereas in the past a naval clash might have been small scale with low-tech shortrange weapons, in the 21st century, Asian maritime tension will be characterised by the anti-ship missile, the submarine, and blue-water naval task forces [6]. This is a fair judgement. Most East Asian countries have resumed their naval modernisation programs after the Asian financial crisis. There is no doubt that we are now seeing a new race to develop a significant number of naval programs in the region, particularly in the proliferation of submarines, surface combatants, antiship missiles and a widening interest in aircraft carriers. 3.1. Submarines Seeking to boost their combat capabilities and guard their sea trade routes from attack, particularly ships plying the Straits of Malacca, the South China Sea and the Indian Ocean, East Asian navies are turning to submarines that are difficult to detect. China’s program to expand its navy is also prompting countries to build, buy or lease submarines to improve their fleets or create new ones. It is easy to understand the appeal. In operating near shipping channels or chokepoints even a

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few submarines can conduct sea denial or exert regional influence (see generally [8–10]). The proliferation of submarines raises the risk of submarine attacks in future operations in the region and raises the stakes for those countries, such as the US, that might wish to use carrier battle groups in shows of force. East Asian navies are acquiring mainly diesel-electric boats and with a number of European navies cutting back fleets there are surplus boats on offer. The Malaysian navy announced in April this year that it planned to acquire four submarines. Navy chief Admiral Abu Bakar said that many countries had offered to sell their submarines and the navy was evaluating the offers. He stressed the capability of moving underwater without being detected made them very effective in spying activities such as taking photographs or intercepting transmissions. The navy wanted to take delivery of four submarines, but the final decision would depend on cost. The Malaysian government and the Dutch company RDM Submarines have brought two used diesel-electric boats to the dockyard in Lumut to be used for training [11]. RDM submarines recently formed a joint venture with the main Malaysian shipbuilding firm, PSC Naval Dockyard Sdn. The joint venture has submitted a proposal to the Malaysian government to set up a submarine service, including training, operations and support. Malaysia is engaging in talks with three European submarine builders who have each put forward proposals for the initial transfer of two second-hand boats, to be followed in the longer term by two new-build submarines [12]. The Royal Thai Navy also plans to lease one or two second-hand submarines from Germany. The Thai navy chief stated earlier this year that Malaysia and Singapore already have submarines, that other countries in the region were planning to buy them and ‘importantly, a submarine can be defeated only by a submarine’ [13]. The Thai navy plans to lease submarines from Germany. Under the proposal the cost would be three billion baht that would be spread over fiscal years 2002–2004 [13]. Thailand is looking for a low-cost five year leasing arrangement with the likeliest option a pair of ex-German navy Type 206 or 208 boats that were originally earmarked for sale to Indonesia [14]. The lease deal appears to be the Navy’s latest attempt to achieve its long postponed ambition of guarding the important but shallow Gulf of Thailand with a submarine. If the gulf is blocked, the damage will be high because 80–90 per cent of Thailand’s trade is sent by sea. The proposal to lease the submarines has, however, been shelved at the moment due to budget constraints. The Thai Defence Minister has suggested that the navy might ask China or other European countries for use of their submarines for training [15]. Singapore in January last year took delivery of the first of four refurbished ex Sjoormen Swedish boats and the second is expected to

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arrive in Singapore later this year.1 It is not clear how Singapore intends to use the boats, although blockade purposes or insertion of special forces are possible roles.2 Singapore hosted the region’s first submarine rescue exercise that involved Japan, the ROK and the US last year, so the submarines also give Singapore political influence in the region as well. Japan with 16 modern non-nuclear submarines in its fleet, is considered to have the strongest capability for underwater operations in the region. Japan’s latest SSK acquisition is the 300 ton Yashio class, five of which have been ordered and two of these already in service. China is attempting to catch up by buying four Kilo-class submarines from Russia, which will eventually be a six or seven boat force and pressing ahead with construction of its new Song class SSKs, fitted with C-801 antiship missiles. At least two are in service, with two additional units under construction. A new SSN named Type 093 is under development, based on the Victor 111-class boat and the first in service date is expected around 2005. It is also developing the Type 094 nuclear powered ballistic missile submarine as a replacement for its single Xia-class SSBN. Taiwan has four submarines (two are of second world war vintage), although China several years ago blocked the Dutch from supplying additional vessels. Taiwan is concerned that China will have a formidable and welltrained submarine force within 10–15 years [17]. Taiwan wishes to use submarines to defeat a Chinese naval blockade or an amphibious assault on Taiwan. In April this year, the US offered to sell Taiwan eight diesel electric submarines as part of the largest ever package of arms that the US has agreed to provide Taiwan.3 The US might be able to persuade Germany, the Netherlands or Sweden to issue licensing, although it does not appear likely in the near future.4 Other options could 1

