Taiwan Defence and Security Report Q1 2013

BMI's Taiwan Defence and Security Report for Q1 2013 examines the country's strategic position in theAsia Pacific region. It provides an overview of the contemporary geopolitical challenges facing thecountry, and the challenges it may face in the future.

The report examines the trends occurring in Taiwan's current and future defence procurement, and theorder of battle across its armed forces. The intention is to provide a clear and concise discussion of theseissues. The report's general conclusion is that the re-election of Kuomintang President Ma Ying-jeou inearly 2012 has paved the way for the continuation of relatively warm cross-Strait relations, giving theisland confidence about its security outlook for the next few years at least. It is also unlikely that the newleadership in Mainland China, headed by Xi Jinping, will alter the country's longstanding Taiwan policy,especially given the many pressing domestic issues that demand Beijing's attention.

Ma's promotion of good relations with China has led to accusations that he has been neglectful of nationaldefence. Perhaps to counter this criticism, Taipei has increased its defence budget for 2012. However, theMinistry of National Defense (MND) continues to complain about a lack of funds. The decision to goahead with a costly F-16 fighter aircraft upgrade programme is likely to monopolise procurement funds inthe short to medium term, the MND has warned, with the result that other requirements will have to wait.

Despite this, there have been some important procurement developments besides the F-16 refit plan.Taiwan is procuring two second-hand frigates from the US Navy, and it has started production of a newclass of corvettes to bolster its fleet of small fast patrol boats that recently entered service. Indigenousmissile programmes are also producing weapons that should serve as a deterrent both to Chinese navalforces and also to land-based targets immediately across the Strait, while Taiwan's own missile defenceshield is steadily expanding.

Over the last quarter BMI has revised the following forecasts/views:

Taiwan-Mainland relations are discussed in light of recent political developments on both sidesof the Strait. While relations are expected to remain cordial, the recent discovery of three allegedChinese spies and the Chinese military's continued focus on attacking Taiwan mean that theisland will remain wary of Beijing's intentions.

The US has assured Taiwan that it is an important part of its 'pivot' to Asia, despite the publicfocus having been on other countries in the region. The decision to sell second-hand frigates toTaiwan, and not to other US allies in the region, came as a sign that Washington remainscommitted to supporting the island.

It has been confirmed that Lockheed Martin will conduct upgrade work on Taiwan's F-16 fleet.The supplier on a new radar system for the aircraft has yet to be announced.

However, the cost of the F-16 refit work is threatening other procurement programmes. DefenceSecretary Kao Hua-chu said that Taiwan would like to procure used M1 Abrams tanks from theUS, but that the funds are not currently available as the F-16 work is given priority.

The Taiwanese military continues to downsize as it aims to become an all-volunteer force by2014. The number of personnel is expected to drop to 190,000 by 2015, down from 275,000 justa few years earlier.