Arms Procurement Decision Making Volume I
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Arms Procurement Decision Making Volume I: China, India, Israel, Japan, South Korea and Thailand Stockholm International Peace Research Institute SIPRI is an independent international institute for research into problems of peace and conflict, especially those of arms control and disarmament. It was established in 1966 to commemorate Sweden’s 150 years of unbroken peace. The Institute is financed mainly by the Swedish Parliament. The staff and the Governing Board are international. The Institute also has an Advisory Committee as an international consultative body. The Governing Board is not responsible for the views expressed in the publications of the Institute. Governing Board Professor Daniel Tarschys, Chairman (Sweden) Dr Oscar Arias Sánchez (Costa Rica) Sir Marrack Goulding (United Kingdom) Dr Ryukichi Imai (Japan) Dr Catherine Kelleher (United States) Dr Marjatta Rautio (Finland) Dr Lothar Rühl (Germany) Dr Abdullah Toukan (Jordan) The Director Director Dr Adam Daniel Rotfeld (Poland) Stockholm International Peace Research Institute Frösunda, S-169 70 Solna, Sweden Cable: SIPRI Telephone: 46 8/655 97 00 Telefax: 46 8/655 97 33 E-mail: [email protected] Internet URL: http://www.sipri.se Arms Procurement Decision Making Volume I: China, India, Israel, Japan, South Korea and Thailand Edited by Ravinder Pal Singh OXFORD UNIVERSITY PRESS 1998 Oxford University Press, Great Clarendon Street, Oxford OX2 6DP Oxford New York Athens Auckland Bangkok Bogotá Bombay Buenos Aires Calcutta Cape Town Dar es Salaam Delhi Florence Hong Kong Istanbul Karachi Kuala Lumpur Madras Madrid Melbourne Mexico City Nairobi Paris Singapore Taipei Tokyo Toronto Warsaw and associated companies in Berlin Ibadan Oxford is a registered trade mark of Oxford University Press Published in the United States by Oxford University Press Inc., New York © SIPRI 1998 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press. Within the UK, exceptions are allowed in respect of any fair dealing for the purpose of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, or in the case of reprographic reproduction in accordance with the terms of the licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside these terms should be sent to the Rights Department, Oxford University Press, at the address above. Enquiries concerningreproduction in other countries should be sent to SIPRI. British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Data available ISBN 0–19–829279–1 Typeset and originated by Stockholm International Peace Research Institute Printed in Great Britain on acid-free paper by Biddles Ltd, Guildford and King’s Lynn Contents Preface ix Acknowledgements x Acronyms and abbreviations xi 1. Introduction 1 Ravinder Pal Singh I. Background 1 II. The rationale for this study 1 III. The scope, method and conduct of the study 4 Table 1.1. Four major themes of this study 5 Figure 1.1. A sample of essential public services required by society 2 2. China 8 Chinese Country Study Group I. Introduction 8 II. The arms procurement decision-making process 9 III. The domestic context 27 IV. Factors influencing arms procurement 36 IV. Conclusions 41 Table 2.1. The Chinese defence budget, 1953–80 28 Figure 2.1. High-level organizations in Chinese arms procurement 10 decision making Figure 2.2. Organization of arms procurement bureaux and institutes 13 in the PLA Figure 2.3 The research and information establishments of China’s 16 Central Military Commission Figure 2.4. Stages in the Chinese military R&D process 20 Appendix 2A. China’s military R&D, manufacturing and trading 43 Appendix 2B. The development of coastal minesweepers by the 46 PLAN in the 1980s Figure 2B.1. Organizations involved in the development of a warship 47 3. India 48 Ravinder Pal Singh I. Introduction 48 II. The arms procurement decision-making process 49 III. The Indo-Soviet arms transfer relationship 63 IV. Deficiencies in the process 66 V. Conclusions and recommendations 83 vi ARMS PROCUREMENT DECISION MAKING Figure 3.1. Organization involved in the Indian arms procurement 50 and review process, 1997 Figure 3.2. The arms procurement decision-making process in the Indian 52 Ministry of Defence Figure 3.3. Information and decision channels in the Indian arms 55 procurement decision-making process Appendix 3A. India’s defence R&D and production establishments 88 4. Israel 91 Gerald Steinberg I. Introduction 91 II. The arms procurement decision-making process 94 III. Threat assessment and Israeli security planning 98 IV. External influences on arms procurement 104 V. Procurement budgeting 108 VI. Influence of the defence industry 111 VII. Checks and balances 116 