So far only one of the boats has been commissioned after undergoing sea trials and torpedo firing tests. 2 The Chief of the Royal Singapore Navy (RSN), Rear Admiral Lui Tuck Yew recently stated that Singapore is committed to being a modern and well-balanced navy that has the ability to safeguard Singapore’s sea lanes of communication (SLOCs) and to defend Singapore. While he said that to think about acquiring more submarines was premature and that the four acquired are sufficient to meet its operational and training needs he did not rule out procuring more in the future. See [16]. 3 The US chose not to sell Taiwan advanced Arleigh Burke class destroyers but it will sell Taiwan four Kidd-class destroyers, 12 P-3 Orion surveillance planes and MH-53E amphibious assault vehicles. In Taiwan there is no consensus on whether the island should buy the 20 year old, 8700-ton Kidd-class vessels, although late reports suggest that the navy would start buying the four warships in 2002 and finish the purchase between 2005 and 2007. Taiwan will continue to seek to obtain the Arleigh Burke-class destroyers equipped with the Aegis combat system. See [18,19]. 4 The German and Dutch governments have already said they would not allow their shipyards to be involved in any submarine project. See [20].

include France, Italy, Japan, Australia or the UK. The US, which no longer builds diesel-powered submarines, could acquire licensing and plans from another country and build them in the US. In fact the US has plans to build in Mississippi the Dutch designed Moray submarines for Egypt. Taiwan’s President has said that he hopes Germany could help Taiwan build the eight submarines in Taiwan. This would help upgrade Taiwan’s warship building capability [21]. South Korea, which has nine submarines in its navy, is wary of the continuing potential threat of North Korea’s estimated 22 Romeo and four Whiskey medium-sized submarines, (the world’s fifth largest submarine force) [22]. The ROK recently announced that it would build three German designed submarines type 214 in South Korea that would enter into service by 2007–2009 at a cost of $1.1 billion. The Republic of Korea Navy (ROKN) remains interested in the acquisition of a larger submarine under the designation SSU 3000. The first unit would not be commissioned into service until 2011–2012. 3.2. China Whilst a number of analysts predicted over the last 15 years that regional navies would increasingly focus on the law enforcement roles to meet their obligations under expanded offshore jurisdictions, East Asian navies are now much more focused on their war-fighting roles. And for many states it is the rise of China, particularly in the expansion of its maritime interests and its ability to assert strategic influence in the South China Sea, the Taiwan Straits and the Sea of Japan (or East Sea to the Koreans), that is a cause of worry. China has invested serious sums on creating a real blue-water navy. It has given priority to naval modernisation and adopted concepts of power projection and sea control. They are aware that the US fleet has been reduced by approximately 40 per cent in the last decade and that its deployments in East Asia have been cut in line with this reduction. The International Energy Agency estimated recently that Chinese oil imports, mainly from the Middle East, would rise to more than 8 million barrels a day by 2020, increasing China’s net import dependence to around 76 per cent, from about 25 per cent now [23] (see also [24]). If China felt vulnerable on the energy front it could become more assertive. China has been working with Myanmar to establish naval bases on Andaman Sea, which would give Chinese forces bases on both ends of the Strait of Malacca. Domestic build programs have now been joined by major unit acquisition from overseas, in particular from Russia. China’s announcement in March this year that it would expand its defence budget by 17.7 per cent reflected a belief that if it is to ever recover Taiwan then it needs to prepare for a conflict with US. The Chinese

