South China Sea: 3 Ways to Win the Money War

Unleash American military spending in the Pacific.

China’s domination of the South China Sea is not yet a fait accompli, but the United States must implement a countercoercion strategy more urgently in order to maintain a favorable balance of power.

Since the beginning of this year, China has deployed surface-to-air and anti-ship missiles, as well as fighter aircraft, to Woody Island, a part of the Paracel Island chain in the South China Sea. These actions are stepping stones for China to dispatch missile batteries and jets to the more geopolitically significant Spratly Island chain. Now, there is growing concern that Beijing may declare an air-defense identification zone in the South China Sea. Left unchallenged, the Chinese are on track to create “mini denial zones” and bring greater coercive force to bear against neighboring Southeast Asian states. If current trends continue, the South China Sea will be a “Chinese lake” before 2030.

Rollback of Chinese gains in the South China Sea is not a viable policy option—the island building is a reality and, short of force, there is little Washington can do to make China withdraw from features it occupies. Thus, Washington must focus its efforts on preventing Beijing from expelling another claimant from a contested territory. One component of U.S. strategy should be the expansion of military assistance programs for Southeast Asian partners. Littoral Southeast Asian states badly need maritime domain awareness capabilities, coast guard and naval vessels, and coastal defenses, as well as additional training to fend off Chinese maritime coercion—all of which the United States can provide.

Since the announcement of the pivot to Asia in 2011, the United States has launched several initiatives to build partner capacity in Southeast Asia, including loosening arms export restrictions on Vietnam and negotiating an Enhanced Defense Cooperation Agreement with the Philippines. The U.S. military also maintains relatively small ongoing programs to provide maritime domain awareness and increase patrol capacity for Indonesia, Malaysia, the Philippines and Vietnam.

However, despite the current administration’s strategic prioritization of the Asia-Pacific, the United States still only devotes 1 percent of its foreign military financing (FMF) to Asia, a number not commensurate with our interests in the region. The next administration will need to ramp up its military assistance efforts if it hopes to provide American partners with a minimum credible deterrent.

There are three main policy considerations that ought to guide capacity building for American partners.

First, the United States needs to supply additional arms and training to boost partners’ maritime operational capabilities. In fiscal year 2014, Indonesia, the Philippines and Vietnam collectively only received $74 million in FMF funding. By comparison, Egypt receives $1.3 billion in FMF every year. The administration also spent $500 million on a Syrian rebel train-and-equip program (not an FMF program) that was ultimately scrapped as a failure. Admittedly, these are imperfect comparisons, but the point remains that the United States continues to spend “budget dust,” relatively speaking, to assist our Southeast Asian partners in resisting Chinese maritime coercion.

For the FY 2016 National Defense Authorization Act, the Senate Armed Services Committee, led by Senator John McCain, rolled out a five-year, $425 million, Southeast Asia Maritime Security Initiative (MSI) to provide further training, infrastructure construction and vessels for Southeast Asian partners. However, Congress ultimately only authorized $50 million for FY 2016, rather than the entire five-year program, which makes it difficult to plan out multiyear projects. In its FY 2017 request, the Pentagon asked for $60 million for the MSI and reiterated its plans for the full $425 million, five-year effort. In the coming budget battle, whether Congress decides to fund the program in its entirety will be a key barometer of America’s commitment to maintaining the peace in Asia. Both China and American partners will be watching.

A new administration could lead the way by expanding the Maritime Security Initiative, which is directed by the Department of Defense and is not an FMF program, as well as proposing a robust Foreign Military Sales package to the Philippines within the first one hundred days in office. In April 2001, President Bush announced a substantial military assistance package for Taiwan as a signal of his administration’s priorities. The next president should consider a similar move with Manila, albeit one that suits the Armed Forces of the Philippines’ needs and capabilities. U.S. assistance to the Philippines, as with any partner, should balance funding for logistics, maintenance and workforce systems with that for the actual defense hardware.