Taiwan's annual government budget has yet to be passed, as opposition parties in thelegislature remain deadlocked on certain items, chief among them a multi-year NTD 1.25 trillionspecial defense budget proposed by Taiwanese President Lai Ching-te (賴清德)to purchase various categories of U.S. made military equipment.
While the armed forces operational budget of NTD 561.4 billion would still be funded in such a scenario, around NTD 78 billion - or around 21% of the total - in funding stands to freeze if the budget is not passed.
However, the Kuomintang (KMT) and Taiwan People's Party (TPP) have only proposed to dicusss raising birth subsidies, a program which accounts for just 40 million (or 0.05%) of the Defense Ministry's potentially frozen budget. This means 99.95% of impacted defense funding might remain frozen.
In response to these developments, American Institute in Taiwan Director Raymond Greene declared "freedom is not free" during a lecture in Taipei on January 22, reaffirming U.S. support for the specialdefense budget. Greene stated that the United States is committed to denying aggression anywhere in the first island chain, but emphasized that freedom comes at a cost and America cannot and should not bear this burden alone. The U.S. can only assist to the extent that allies help themselves, he said, describing the special defense budget as crucial and promised expedited delivery of critical systems.
The TPP countered with its own military procurement bill, slashing the amount to NTD 400 billion. This shifts pressure to the Kuomintang, which holds a legislative majority. Despite repeatedly emphasizing they neither oppose arms purchases nor refuse payment, how the party responds to American pressure and ultimately handles the budget remains uncertain.
U.S. Engages KMT Legislative Caucus
Washington has actively lobbied for swift legislative passage of the special budget. The U.S. initially held expectations for Taiwan People's Party Chairman Huang Kuo-chang (黃國昌) following his trip to America. However, sources indicate that Huang's subsequent comments puzzled and surprised American officials, particularly regarding HIMARS purchases, which Washington views as unproblematic given that quantities were determined through extensive bilateral consultations based on actual operational needs.
Greene also met with KMT Chairwoman Cheng Li-wen (鄭麗文), demonstrating American hopes that opposition parties would approve the special budget. The KMT legislative caucus visited AIT on Aug. 25, 2025, to discuss defense spending, proposing that military pay increases be included in the budget. Greene reportedly remained silent on this suggestion, with one KMT source noting that everyone understood America's primary interest lay inincreasing arms sales, not military salaries. The source questioned the utility of purchasing extensive equipment without adequate personnel to operate it.
TPP Proposes Seperate Defense Budget, KMT Prepares Alternative Strategy
Although the TPP has proposed its ownspecial defense budget of NTD 400 billion, KMT sources express skepticism, arguing that as a non-governing party, it lacks understanding of actual government operations and can only rely on speculation.
With approaches to Cheng and Huang proving unsuccessful, the sources indicate that American pressure has returned to the KMT legislative caucus, and that the party plans to approve military procurement portions of the 1.25 trillion special budget while taking action on commercial sales components.
The KMT believes America primarily wants military purchases and will have fewer objections to other aspects once procurement proceeds. However, the party argues that rapid technological iteration makes bulk purchases of certain line items - like 200,000 drones - questionable, as performance could be surpassed within six months to a year. Instead, they advocate for gradual annual purchases through regular budget allocations and want the Defense Ministry to provide additional explanations for commercial sales components.
Defense Ministry Urges Budget Approval
A presentation by Defense Minister Koo Li-hsiungclarifying procurement issues as the Defense Ministry continues public appeals for opposition parties to approve the budget was held on Jan. 26, 2026.
However, some KMT lawmakers and senior staff reportedly found the ministry's approach objectionable, with a seperate public statement that budget review delays could cause delivery schedules delays of several years drawing particular criticism. KMT sources condemned these claims,describing the language as inappropriate and misleading to those unfamiliar with military procurement processes.
Opposition Parties Face U.S. Pressure
American pressure has intensified steadily. AIT has organized delegations to lobby KMT lawmakers in the legislature, hoping to secure budget passage, though results so far amount to ceremonial exchanges with each side maintaining their positions, failing to break the deadlock.
Beyond legislative lobbying, Washington continuously pressures Taiwan's military establishment. Sources indicate AIT has explicitly told the Defense Ministry to "actively explain" the budget publicly, reflected in recent ministry actions including Defense Ministry spokesperson Facebook posts declaring "investing in defense means investing in peace," video clips of officials discussing the special budget, and infographics detailing the seven major procurement categories.
With mounting pressure on the defense budget over time, the special legislation is expected to be addressed as early as March 2026. （Related： Taiwan's Cyber Command Restructured, Talent Retention Problems Remain ｜ Latest ）