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navy (PLAN) is expected to obtain a large slice of the budget with a focus on new submarines (see above), state-of-the art anti-shipping missiles and an aircraft capability [25,26]. China has taken steps to increase its military operations beyond its shores. It has recently acquired two Sovremenny-class destroyers from Russia and seeks two more such vessels. These give the Chinse navy a punch it has been lacking [27]. These will complement the 6000 ton Luhai-class DDGs now under construction as the leading class of Chinese Naval combatants [28,29]. China remains committed to the eventual acquisition of aircraft carriers, possibly as early as 2010. There is substantial cooperation between Russia and China over the construction and design of aircraft carriers and China is currently considering a range of aircraft carrier options. The Chinese navy is beefing up training in order to boost its influence around the waters of Taiwan and the South China Sea, where they wish to get real operational capability. Of particular worry is China’s large inventory of surfaceto-surface and air-to-surface missile of all types, including Sunburn supersonic anti-ship missiles [30]. While it is experiencing teething problems, China’s navy is gradually making the transition to blue water and as it does so it is likely that Beijing will increasingly view the navy as a mechanism to exert pressure on China’s neighbours and to assert its influence regionally. It is quite possible that within the next 20 years it will develop a navy with regional capabilities second only to Japan’s. 3.3. South Korea and Japan Other East Asia countries are aware of the risks and are moving towards some degree of maritime containment of China. South Korea, whilst it does not wish its naval plans to be misinterpreted by China, is certainly taking notice of China’s growing reach, and the expanded naval role of Japan (see below). South Korea is now moving toward growing its navy into a true bluewater force. This is now realistic because of the reduced threat of invasion from North Korea. South Korea is also attempting to reduce its long standing dependence on the US for its security. To outfit the navy with strategic capabilities, South Korea is building three 4200 ton KDX-class destroyers and plans to build three 7000 ton KDX 111-class AEGIS destroyers, the first of which will be launched in 2006. The KDX-111 destroyer project is based on the state-of-the art AEGIS radar system developed by the United States. They will be equipped with anti-ballistic missile capability to counter emerging North Korean and Chinese ballistic missile threats. South Korean officials are studying equipping the vessels with Standard SM-2 Block-VI-A Theatre Missile Defence (system), that intercepts missiles at ranges up to 62 miles. There are also plans to develop an

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amphibious transport dock to be commissioned in 2005 and a STOVL aircraft carrier with an air wing of 15–18 fixed wing VTOL aircraft and helicopters. As a recent report from Stratfor observed: ‘South Korea’s bluewater navy, while still a decade away, is natural response to naval developments in the region. Korean reunification or not, Seoul sees little choice but to compete with its neighbours by introducing a credible naval force that can operate far from home’ [31] (see also [32]). In the case of Japan, the focus of the US-Japan alliance has shifted from the defence of Japan to regional security, motivated to a fair degree by a common concern with China’s long-term strategic direction. Japan, which boasts the most advanced fleet in the region, (the Maritime Self-Defence Force [MSDF] ranks second only to the US seventh fleet in the Asia Pacific), has taken a more active approach in its defence affairs, relying less on the US and more on its own military capabilities. Traditionally the MSDF has always lacked the force structure and operational independence of a ‘normal’ navy, squeezed between constitutional constraints and its close links with US navy. Power projection platforms such as strike carriers and nuclear submarines have been deemed too provocative. The MSDF has defined its role in terms of defending Japan’s territory and sea areas out to several hundred miles and the US has encouraged specialisation in ASW and mine countermeasures. In 1981, under pressure from the US, the protection of sea lanes to 1000 nautical miles was added to the MSDFs missions [33]. The Fleet escort force is the core of the MSDF surface fleet, comprised of four escort flotillas enabling one to be kept at sea at all times. Each flotilla is made up of eight helicopter carrying escorts, including the Kongo-class AEGIS destroyer providing air defence. The MSDF currently possesses four AEGIS destroyers and may acquire four more. Its fleet of over 80 Orions still constitute the MSDFs most potent ASW asset. Recent acquisitions indicate an effort to boost capabilities in some of Japan’s traditionally weak areas. The first of four, 8900 ton amphibious warfare ships which the MSDF plans to acquire was commissioned in 1998. The Osumi-class is a quantum leap in Japan’s amphibious capabilities. Designed to carry 1000 troops and two US built air cushion landing craft the new vessels will give Japan increased capacity to support peacekeeping commitments, evacuate its nationals overseas and provide disaster relief. The flat topped Osumi is controversial since its outwardly resembles a small aircraft carrier and can accommodate several of the MSDFs large MH-53E minesweeping helicopters above deck. The Japanese Defence Agency point out that it is structurally unsuited to operate fixed wing aircraft, but its long-term significance may lie in preparing the Japanese public for larger classes of vessels. Funds have

