Taiwan's Defense Budget Standoff Reveals Deeper Strategic Vulnerabilities

Taiwan's President Lai Ching-te (賴清德) assembled an unprecedented display of military leadership at the Presidential Office to promote his administration's NT$1.25 trillion (about US$40 billion) eight-year defense budget. Flanked by Defense Minister Wellington Koo (顧立雄), Chief of General Staff Mei Chia-shu (梅家樹), and the three service commanders—twelve stars lined up in the Presidential Office reception hall—the president sent a clear message: this massive spending package must pass. Whatever the outcome and final form of this budget, the underlying issues demand sober examination.

Lai opened his press conference declaring that "national defense cannot wait." Yet Taiwan's defense readiness is not a case of "cannot wait"—it has been kept waiting for years. The Tsai administration's NT$240 billion (about US$7.5 billion) military aircraft procurement has yet to deliver a single aircraft, while other delayed purchases total NT$600–700 billion (roughly US$19–22 billion). Lai may use "cannot wait" as a slogan to pressure opposition parties into approving the special budget, but he cannot pretend that simply passing NT$1.25 trillion (about US$40 billion) will automatically ensure national security.

Lai cited Japan and South Korea's defense budgets to justify Taiwan's higher spending. Japan set aside NT$1.8 trillion (about US$57 billion) this year and South Korea NT$1.4 trillion (around US$44 billion). Taiwan's regular defense budget is smaller—NT$949.5 billion (about US$30 billion), with over NT$800 billion (roughly US$26 billion) for core defense items—but adding the special budget would still push annual spending above the trillion‑dollar mark in New Taiwan dollars.

On paper, Taiwan spends less than Japan and South Korea. Once GDP is factored in, however, the picture flips. Japan's GDP is about NT$135 trillion (around US$4.3 trillion) and South Korea's about NT$59 trillion (around US$1.9 trillion), so their defense budgets amount to 1.3% and 2.4% of GDP. Taiwan, with GDP of roughly NT$25 trillion (about US$800 billion), is devoting over 30% of its total government budget and 3.8% of GDP to defense. That is a heavy load for a smaller economy that still cannot buy F‑35 fighters and watches South Korea move ahead with U.S.-backed nuclear-powered submarines while Taiwan is still putting its domestically assembled diesel submarine through "shallow water diving tests."

Opposition parties argue that the government should first allocate legally mandated NT$30,000 (about US$950) salary increases for volunteer personnel before discussing the special defense budget. Lai issued a "stern statement" calling this "an erroneous connection." He pointed to the DPP government's 14% cumulative salary increases for military and civil servants over the past decade, as well as equipment modernization and housing improvements. He added that his administration adjusted five types of allowances just last year. He insisted that "across-the-board salary increases raise constitutional concerns, lack professional consideration, undermine military discipline, and impede military leadership."

Lai's arguments ring hollow. He knows that past raises for military and civil servants were themselves across-the-board adjustments. When opposition legislators proposed raising volunteer service allowances from NT$10,000 to NT$30,000 (roughly US$320 to US$950) last year, Lai countered with NT$15,000 (about US$480) for volunteer forces and NT$7,000–12,000 (around US$225–385) for combat units, up from NT$3,000–5,000 (about US$95–160)—and these allowances are not mutually exclusive. More importantly, better pay is one of the few realistic incentives for young people to pursue military careers. With low salaries, high risk, reduced retirement benefits, and stricter overseas travel restrictions even after leaving service, who would willingly sign up? Defense Minister Koo has said that manning levels have "returned to 80%"—still short of what is needed.

Legally, the Military Personnel Pay Act has been amended, passed, and promulgated by the president. Even if the Executive Yuan seeks constitutional interpretation, that does not justify refusing to allocate budgets in accordance with the law. Yet the Lai government has chosen a unique path—non-compliance. If the Executive Yuan does not budget according to law, how can it demand the Legislative Yuan review budgets according to law? When everything depends on Executive Yuan discretion, why should the Legislative Yuan cooperate with "presidential agents" who ignore the "supreme representative body"?

