Bound by Uncertainty: What Future for EU-Japan Security Cooperation?

CSDS POLICY BRIEF • 34/2024

By Eva Pejsova

20.11.2024

Key issues

• The conclusion of the European Union (EU)-Japan Security and Defence Partnership in November 2024 is the latest and most strategically significant milestone in the evolving bilateral relationship since the entry into force of the Strategic Partnership in 2019.
• While struggling with many urgent domestic and foreign concerns, the newly appointed administrations in Brussels and Tokyo will need to rethink and build-up their security and defence postures, for which the new partnership can be highly instrumental.
• The re-election of Donald Trump and the prospect of intensified strategic competition between the United States (US) and China should give an additional impetus to closer cooperation on economic security, technology and innovation, but also on engaging with other like-minded partners to uphold the liberal international order in the Indo-Pacific.

Introduction

The “Golden Era” of EU-Japan relations seems to be in full swing. The two strategic partners have made another significant leap forward with the conclusion of the Security and Defence Partnership, which was finalised during the visit of the Union’s High Representative/Vice-President Josep Borrell to Tokyo on 1 November 2024. The reasons for the Security and Defence Partnership have never been more acute, starting with the growing Russia-China alignment to managing their key common US ally, or even rescuing the liberal international order. However, the partnership emerges in a context of particularly shaky domestic political grounds. With both Tokyo and Brussels emerging from new electoral cycles, the incoming administrations will need to juggle pressing regional security challenges, all while dealing with more unpredictability, uncertainty and pressure in Washington. Indeed, “Trump 2.0” will likely prioritise American interests over Alliances. In many ways, both partners are in the same boat and should seize the opportunity to make their partnership even stronger, rather than risk losing the momentum and slipping into inertia.

This CSDS Policy Brief makes the case for furthering EU-Japan security and defence cooperation against the increasingly uncertain global geopolitical environment and the outcome of the US elections. It first takes stock of Japan’s current security concerns, before identifying the benefits of partnering with Europe, especially in areas such as defence industrial cooperation, economic security and hybrid threats. Finally, it points to the growing alignment between and influence of autocratic powers, underscoring the need for Japan and Europe to engage with the non-aligned countries to save what is left of the liberal international order and its institutions.

A weaker Japan, a less secure Indo-Pacific

Over the past decade, Japan has emerged as a thought-leader within and a central pillar of the US-led “lattice-like” security architecture in the Indo-Pacific. From initiating the Free and Open Indo-Pacific (FOIP) concept in 2016, reviving the QUAD, multiplying minilateral security partnerships such as the SQUAD (Australia-Japan-Philippines-US grouping) or the US-Japan-ROK trilateral Camp David agreement, the world has gotten used to Japan “being back” and playing a key proactive role in regional and global security. Its 2022 National Security Strategy, which promised ambitious security reforms and defence spending by 2027, underscored this ambition. Yet, this trend may now be in jeopardy.

Japan enters an unprecedented period of political instability following the loss of the Liberal Democratic Party (LDP) coalition majority in the Lower House, following snap elections that were called at the end of October 2024. The victory of opposition parties, with the Constitutional Democratic Party of Japan (CDP) at the forefront, indicates a deep popular dissatisfaction with the ruling party, which lost almost 20% of LDP voters, due to embarrassing fundraising scandals, its members’ ties to the controversial Unification Church and the incapacity to redress the country’s lasting economic sluggishness. Although Shigeru Ishiba has secured his position as the country’s prime minister, he will be leading a minority government, having to answer to the opposition’s demands and seek approval for all future bills and budgets, all while facing limited support from within the LDP itself.

Needless to say, a politically weak Japan is both a source of concern for the US and an advantage for its adversaries. Neighbouring China and North Korea may use the opportunity to step up provocations, multiply missile tests or increase intrusions into Japan’s territory in order to test the limits of the US-Japan alliance. Against the increasingly hostile regional security environment, Prime Minister Ishiba, a former defence minister known as a hawk on defence, vowed to reinforce Japan’s military posture, double defence spending and work closely with the second Trump administration to boost the bilateral alliance.

Both are easier said than done. For one thing, Japanese public support for security reforms is less than lukewarm. According to a recent opinion survey by the University of Tokyo, 65% of Japanese are concerned about Japan’s security but only over 40% are in favour of increasing defence spending, and over 60% strictly oppose any form of nuclear sharing with the US. To meet the agreed 2% of GDP spending by 2027, the defence ministry’s budget proposal for 2025 hit a record-high of nearly €55 billion, which will require imposing a much-debated tax hike on income and the corporate and tobacco sectors. Given how extremely unpopular this measure is, combined with the yen’s weakness and Japan’s already stagnating economy, as well as the onslaught of criticism by the opposition parties, the introduction of the tax may possibly be further delayed.