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also been requested for a large class of replenishment vessel which would enhance the ability of the MSDF to support the USN and its own blue-water operations. A highly significant recent decision for Japan was the recent move for it to acquire air-to-air refuelling tankers. The four aircraft will be able to allow land-based air defence aircraft and control systems to operate well away from Japanese air space and directly support bluewater deployments of MSDF units at long range. Japanese military planners have begun to reassess the navy’s role in the light of China’s naval expansion, increased threats from piracy and uncertainty over the long-term future of the US security umbrella in East Asia. Japan is at this stage unlikely to engage in large scale naval expansion, but the MSDF is likely to be involved in new responsibilities, including a renewed southward focus on the security of its sea lanes as far as the Persian Gulf, where over 80 per cent of Japan’s oil is sourced. To some extent it would appear that sea lane security is being used by Japan to cooperate with nations around China’s periphery. Japan has been attempting to gain a presence in the South China Sea through anti-piracy patrols involving the Japanese Coast Guard, a move opposed strongly by China [34]. The Indian Defence Minister has stated that navy-to-navy cooperation will be high on the agenda of the new Indo-Japan security dialogue. Cooperation on piracy has already paid dividends for Japan with recovery by the Indian navy of the Alondra Rainbow, a Japanese owned bulk carrier hijacked in the Malacca Strait in October 1999 [34]. Fighting piracy is potentially a fairly good way for Japan to get Japan’s security role in the region accepted. The current strengthening of ties with South Korea, India and Southeast Asian nations amounts to testing of the diplomatic waters. The MSDF will continue to adapt to new military roles within the framework of the US alliance, but it will continue to explore security cooperation with other countries. For example, last October, Japan joined in a South China Sea drill involving rescuing submarine crew and in May this year sent observers to the ‘Cobra Gold’ exercise, the largest Southeast Asia military exercise. This is the first time the Japanese Self-Defence Forces, including the MSDF, have been sent to a multilateral exercise that assumes regional conflict has broken out.

amounts to roughly US $2.5 billion with $1.3 billion kept aside purely for modernisation. This will see the arrival of a new carrier, (the Russian carrier Admiral Gorshkov, with negotiations expected to be completed mid this year), and the move back to having a two carrier force [37]. It will take a further two years after the deal is signed for the Russian carrier to be made ready to join the Indian navy. Into the future, an Indian designed 24,000 ton carrier (now called an air defence ship) will enter into service. The surface fleet will increase in size and capability while the submarine fleet will also modernise. Last year India commissioned INS Sindhushastra, its second Russian Sindhugosh class submarine and has approved the local construction of two conventionally powered submarines. The first of its new 3500 ton Krivak class frigates is expected to be commissioned next year followed by two others by 2004–2005. By 2005 the Indian navy will have seven destroyers including the locally built 6700 ton Delhi class destroyers. The Indian navy is in better shape than it has been for a number of years. And this is provoking some reaction from Pakistan, that is in the final phase of acquiring three Agosta-B submarines from France as well its navy receiving advanced missile-related training and expertise from France.5 India has regional blue-water aspirations and is emerging as a powerful new force. Last year Indian naval activities included ship visits and exercises off Singapore Strait and it has shown an interest in gaining access to Cam Ranh Bay in Vietnam. Last year, India conducted their first ever exercises in the South China Sea with the Vietnamese navy and the Indian Coast Guard has held joint training exercises with Japan in the Bay of Bengal. Through navy-to-navy talks and exercises, the Indian navy has become a key player in building closer defence ties between the US and India, where India is seeking a new, more normal relationship with Washington that allows for some degree of cooperation in combating the threats that may appear in the future [39]. India now adopts a ‘look east’ policy [40], and has stated that it sees the Indian navy having a role to play in sea lanes extending as far as Japan and also being engaged in combating piracy. India is aware of China’s vulnerability to the disruption of energy imports. As one well respected commentator has observed: Indian warships rarely visited East Asian waters and there is no precedent for prolonged Indian naval operations east of Malacca and Singapore Straits. However, it could well be a strategic aspiration of India to be able to control, or at least threaten, the movement of shipping through the ‘choke point’

3.4. India There is little doubt that the Indian navy see its longterm challenge to contain China’s maritime development and the Indian navy is finally being allowed the money to put its house in order (for background see [35,36]). In the past, the navy’s share of the defence budget used to be between 11 and 12 per cent. This financial year it has increased to 15 per cent that

5

The sale of the submarines has been associated with allegations of secret commissions paid to retired officers of the Pakistan navy. See [38].

