Criticism of Being Overcharged by the US Leads to Reconsideration
Not Reflected in Defense Ministry Budget... Contract with the US Canceled
[Asia Economy Reporter Hyunwoo Lee] The Japanese government is reportedly canceling the upgrade project for the F-15 fighter jets, the main combat aircraft of the Japan Air Self-Defense Force, and will renegotiate with the United States. This is interpreted as a response to criticism over excessive spending, as the upgrade costs surged to nearly three times the initial estimate.
According to local Japanese media such as the Nihon Keizai (Nikkei) newspaper on the 8th, the Japanese Ministry of Defense did not execute the initial cost of 39 billion yen (approximately 397 billion KRW) for the F-15 upgrade project included in the 2020 fiscal year budget (April 2020 to March 2021), and the related costs were not reflected at all in the 2021 budget. Defense Minister Nobuo Kishi is also reported to have instructed the relevant departments to cancel the contract with the U.S. side and to renegotiate.
As the upgrade costs for the fighter jets ballooned to nearly three times the expected amount, raising concerns over budget waste, the government is believed to have decided to reconsider the project from scratch. The F-15 fighter jets are the main combat aircraft of the Japan Air Self-Defense Force, with over 200 units deployed. Previously, the Japanese government had contracted with the U.S. in 2018 to upgrade 20 aging F-15 jets by 2027.
The Ministry of Defense’s budget for the 2019-2020 fiscal year included a total upgrade cost of 80.2 billion yen, but as the U.S. side repeatedly requested cost increases, the initial cost alone rose to 39 billion yen, making it difficult to estimate the total project cost, leading to a complete cancellation, according to Nikkei. There is growing concern that the U.S. government, through the Foreign Military Sales (FMS) system?which acts as an intermediary for defense contractors to set prices and delivery schedules?is overcharging allied countries. This has prompted the Ministry of Defense to reconsider the project from the beginning.
During U.S. Secretary of Defense Lloyd Austin’s visit to Japan on the 16th of last month, Defense Minister Kishi reportedly explained the Japanese government’s position on the F-15 upgrade issue and requested cooperation from the U.S. side.
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