Michael Chase, who writes cogently on Taiwan defense issues, has a new piece out in the Jamestown Foundation’s China Brief on Taiwan’s Defense Budget: how much is enough in the new era of cross-strait lovefesting? Ok, so he didn’t title it that way…an excerpt:

Taiwan’s ambitious force modernization goals include procurement of P-3C maritime patrol aircraft, army attack helicopters, army utility helicopters, PAC-3 missile defense systems, F-16C/D fighters, and diesel-electric submarines, and upgrading Taiwan’s existing PAC-2+ systems. Importantly, as proponents of higher defense spending point out, strengthening Taiwan’s defense entails more than force modernization alone. The transformation of the military is an equally important component of Taiwan’s defense modernization program. Indeed, beyond its plans to purchase new weapons and equipment, Taiwan is also trying to move toward a professional, all-volunteer military, and this has important implications for the island’s defense budget because the transition to an all-volunteer military will result in further and perhaps quite substantial increases in personnel costs, which are already high as a share of overall defense spending. Taiwan’s efforts to streamline its military may help offset this to some extent. The Taiwanese Ministry of National Defense (MND) plans to reduce the size of the military from its current 270,000 members to about 250,000, and then gradually reduce the size of the armed forces further to 200,000 troops (China Post, May 22; China Brief, July 3). Even as Taiwan continues to reduce the overall size of its military, however, it will likely need to spend more money on salaries, benefits, and quality of life improvements to recruit and retain the people it needs, especially highly skilled officers and non-commissioned officers (NCOs). In a recent testimony before the Foreign Affairs and National Defense Committee of the Legislative Yuan (LY)—Taiwan’s legislature, Defense Minister Chen Chao-min acknowledged that a defense budget equivalent to 3 percent of GDP would not be enough to complete the transition to an all-volunteer military (Taipei Times, May 22). The transition to an all-volunteer military will also increase the costs of benefits for retired military personnel, including education, welfare, and medical care expenses, as Kua Hua-chu, the head of Taiwan’s Veterans Affairs Commission, recently pointed out in testimony before the LY (China Post, June 3).

In other important issues, Kathrin Hille, one of the island’s most knowledgeable correspondents, reports in the Financial Times that Taiwan will not be buying the F-16s this year.

The move comes as the Bush administration debates what arms to sell Taiwan given the improvement in relations between Taipei and Beijing. One senior US official said the US was evaluating whether to sell Taiwan a separate $11bn (€6.95bn, £5.5bn) package of arms, but was not currently considering selling F-16s. He added that there was only a “low possibility” that a sale could happen this year.

The official said Taiwan had told the US its priority for now was the $11bn package, but the US expected Taiwan would return to the F-16 issue in the future. He said the US still needed to debate what weapons the US should supply Taiwan given the better relations with China, and whether F-16s were even appropriate.

“That may not be the best way to defend the island against an invasion. Who says F-16s are the best way? Who has made this judgement, Lockheed Martin? Because that is certainly an option for defence, but there are a whole lot of other ways that you protect yourself from an attack,” the official said. The Taiwanese move comes
as Admiral Timothy Keating, head of US Pacific command, this week said Washington had suspended arms sales to Taiwan because “there is no pressing, compelling need for at this moment arms sales to Taiwan”.

However, Taipei officials said they believed that the US had temporarily put off arms sales in order to secure Beijing’s co-operation in tackling trouble in Iran and North Korea.

Bad news for the island. As I have noted in the past, KMT officials publicly and privately have said they want the weapons — the decision appears to be a unilateral decision by the Bush Administration.