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based on these key strategic straits. The objective would be to be able to disrupt the tanker traffic between the Middle East and Northeast Asia, as well as the movement of warships and submarines through the straits, in the event of conflict with China [41]. This control would be facilitated by India’s bases in the Andaman Islands close to the northern approaches to the Malacca Strait. India’s push into the area will make it difficult for ASEAN, that will have to balance China–India–US roles. The next step would be to bring in Indian maritime aircraft into the South China Sea, or possibly for India to ask Singapore to use its new S$60 million Changi deep water naval base as a stepping stone for its operations. This would give India a far greater presence in the region.6 In February 2001, India held the International Fleet Review in the waters off Mumbai. This was promoted as the largest naval extravaganza ever held with 70 ships (24 foreign ships) from 20 navies joining the so called ‘bridges of friendship’. Participating navies included Australia, Bangladesh, France, Indonesia, Iran, Japan, Kenya, Malaysia, Mauritius, Morocco, Oman, Poland, Russia, Singapore, South Africa, Sri Lanka, Thailand, UK and the US. A total of 16 heads of service or chiefs of naval Staff/Chief of Naval Operations were also present [42,43]. The Indonesian patrol boat was apparently singled out for particular attention by the Indian media with the Indonesian navy reportedly expressing hopes for stronger ties with India [44]. This seems part of India’s policy to reach out to other states that one day may feel threatened by Chinese actions. 3.5. Russia This year saw another naval developmentFthe first major deployment by the Russian Pacific fleet to Southeast Asia and the Indian Ocean for over seven years. In Russian history, the resurrection of the state has been associated with resurgence of the navy, and the attempt to revive the battered fleet is being perceived in Russia as a sign of Russia’s revival after years of decline [45]. Russia’s naval chief has stated that the objective of these visits is to enhance the training level of naval crew and resumption of the practice of military service in oceans [46,47]. Russia’s new naval doctrine calls for transforming the country back into a strategic force on the high seas. The deployments by the Russian Pacific fleet comes after a severe decline under Yeltsin. Russia is also interested in extending its lease over 6 In late March this year, the USS Kitty Hawk made history when it became the first US aircraft carrier to dock at the base. The only other place in Southeast Asia where such carriers can moor is Port Klang, a deep water port in Malaysia along the strategic Straits of Malacca.

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facilities in Cam Ranh Bay in Vietnam that is due to expire in 2004 [48]. According to Russia’s navy Commander-in-Chief, Admiral Kuroyedev, the navy should have 12–15 strategic missile submarines, 50 nuclear powered submarines and 35 diesel submarines as well as some 70 ocean going surface combatants. Admiral Kuroyedev said that to achieve this goal the service should receive no o25 per cent of the defence budget compared to the present allocation of about 12 per cent [49]. For the foreseeable future the current Russian slogan of ‘our fleet will return to the world ocean’ is likely to remain simply a slogan and Russia will struggle to try and have a ‘first world’ navy. Fuel shortages and a lack of maintenance will continue to place severe restrictions on the ability of the navy to undertake long-distance deployments. 3.6. South China Sea factor Naval developments are also being fuelled by the situation in the South China Sea, which appears to be coming back on centre stage after some years of relative peace. The Spratlys have provided one of the best arguments for ASEAN navies to justify their requests for larger shares of defence budgets. The proposed Code of Conduct between China and ASEAN for the South China Sea has not emerged and earlier this year the Philippines navy and aircraft engaged in a tense standoff with Chinese fishing vessels near the disputed Scarborough Shoal north-east of the Spratly Islands. China has erected structures on areas of the Spratlys claimed by the Philippines, raising suspicions in the Philippines that it intended something similar on Scarborough Shoal [50]. In June this year the Chinese stepped up naval activity, with some 12 Chinese ships spotted in the Spratly chain. The Chinese navy also sent warships to Scarborough Shoal in May, contradicting assurances provided to the Philippines government in April by a senior Chinese Foreign Ministry official that Beijing was not seeking to establish a military presence at Scarborough [51]. The Philippines were galvanized to launch a new modernisation plan (naval combatants and combat aircraft) after the Chinese occupied an outpost on Mischief Reef in 1995, but the plan has foundered on lack of resources and political will and the Philippines has had to postpone new naval acquisitions.7 3.7. Vietnam Vietnam has expressed deep concern to China on 25 May this year for closing off areas around the Paracel Islands, claimed by Vietnam, for weapons exercises. 7 The AFP modernisation plan includes 3 frigates, 6 Corvettes, 12 OPVs, 16 patrol craft and 24 patrol boats.