Dealing with Trump’s second administration will also be challenging. The threat of 20% “universal” tariffs on imports raises serious concerns for Japanese business, especially in the automotive and semiconductor industries, for which the US is now the largest export destination. A new trade war with China, with 60% tariffs on Chinese products, will have a severe impact on most Asian countries that are dependent on both China and the US for trade, such as Japan.

Finally, the question of establishing good interpersonal relations with Trump will be essential. Following the example of the late Prime Minister Shinzo Abe, who became a reference for his ability to “manage Trump” during his first Presidency, Ishiba wanted to be the first foreign leader to meet the US President-elect and was hoping to do so “around” the upcoming G20 Summit in Brazil. The plan did not materialise in the end. Indeed, Ishiba is not Abe, and many worry Trump will not take Japan’s leader seriously, so he may attempt to exploit his weakness to ask for more concessions and more burden-sharing within the alliance. More than ever, Japan needs reliable partners to overcome its security conundrum.

How does Europe fit in?

Many of the issues that Japan currently faces are familiar to Brussels. Russia’s ongoing war in Ukraine enters its third year and its management will determine the future of European security. At this stage, Europe most likely cannot prevent any deal that President Trump will attempt to strike with Moscow. Without speculating about the exact contours of such a deal, the key interest for Europeans is to make sure Ukraine – or whatever is left of it – receives credible security guarantees and that Russia does not pursue its military expansion. To do so, it will need to persuade Washington it is willing to invest more in defence, which may in turn boost the chances of US support for Ukraine’s NATO membership and its continued commitment to European security.

The debate is certainly not new, but this time Europe may simply not have another choice. Meeting the 2% of GDP NATO target in defence spending is the bare minimum we should expect, even though 3% should be the target according to some. The surge in European defence company market stocks in the aftermath of the US elections echoes this expectation. The incoming European Commission seems to be onboard. In his hearing, the Commissioner-designate for Defence and Space, Andrius Kubilius, emphasised the need to build a “self-reliant defence posture”. When meeting in Budapest in early November 2024, EU leaders agreed that there is an urgent need to boost competitiveness and increase investments into research and innovation in defence and dual-use technologies. No matter how difficult it will be and how long it will take, Europe will have to build up its defence muscle, and it will need partners for this purpose.

Besides defence, the European economy will struggle under “Trump 2.0”, too. Although Europeans have been preparing to “hit back hard” in case of more US protectionist policies, declarations of the EU being a “mini-China” for its trade deficit with the US foreshadow trade conflicts in the future. The US’ proposed 10% blanket import tariffs will especially impact the European machinery, automotive and chemical industries, which account for nearly 90% of transatlantic trade. As a response, the EU could team up with Japan to offset the impact of US tariffs through greater economic integration, taking onboard potentially other like-minded countries in similar situations such as Australia, Canada and South Korea. Coming from the world’s largest trading partners and promoters of the liberal international order, a strong diplomatic response would also be due, taking the form of a joint declaration or a complaint at the World Trade Organisation, even if the effects may be limited. To start with, the safest bet for the EU and Japan is to join forces on innovation, especially in the field of emerging defence technologies, energy and green technologies.

New agreement, new opportunities?

The EU-Japan security and defence pact comes at the right time. Moving beyond mutual reassurance and statements about the interconnectedness of the European and the Asian security theatres, the two partners now need to focus on delivering concrete results. Besides the usual areas of cooperation previously covered in the Strategic Partnership, such as maritime security, counter-terrorism, cybersecurity and nuclear proliferation, the new agreement stresses the need to strengthen cooperation to address cross-cutting security challenges such as hybrid threats, outer space, technology and economic security.

Strengthening cooperation on defence technology should be a priority. The bilateral agreement so far remains rather vague on the topic, promising an ‘exchange of information sharing on defence industrial matters’ and possible ‘mutual involvement in respective defence initiatives’. Japan hopes to benefit from better access to the European defence industrial market, through an exchange of technical expertise and participation in collaborative research projects through the European Defence Fund (EDF). This would help reduce R&D costs and improve interoperability with European defence platforms. Indeed, foreign entities based in Europe that adhere to the Union’s security of information and technology rules can already benefit from the EDF, with Japan’s NTT taking part through its Spanish subsidiary in the €10 million KOIOS project. This project is developing Artificial Intelligence applications for the defence sector. In line with the EDF’s participation rules, similar projects could be envisaged in the realm of quantum computing, cyber and electronic warfare capability development, which are priority areas for both Japan and the EU if they want to maintain a competitive edge.

