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MND gives up on special budget

In a major defense policy shift, the government has decided to scrap the "special budget" mechanism to procure advanced arms from the US, and will instead ask for the military's annual budget to be increased to 3 percent of GDP.

"The Ministry of National Defense (MND) has proposed increasing the regular military budget to fund the purchase of eight diesel-electric submarines and 12 P-3C Orion maritime patrol aircraft from the US, but will delay the proposal to buy three PAC-3 Patriot anti-missile batteries," Minister of National Defense Lee Jye (李傑) told the legislature yesterday.

The decision by the MND to give up on procuring the submarines through a special budget has put paid to the term "special arms budget" and "special arms procurement bill."

Taiwan spent NT$251.94 billion (US$7.78 billion) on defense last year, according to figures from the Directorate General of Accounting, Budget and Statistics, representing about 2.3 percent of the nation's estimated 2005 GDP, US$334.4 billion. If the defense budget were increased to 3 percent of the GDP using the figures from last year, it would mean an increase of about NT$73.10 billion each year.

No upgrade

To further allay the pan-blue camp's concerns about cost, the MND has also decided not to upgrade the PAC-2 Patriot missile batteries the nation currently possesses, something that Legislative Speaker Wang Jin-pyng (王金平) has recently advocated, because the upgrade of the PAC-2s would not provide a sufficient boost to the nation's anti-missile capabilities to warrant the cost incurred, Lee added.

Lee said he prefers to focus the money on the submarines and the P-3C aircraft, and added that he hoped the bill would be approved in the current legislative session.

The minister yesterday did not specify how much of the regular military budget would be allocated to fund the two weapons systems, but he said that the proposed increase of the annual budget to 3 percent of GDP would be "helpful" in funding the arms procurement.

The MND originally asked for a NT$610.8 billion special budget to buy the three systems from the US. This was later adjusted to NT$480 billion because of the depreciation of the US dollar.

But because a long-term boycott of the arms procurement plan by the pan-blue parties has adversely affected national security and aroused concerns within the US, the MND late last year decided it would try to delay the purchase of the PAC-3 batteries until next year, while including the P-3C aircraft in this year's regular defense budget. This left the eight diesel-electric submarines -- with an estimated maximum price of NT$299 billion (US$9 billion) -- the only items the MND was requesting to procure through a special budget.

The government's effort to move the arms deal forward by tossing out the special-arms package was apparently justified by the pan-blue parties yesterday, as they once again rejected putting the arms bill on the legislative agenda.

KMT version

Chinese Nationalist Party (KMT) Legislator Tseng Yung-chuan (曾永權), who also serves as the executive director of the KMT's Central Policy Committee, said the KMT would release its version of an arms bill early next month, and then negotiate with the People First Party and independent legislators before offering an alternative arms-procurement policy.

"We expect the policy will be finished in May, and that we can deal with the arms bill in this legislative session," Tseng added.

One of the reasons the government may have decided to delay procuring the PAC-3s until next year is that the pan-blue parties have used the results of a failed referendum in 2004 to justify opposing the arms deal.

The pan-blues contend that the failure of the referendum, which asked whether Taiwan should take measures to boost its defensive capabilities in the face of the threat from Chinese missiles, effectively "vetoed" the government's plan to buy anti-missile batteries.

Although the people who voted in the referendum overwhelmingly supported the government, an insufficient proportion of the electorate participated, thus invalidating the referendum.
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