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Vietnam earlier this year has insisted there could be no compromise over its claims to the islands and announced plans to establish local government in the South China Sea islands just like any other part of Vietnam [52]. China has warned Vietnam not to proceed with local government plans [52]. Vietnam bought a few years ago two Sango submarines from North Korea indicating that its defence spending is now focused on giving some muscle to its maritime claims. They have a range of 2700 nautical miles and can be armed with 4 torpedoes and up to 16 mines. These are important complements to the navy’s ageing collection of 7 frigates. The submarines add a new dimension to potential conflict in the South China Sea and its approaches, as Chinese ships in and around this area have not had to consider any threat from under water. It will take many years, however, before Vietnam’s navy is able to effectively defend much beyond its mainland coastline. Indeed Vietnam is mainly interested in smaller vessels for law and order at sea tasks. 3.8. Singapore, Malaysia, Indonesia In terms of the other ASEAN states, Singapore is the one with the most substantial plans for naval expansion, with the six general purpose frigates being ordered from DCN of France for delivery between 2005 and 2009 (for background on Singapore’s navy, see [53]). The first will be built in France, the last five under license in Singapore. The frigates will be the first ships to carry helicopters in Singapore’s naval history. Its amphibious capability has been enhanced with the commissioning early last year of two locally built Endurance-class tank landing ships and two more are to be ordered. And as noted above, the first of four Swedish SSKs was commissioned in mid last year. Last year saw Malaysia take delivery of its two Yarrow-class frigates from the UK. Malaysia would also like to obtain at least three more surface ships and one vessel capable of transporting a battalion plus equipment along with two landing ships, but lacks the money to do so. As noted above, Malaysia has asked European manufacturers to tender for the supply of up to four submarines (for background, see [54,55]). The Royal Malaysian Navy’s (RMN) biggest peacetime project is the on-going acquisition for up to 27 new-generation patrol vessels, essentially a light frigate based on the MEKO design. Six vessels have been contracted, with delivery of the first two ships, to be built by Blohm+Voss, in May and November 2004. Four units are to be built in Malaysia. As far as the Indonesian navy is concerned, it consists of mainly elderly East German ships which are unlikely to be fully operational. It appeared that under President Wahid the navy would be upgraded. He stated in March 2000 that increasing the navy’s size and capabilities was his most important defence priority. A naval officer for

the first time was appointed the overall armed forces commander. At the same time the navy chief announced plans to form four regional naval commands in late 2000 and expand the marine corps by 10,000 men. But it appears that little expansion of Indonesia’s naval force has taken place. The navy has been heavily involved in providing amphibious and sealift to transport army units to areas of ethnic tension, transporting internal refugees and also principal and minor surface shipping to escort these vessels. This has undermined Indonesia’s ability to carry our anti-piracy patrols in the Malacca Strait and in its own waters. Indonesian waters saw the highest incidents of piracy from mid 1999 to mid 2000. Of the total of 285 reported attacks world wide in that period the International Maritime Bureau records a total of 117 attacks took place in Indonesian waters [56]. 3.9. Australia and New Zealand The Australian Defence White Paper released in December 2000 [57] lays the foundation for the fleet for the next decade and beyond. The Royal Australian Navy’s (RAN) obsolete DDGs (destroyers) are being decommissioned, leaving only 6 Adelaide-class FFGs (frigates) and 8 Anzac class frigates. The frigates are undergoing warfighting improvement programs with new combat systems for an improved capability for anti-ship missile defence. The final ship will be completed by 2006. New ships to be acquired include at least 3 air defence capable ships, DDGs with a substantial air defence capability (for an examination of the options here, see [58]). The White Paper includes upgrades of the 6 Collins class submarines (no additional boats will be acquired) and replacement of the 15 Fremantle class patrol boats. While the Chief of the Navy has stated that the White Paper presents a good outcome for navy, one analyst has correctly noted that the latest plan would see a contraction of the surface fleet [6]. The 1994 Defence White Paper confirmed the objective of a force of 17 major vessels and three years later in another official Australian defence paper this was reduced to 14 as an adequate number to meet requirements. In fact, for most of this period the strength of the RANs surface combatant fleet was around 10, with completion of the ANZAC class construction program to bring numbers up to 14. The 2000 White Paper represents a further reduction of targeted surface combatant strength. In effect, the 3 DDGs have been allowed to go without replacement and the 6 FFGs are to be replaced with 3 (maybe 4) air-warfare destroyers (AWDs). By around late 2010 this will give the RAN a fleet of 11, maybe 12 surface combatants. One noted naval writer has remarked: ‘The loss of the DDGs could in some circumstances be felt acutelyyif hostile air effort beyond a very limited level is anticipated, it is hard to see Australian forces being