Outer space presents another promising area, in which quite some progress has already been made. The 2023 Copernicus Cooperation Agreementfacilitates reciprocal information and satellite data sharing, and Japanese companies – NTT, DOCOMO and Sky Perfect JSAT – and Airbus are jointly developing future High-Altitude Platform Stations (HAPS) for wireless connectivity. The Security and Defence Partnership mainly mentions the promotion of norms for responsible behaviour in space through bilateral and multilateral frameworks. Indeed, given the increasingly worrying militarisationof outer space, and the growing strategic competition  for dominance in the domain, regulation is an important factor. However, enhancing interoperability and preparedness in case of an emergency in outer space should be a priority, not only for the EU and Japan, but also for NATO and among US allies globally.

Looking beyond the US and China

If one thing is certain, China will remain the US’ number one priority during President Trump’s second term. An “America First” foreign policy and a more aggressive US-China trade war will have a multitude of negative effects for security in the Indo-Pacific. Beyond the potential impact on trade, however, there is also the risk of weakening cooperation, growing Chinese influence in Southeast Asia and greater militarisation.

To be sure, US allies in the region will be under pressure to play an active part in supporting the US, while also taking more responsibility for their own security. The resulting boost in greater security and defence may be one of the few positive outcomes of President Trump’s election. However, the fear of abandonment, and increased uncertainty about US security guarantees, may also lead to greater militarisation, as shown by South Korea’s renewed debate on the acquisition of nuclear weapons in the face of the North Korean threat. The same uncertainty casts a shadow over the future of the many US-led minilateral cooperative structures that have mushroomed under the Biden administration (i.e. US-Japan-ROK, US-Japan-Philippines or US-Japan-Australia), and which may struggle under President Trump’s leadership. Japan and its like-minded partners in the Indo-Pacific will have to double their efforts to sustain these cooperative mechanisms, but they could do so in cooperation with Europe, which has its own interest in maintaining regional stability.

With the US and China vying for “top spot”, much of the “rest of the world” is relegated to being mostly viewed through the lens of Sino-American strategic competition. This is felt especially strongly in Southeast Asia. The absence of the US at the last ASEAN Summit in Vientiane, Laos, for the second time in a row was noticed as a sign of the US’ wavering support. Summit attendances aside, the overwhelming US focus on fostering bilateral relations with a handful of close allies has a cost: leaving a vacuum for China to seek to fill. Figures from Singapore’s ISEAS-Yusof Ishak Institute’s annual ASEAN survey show the balance strongly shifting in China’s favour in 2024, with over 70% of respondents from key countries such as Indonesia and Malaysia preferring to align with China over the US. While partly related to the West’s double standards in the Gaza conflict, it will unlikely change under “Trump 2.0”. On the contrary, under the promised 60-100% tariffs on Chinese imports, Beijing will – and is already preparing to – divert more production and exports to Southeast Asian markets, so its economic influence will likely rise further.

As counter-intuitive as it may sound, if Brussels and Tokyo want to constructively contribute to addressing the China challenge, they should step up their engagement with partners at the margins of strategic rivalry. Both the EU and Japan have lasting interest in the security of Southeast Asia, and both rank high as preferred partners in hedging against the US and China in the region. Joining forces in niche security areas such as countering hybrid challenges –especially Foreign Information Manipulation and Interference (FIMI) and “lawfare”, or the promotion of joint resource development and law enforcement capacity-building, which are particularly needed to de-escalate tensions in the South China Sea, could be a concrete low-hanging deliverable for the EU-Japan Security and Defence Partnership. Joint initiatives for sustainable connectivity, digitalisation and the green transition, which are also part of the broader EU-Japan Strategic Partnership, should be pushed for in other regions such as South Asia, Central Asia and Africa, as long-term investments that can prevent the spread of Chinese influence.

Conclusion

As much as the first Trump Presidency played a key role in bringing Japan and Europe closer together, the “second coming” of President Trump could provide another major wake up call. Despite the many challenges the new administrations in Tokyo and Brussels may face, they should take each other into account when looking for creative solutions to what the new geopolitical environment, with all its uncertainties, will bring about. Deepening defence ties through industrial cooperation and joint R&D projects in emerging and disruptive technologies and space represent an immediate priority, as these areas are needed for both actors if they are to provide for their security and competitiveness. Such cooperation may also help the EU and Japan become worthier partners in security frameworks they both want to see thriving, such as NATO.

Beyond defence, joining forces in economic security in areas such as supply chain security and technology cooperation will be necessary to withstand the winds of US economic protectionism. This can potentially be achieved with other like-minded partners such as Australia or South Korea. Southeast Asia could be another priority area for the EU and Japan, where both actors could jointly propose capacity-building initiatives in the field of countering hybrid challenges such as disinformation, FIMI or “lawfare”. In doing so, the Security and Defence Partnership could demonstrate its value-added for regional security, and this could set a precedent for further cooperation. All in all, the challenges facing Japan and the EU need joint action. Against the impending US-China trade war and growing strategic competition, the EU and Japan will be among the few last beacons of the liberal international order.

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