Editor's Foreword

390 THE MILITARY BALANCE 2010
of the �% annual increase in base spending that was
introduced in the ���� White Paper. In the absence
of such one-off provisions, future budgets will show
more modest year-on-year growth over the next four
years.
Of all the Southeast Asian countries, Thailand
has been hit particularly hard by the global recession.
The country was already suffering from an
investment slump because of the political turmoil
triggered in ����, and when its export markets
contracted because of the global economic crisis, the
country was deprived of its main engine of growth.
As a result, the economy is expected to contract by at
least �% in ����, while the government will record
a budget deficit of more than �% of GDP. Against
this background, the ambitious two-stage military-modernisation
programme outlined in ���� is
already in difficulty. The original plan, drawn up to
both combat internal unrest and replace the armed
forces’ most obsolete equipment, had outlined a
significant financial commitment of some THB���bn
(US$�.�bn) over a ten-year period. The most highprofile
purchase announced had been the plan to
procure �� JAS-�� Gripen fighter aircraft and two
Erieye airborne early-warning and control (AWAC)
aircraft from Saab of Sweden, to be delivered in two
tranches. However, in June ���� the Thai cabinet
announced that it had postponed the purchase of the
final six aircraft and one Erieye platform by at least two
years because of growing economic pressure. Other
programmes that have apparently suffered because
of budgetary constraints include the army’s plans to
acquire armoured personnel carriers as well as the
air force’s purchase of four search-and-rescue helicopters.
Instead of making any progress with these
major acquisitions, the government was reduced to
allocating a sum of just THB��bn (US$���m) for the
purchase of several �.�-tonne trucks, three ��-metre
coastal-patrol craft and the upgrade of six S-��
Seahawk helicopters to include an ASW capability.
Following the conclusion of controversial talks
between Taipei and Washington in ���� that saw
Taiwan finally agree to buy part of a comprehensive
weapons range from the US, li�le progress was
made in resolving the outstanding items, particularly
Taiwan’s desire to procure extra F-�� aircraft.
The original package offered by the George W. Bush
administration in ���� had included eight submarines,
new maritime-patrol aircraft and several
Patriot PAC-� air-defence systems. However, after
seven years of domestic political wrangling, Taiwan
se�led for a smaller and cheaper deal that included ��
second-hand P-�C Orion MPAs, three PAC-� systems
and funds that only cover an ‘evaluation study’ of
the proposed submarine programme. Purchase of
the P-�Cs is accompanied by a significant offset
requirement of ��% of the contract value (equivalent
to nearly US$���m). This is a much higher level
than the ��% threshold usually sought by Taiwan’s
Industrial Co-operation Programme office, and illustrates
the island’s growing commitment to becoming
more self-reliant in the defence sector. In this regard,
members of the Washington-based Taiwan Defense
Working Group have called on Taiwan to abandon its
proposed purchase of diesel-electric submarines and
instead allocate the money towards producing more
domestic weapons systems, albeit with US assistance.
Despite improved cross-straits relations following
the election of Taiwan’s President Ma Ying-jeou,
hopes that Taiwan’s air force would get the go-ahead
for its plans to acquire �� F-��C/D aircraft appear to
have receded. The country’s first-ever Quadrennial
Defence Review (QDR) published in March ����
acknowledged that the chance of procuring the F-��s
was slim but said the Ministry of National Defence
would continue to push the US while laying the
groundwork for the procurement of a next-generation
fighter aircraft. Suggestions that candidates
would include the Eurofighter Typhoon and F-�� and
F-�� planes look unrealistic. However, in July ����
the US Senate Armed Services Commi�ee passed
a bill calling for a presidential report on the status
of Taiwan’s air force to be included in the National
Defense Authorisation Act. This report could help
chances for the F-�� sale, should it conclude that
China enjoys significant air superiority over Taiwan.
The QDR also stated that Taiwan would continue to
develop its indigenous Hsiung Feng IIE surface-tosurface
cruise missile, despite sharp criticism from
Washington, and included plans to downsize the
military to an estimated force of ���,��� professional
service personnel by ����. In the short term, however,
the cost of completing this la�er initiative will wipe
out any potential savings that may accrue from the
reduction in personnel.
Unlike some other countries in the region,
Indonesia entered the global slowdown with
strong economic fundamentals, brought about
through sound macroeconomic policy implementation,
prudent debt management and a sound financial
sector. In its ���� Article IV Consultation, the