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deployed without a highly capable ally engaged’ [59]. It may inhibit the development of other areas of the RAN’s force structure. For example, one of the options being canvassed by the RAN for replacement of its current amphibious fleet is three flight deck vessels, capable of operating up to F-18 size aircraft. If built these would be valuable assets and require a high level of protection when deployed. At most times a fleet containing only three AWDs would find this an impossible task. Separately New Zealand on 8 May this year released a major statement on the future of the New Zealand defence force. While two new ANZAC class frigates have entered service New Zealand will not replace the ageing Leander class frigate due to leave service in 2005. A study will be made to identify a suitable multipurpose, long range, helicopter capable vessel able to operate in the Southern Ocean and New Zealand’s Ross dependency. New Zealand also confirmed that HMNZS Charles Upham would be sold. The former commercial roll-on/off vessel was purchased for conversion to the military role but this has not taken place. A study will proceed on how the sealift capability can be achieved. New Zealand is giving its top priority to the army’s ability to participate in peace support operations and it decided to scrap its air combat force of 17 A–4k Skyhawk fighters and 17 Aermacchi trainers [60]. 3.10. Trend to coastguards There appears little doubt that the new build-up in naval programs is being fuelled by general strategic uncertainty and that navies are now concentrating on their war-fighting roles and not focused so much on their constabulary roles. Indeed the trend is now very much towards establishing coastguards to meet EEZ surveillance and offshore sovereignty tasks. There is good demand for coastguard vessels in the region. This trend will likely highlight problems in command and control arrangements for some states. Some of these new services are very recent and are still being established, for example in Bangladesh, the Philippines and Vietnam with Malaysia also contemplating forming a coastguard. These coastguards are normally equipped with used naval vessels and staffed by former naval personnel. In Australia the main opposition party is promoting the coastguard concept and in Japan, the Japanese Maritime Safety Agency has been re-designated the Japanese Coastguard. As Bateman notes: With expansion of both regional navies and coastguards, it is not a ‘zero-sum’ game for maritime security forces in East Asia. Separate navies and coastguards might compete for resources but this need not be a problem if their separate roles are clearly defined and the two elements can readily work together in the event of conflict [41].

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4. What can be done? There are risks of sustained confrontation between the major powers of East Asia and it is not surprising in these circumstances that countries have found reasons to expand their naval programs. As noted above, regional navies are getting back to basics and focusing on their capabilities for war-fighting. Unlike the earlier round of naval expansion in the early 1990s that was seen as part of a non-threatening process of modernisation, this second round appears to be ‘much more clearly posited on assessments of threats posed by other regional countries’ [41]. To make some progress towards minimizing this trend will require an on-going process where regional countries pursue trust and confidence building measures and where multilateral security mechanisms can be made to work. This will require a change of mindset in the region. The ASEAN Regional Forum has been fairly ineffective in developing coordinated regional arms control measures due to lack of political will (see [61,62]) and ASEAN has not even established a regional arms register. Given the recent USN EP-3 aircraft incident and President Bush’s explicit statement that the US would do ‘whatever it took’ to defend Taiwan, the US seems to be set to take a tougher line with China, although this does not rule out some modest confidence building measures such as avoidance at sea agreements, navy-tonavy talks and hot lines between military headquarters. Without more open-ended discussions about what countries are buying and why the situation will remain tense.

