Taiwan progresses ‘special’ funding plan as relations with Beijing deteriorate

by Jon Grevatt and Andrew MacDonald

Jon Grevatt, principal at Janes takes a look at the plan to allocate TWD240 billion to enhance sea and air combat capability

Taiwan’s Ministry of National Defense (MND) has advanced its plan to allocate TWD240 billion (USD8.6 billion) in additional military funding to enhance the island’s sea and air combat capability. The MND submitted its funding plan for approval to the island’s Legislative Yuan on 4 October. The proposal was approved by Taiwan’s Executive Yuan in September. 

The funding plan was submitted on the same day that the MND announced that nearly 150 People's Liberation Army (PLA) aircraft had been deployed near Taiwan since 1 October: the date Beijing celebrated the 72nd anniversary of the founding of the People's Republic of China.

The funding proposal – contained in ‘regulations on the procurement of sea and air combat power enhancement’ – appropriates the funding over five years. The allocation is in addition to Taiwan’s annual defense budget. The new proposal outlines a plan to procure unmanned combat aerial vehicles (UCAVs), ground-based anti-ship missiles, a ground-based air defense system, naval vessels, and “other urgently needed systems”.

According to the regulation, the funding will also enable the procurement of locally developed Wan Chien (Ten Thousand Swords) stand-off air-to-surface missiles and Hsiung Feng IIE (‘Brave Wind': HF IIE) surface-to-surface cruise missiles.

In its new submission, the MND said the funding is required “in response to Chinese threats and the need to urgently strengthen self-defense”. It said the procured capabilities will help ensure “the security of Taiwan and stability in the Asia-Pacific region”.

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Special funding will take up a quarter of Taiwan’s defense expenditure - Andrew MacDonald, lead Asia-Pacific budgets analyst at Janes explores
Taiwan’s new military funding law is the second announced in recent years to allocate financing from outside the core defense budget. In 2020, the Taiwan government approved a similar ‘special’ expenditure to support the procurement of Lockheed Martin F-16 fighter aircraft from the US government. 

Assuming equal allocations across the new law’s lifetime to 2026 (although in reality such even disbursement is unlikely), the fund’s annual value would be equal to almost 13% of Taiwan’s annual core defense spend in 2022, and taken together with spending on the F-16 procurement, total special budget funding would reach just under 24% of the official budget.

Funding for the F-16 purchase, although distributed at a relatively even pace from 2022 onwards was phased in gradually; from TWD5 billion in 2020 it increased to TWD29 billion this year. 2022’s allocation is due to rise to TWD40 billion before reaching an annual peak of TWD45 billion in 2023 and 2024 and tapering to TWD43 billion and TWD39 billion in its final years.

Although the funding schedule of the new legislation is yet to be published, in total these special allocations will have added TWD487 billion to Taiwan’s military spend from 2020-2026. That’s equivalent to 1.3 times the  current annual core defense allocation.

The additional funds are likely to push Taiwan’s total defense budget for next year, which remains in the draft stage, to more than TWD502 billion, or TWD718 billion if veterans’ affairs costs are included.

Taking this more inclusive view of Taiwan’s total military spend, intelligence from Janes indicates that 2022 will now see the annual allocation rise by nearly TWD78 billion year-on-year, or more than 10.8%.  That would be the fastest rate of annual budget growth since 2008 and far in excess of the average rate over the past 10 years of just 0.5% in real terms. 

Assuming the budget is passed in its current form, 2022 will see Taiwan’s annual defense spend increase by significantly more in one year than it did across the entire decade to 2020.

Although this undoubtedly marks a notable shift in Taiwan’s pace of defence budget growth, the beginnings of such efforts can be seen as far back as 2019, when total funding increased by 6% in real terms, marking the start of a period of elevated growth rates, despite the negative impact of the Covid-19 pandemic.

However, with so much of this momentum built by funding external to the MND’s regular budget, annual expansion is set to fall back to nominal rates between 2% and 3% from 2023. Further, with both sets of special funding due to end in 2026, 2027 looks likely to record a significant drop in budget of close to 7% nominally.