VIII. Analysis and recommendations 125 IX. Conclusions 130 Table 4.1. US military aid to Israel, 1949–95 105 Table 4.2. The Israeli defence budget by category, 1989–94 109 Table 4.3. The Israeli defence industry: sales and exports, 1980–95 112 Table 4.4. Subsidies for Israeli state-owned defence firms, 1991–94 116 Figure 4.1. Major actors in the Israeli defence establishment 96 Figure 4.2. Military technology evaluation procedure in Israel 102 Figure 4.3. Evaluation of the equipment needs of the Israeli infantry 103 based on decision tree analysis 5. Japan 131 Masako Ikegami-Andersson I. Introduction 131 II. The arms procurement decision-making process 133 III. Defence budgeting 145 IV. R&D and domestic production in arms procurement 151 V. Factors which constrain the rationality of arms procurement 161 in Japan VI. Conclusions 171 Table 5.1. The Japanese defence budget and its share of GNP, 1955–95 136 Table 5.2. Stages in the defence and arms procurement decision-making 139 process in Japan Table 5.3. Changes in the composition of Japanese defence expenditure 146 (original budget), FYs 1992–96 Table 5.4. Budget allocations to the Japanese Self-Defense Forces, 147 1992–96 C ONTENTS vii Table 5.5. Annual process of compiling the Japanese defence budget 148 Table 5.6. Government expenditure on defence R&D in select countries 152 Table 5.7. Ratios of defence production to industrial production and of 158 domestic procurement to total procurement in Japan, 1985–94 Table 5.8. Defence production by category as a percentage of total 159 industrial production in Japan, 1994 (preliminary) Figure 5.1. Coordination of foreign and security policy making in Japan 141 Figure 5.2. Actors involved in arms procurement decision making in 144 the Japan Defense Agency and the Self-Defense Forces Figure 5.3. The role of the Japanese Central Procurement Office in 145 the arms procurement decision-making process Figure 5.4. The organization of the Japanese Technical Research and 153 Development Institute Figure 5.5. Flow-chart of defence R&D planning in Japan 156 6. South Korea 177 Jong Chul Choi I. Introduction 177 II. The arms procurement decision-making process 179 III. Problems with the arms procurement process and 202 recommendations IV. Conclusions: short- and long-term developments 209 Table 6.1. Major activities of the force improvement plan, 1974–94 183 Table 6.2. Major arms to be procured under the Mid-Term National 184 Defense Plan for 2001 Table 6.3. Procurement by source: domestic, foreign and US, 1988–94 185 Table 6.4. Defence R&D investment in South Korea, 1970–95 192 Table 6.5. South Korean imports of major conventional weapons, 193 1980–96 Table 6.6. Rank of offset preferences based on technological merit 197 Table 6.7. Technology assessment for domestic R&D 198 Table 6.8. Methods of arms acquisitions in South Korea, 1970– 200 Table 6.9. Designated defence products and contractors, 1996 201 Table 6.10. Time span of the arms procurement decision-making process 204 Table 6.11. Offset rates provided by the 50 largest US arms exporting 205 companies, 1980–87 Table 6.12. Comparison of offset rates and directed buy-back requirement 206 in the F/A-18 co-production programmes Figure 6.1. South Korea’s National Defense Planning and Management 180 System Figure 6.2. Main stages in South Korea’s arms procurement process 187 viii AR MS P R OC UR EMENT DEC IS ION MAKING 7. Thailand 211 Panitan Wattanayagorn I. Introduction 211 II. The arms procurement decision-making process 212 III. Arms procurement programmes 223 IV. Problems with the existing structure 226 V. Factors affecting arms procurement 228 VI. An ‘ideal type’ of process 234 VII. Conclusions 240 Table 7.1. Equipment holdings of the armed forces of Thailand and its 225 neighbouring countries, as of 1 August 1996 Table 7.2. The Thai Ministry of Defence budget, 1982–97 229 Table 7.3. Costs of the Thai equipment procurement and force 230 modernization programmes, 1997 Table 7.4. Breakdown of the Thai Ministry of Defence budget, 1982, 231 1985 and 1990 Table 7.5. Breakdown of the Thai Ministry of Defence budget, 1992–95 232 Figure 7.1. The arms procurement structure in the Thai armed services 214 Figure 7.2. The arms procurement structure at the Thai Supreme 215 Command Headquarters Figure 7.3. The arms procurement structure at the Thai Ministry of 216 Defence Figure 7.4. The arms procurement structure in the Thai Parliament and 217 Cabinet Figure 7.5. A model arms procurement structure for the Thai military 236 Figure 7.6. A model arms procurement structure for the Thai Parliament 237 8. Comparative analysis 242 Ravinder Pal Singh I. Introduction 242 II. Military and politico-security issues 243 III. Defence budgets, financial planning and audit 250 IV.