Defense spending clearly needs to rise under mounting geopolitical pressure. What is unusual is the eight-year "special budget" format. If a KMT president had proposed an eight-year trillion-dollar special budget in New Taiwan dollars, would DPP legislators have applauded? Tsai Ing-wen's eight-year NT$880 billion (about US$28 billion) "Forward-looking Infrastructure" special budget was already unprecedented; now Lai is pushing another eight-year, NT$1 trillion‑plus (over US$30 billion) package for defense. With U.S.-approved arms sales already exceeding NT$400 billion (around US$13 billion), why not plan within regular budgets based on approved items? Even allowing for some flexibility, is eight years of "flexibility" worth an extra NT$800–900 billion (roughly US$26–29 billion)?

The Tsai administration's solar energy policies created chaos in southern Taiwan's solar sector. Lai's aggressive promotion of military procurement and defense industries has now energized defense-related stocks. Yet defense budgets and industries operate with unusual opacity. A simple "classified" label can shut down legislative oversight. Until the Defense Ministry tackles the entrenched problem of "defense contractor cronyism," it will not win public trust.

Lai also recalled that twenty-one years ago, when he was a legislator during the DPP's first presidency, the U.S. approved a package of eight submarines, but the special procurement budget was blocked sixty-nine times in the Legislative Yuan's procedure committee. "If passed then, eight submarines would already be operational," he lamented. He remembers the KMT and PFP blocking the budget but seems to forget that the U.S. had already stopped producing diesel submarines and that European partners were reluctant to cooperate. Even with budget approval, the outcome would likely not have exceeded the current Hai Kun submarine program.

This is Taiwan's enduring military procurement dilemma. The U.S. effectively controls the Taiwan Strait and Taiwan's defense lifeline. What Taiwan can buy, cannot buy, can do, and cannot do all require U.S. consent. Without it, Taiwan has little leverage. The one real exception was the purchase of Mirage fighters from France, which in turn forced U.S. approval of F-16 sales—a unique case that has not been repeated. Now, pressure around the defense budget is likely to intensify. Reports that Trump may visit Beijing in April, following a call with Xi Jinping in which Xi reportedly emphasized that "the U.S. must handle Taiwan arms sales prudently," have put Taiwan on the menu—whether as appetizer or dessert.

Taiwan has no control over such great-power bargaining. Fearing both Beijing's tightening grip and the possibility that Trump might abandon or bargain away Taiwan, lawmakers should recognize that passing the defense budget does not guarantee continued U.S. arms sales, but refusing to review it certainly increases the risk of sudden changes.

The Legislative Yuan now faces multiple competing proposals: the Taiwan People's Party's NT$400 billion (about US$13 billion) version, and KMT drafts ranging from NT$800 billion to NT$900 billion (roughly US$26–29 billion) that at least come closer to the Executive Yuan's figures. It is unreasonable for the Executive Yuan to insist that opposition parties accept every word and every dollar unchanged.

Former Veterans Affairs Council Deputy Chairman Lee Wen-chung has offered five useful guidelines: items lacking clear justification for special-budget treatment should return to annual budgets; items that do not meet Taiwan Strait defense needs should be deleted or reduced; items inconsistent with asymmetric warfare logic should be removed; items without completed U.S. internal procedures should not receive funding; and projects with major delivery delays should require committee reports before funds are released.

Opposition parties should not only debate their own versions while ignoring the Executive Yuan draft. Military procurement is not like funding bridges, drainage projects, or baseball stadiums. The KMT has governing experience and legislators such as former navy commander Chen Yung-kang (陳永康), alongside many retired generals in party-affiliated think tanks. Their participation can strengthen professional oversight and credibility. As for talk of "Green-White" or "Blue-White" coalitions on defense budgets, it should stop. With such wide gaps between versions, no side should try to hold the others hostage.

Original Article in Chinese

（Related： Takaichi's Landslide Victory and the Uncertain Ripples Across the Taiwan Strait ｜ Latest ）