4.1. Current confidence building measures Generally though, there are slim prospects for naval arms control in East Asia. Current examples of maritime confidence building include Indonesia, Malaysia and Singapore cooperating with good effect to combat piracy in the Malacca Strait and an agreement between Indonesia and Malaysia in January 2001 that provides that standard safety procedures apply during unscheduled encounters at sea between units of the two navies. But little progress is evident in Northeast Asia with the notable exception of INCSEA agreements between Russia and South Korea, some port visits between the navies of Japan and the ROK, multilateral naval talks involving the USN and regional navies and talks on trilateral naval cooperation between Japan, the US and South Korea (see [63,64]). The general atmosphere in the region, however, remains one of maritime insecurity. China in particular has high sensitivity towards potential Korean–US–Japanese security cooperation. China does not engage in multilateral naval cooperation itself,

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seeing it as a curb on its own freedom of action [65] (see also [66]). 4.2. Constraints There are of course practical problems with naval cooperation given tight operating budgets. Exercises and port visits can be expensive. There are problems too with common doctrine and interoperability of equipment. Naval cooperation may be used to gain intelligence on the capabilities of a potential adversary making it sensitive. Navies may be uncomfortable discussing operational and doctrinal issues, so that at this stage attention should be given to low key confidence building activities such as ship visits, personnel exchanges and navy-to-navy talks and regional fleet reviews, rather than more ambitious activities such as intelligence exchanges, joint doctrine development, cooperative maritime surveillance or standing regional forces. The main thrust of the Western Pacific Naval Symposium (WPNS), the forum for naval commanders from 17 regional countries with France, India and Canada as observers, has not been multilateral naval operations which would be too sensitive (although it is interesting to note that Singapore in June this year hosted the first WPNS mine counter measures exercise in Singapore and surrounding waters),8 but the harmonisation of existing procedures. There has been some progress here [68]. 4.3. Way ahead Non-controversial naval exercises such as search and rescue, disaster relief and humanitarian relief operations could be considered along with joint training periods based on seamanship and ship handling skill. There is certainly scope for naval cooperation in implanting a higher level of coordination in maritime search and rescue. Some start on this was made last December, with the Hong Kong Search and Rescue Exercise that involved eight nations.9 ASEAN and Japan could broaden and deepen their participation in WPNS. In view of the increasing number of submarines in East Asian waters the safety of submerged operations is a concern. Regional ASW capability is also increasing and 8 Fifteen ships and 1500 personnel took part in the 11 day Western Pacific Mine Conference Exercise and Western Pacific Diving Exercise held in the Singapore Straits and South China Sea, including some parts of Indonesian waters. The navies of Australia, Canada, China, France, India, Indonesia, Japan, Malaysia, New Zealand, PNG, Russia, Singapore, South Korea, Thailand, the US and Vietnam were involved, but only six countries sent ships (Australia, 2, Indonesia, 3, Japan, 3, Singapore, 2, Thailand, 2 and the US, 3). See [67]. 9 It is interesting to note here the recent heads of coastguard meeting in Tokyo which sought to improve cooperation among the Japanese, Korean, Russian and US coastguard forces in the battle against common threats like the drug trade, pollution and so forth. See [69,70].

this could create tensions if detections are made in sensitive areas. It may be necessary to consider the establishment of a submarine movement advisory authority or water space management regime, but this will be difficult in view of the covert nature of submarines [71]. One positive sign of cooperation was the Western Pacific submarine rescue exercise last year, Exercise Pacific Reach. This exercise was hosted by Singapore and involved the Japanese navy, the ROK navy, the Singapore navy and the US navy working together to recover crew members from a submarine in a simulated ‘Kursk’ disaster. Interestingly China and Russia sent observers [72]. While countries in East Asia should pursue naval cooperation it must be done carefully, lest it stimulate controversy and tension, particularly between US allies and China. This could occur if it appeared that some navies were forming exclusive clubs,10 or if it emphasised differences in capabilities thus leading to further acquisitions. The Commander-in-Chief, Pacific Command, Admiral Blair, is trying to infuse a more regional multilateral flavour into future training activities to cope with humanitarian and peacekeeping operations [73]. This is sensible, although in many cases this will involve non-military players such coastguards, rather than navies. The region probably needs to tread warily with naval cooperation while gradually moving to exploit those opportunities for building confidence at sea.

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