Having peaked the year before at a record level of more than TWD800 billion, total funding in 2027 is forecast to drop back nearly to TWD745 billion. Despite the ending of both batches of external funds, this level of spending will remain almost a third larger than Taiwan’s total allocation in 2019, before either law was enacted, while core MND budgets are expected to have risen even faster, reaching TWD470 billion nominally.

If additional equivalent tranches of ‘special expenditure’ are approved to avoid this drop-off as the current batches expire, Taiwan’s defence spend would instead be likely to approach TWD900 billion by 2030 – more than USD30 billion in nominal terms.


Link 16 terminal qualified for French AWACS aircraft

by Olivia Savage

French Boeing E-3F Sentry AWACS to get latest military tactical datalink. (Boeing)

The Multifunctional Information Distribution System-Low Volume Terminal Block Upgrade 2 (MIDS-LVT BU2) has been qualified for use on all four of the French Air and Space Force Boeing E-3F Airborne Warning and Control System (AWACS) aircraft.

Announced by the French Directorate General of Armaments (DGA) on 22 September, the new terminal will enable the operation of the latest-generation Link 16 military tactical data network on its aircraft in September−November 2022.

In 2020 Thales and Air France Industries were selected to integrate the new MIDS-LVT BU2 terminal on the French E-3F AWACS, the announcement said.

The DGA conducted two years of tests to qualify the terminal, in conjunction with the French Air and Space Force and the two industrial partners. Specifically, the DGA Information Control Centre of Expertise and Testing handled security with the information systems, while the DGA Project Engineering Centre examined the authorisation files for flight, temporary employment authorisation, and qualification of the integration of MIDS-LVT BU2 on the AWACS. Several flights were conducted by the DGA Flight Test Centre, which tested the integration and operation of the terminal, the DGA said.

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Turkey touts Eurofighter plan, should F-16 talks stall

by Lale Sariibrahimoglu

Seen in Luftwaffe service, the Eurofighter could be an option for Turkey should continuing discussions with the United States over the F-16 fail to yield results. (Janes/Gareth Jennings)

Turkey has, for the first time, officially pronounced a possible purchase of Eurofighter Typhoons in case if the United States fails to sell Lockheed Martin F-16 Fighting Falcons.

İbrahim Kalın, Turkey's presidential spokesperson, confirmed the previously reported plan, telling local NTV news channel on 23 September, “We have negotiations with Europe regarding […] Eurofighter […] Turkey will never be without alternatives.”

Turkey made a request to the United States for 40 F-16 fighters and nearly 80 modernisation kits for its existing warplanes in October 2021.

The US administration warmed to the sale of the fighters to Turkey, Kalın said, as the Joe Biden administration in June threw its support behind the potential sale after Ankara lifted a veto of NATO membership for Finland and Sweden.

However, a condition set out by the US House of Representatives in July 2022 to ensure that F-16 jets sold to Ankara are not used to violate Greek airspace has been rejected by Turkey.

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Philippine Army deploys ATMOS 2000 howitzers for operational tasking

by Kapil Kajal

The Philippine Army said that the ATMOS will boost the army's mobility and range, and enhance its indirect fire-support capability. (Soltam Systems)

The Philippine Army has deployed its Autonomous Truck Mounted howitzer System (ATMOS) 155 mm/52 calibre self-propelled artillery units to the service's 10th Field Artillery ‘Rolling Thunder' Battalion, marking the weapon system's entry into operational status.

The deployment was held on 21 September at Fort Magsaysay Military Reservation area in Nueva Ecija, which lies about 120 km north of Manila.

Videos of the deployment were released by the Philippine Army's official social media channels on the same day.

Philippine Army spokesperson Colonel Xerxes Trinidad told Janes on 27 June that the 10th Field Artillery Battalion operates under the service's artillery regiment. He further described the 12 artillery pieces as equipment that will boost the army's mobility and range and enhance its indirect fire-support capabilities.

The Philippine Army took delivery of the ATMOS units in December 2021 and conducted a three-day live firing exercise from 6 to 8 April 2022. This event marked the first in-country training programme for the weapons.

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