December 24, 2015 / 2:37 AM / 4 years ago

Japan defense budget to exceed 5 trillion yen in 2016/17

TOKYO (Reuters) - Japan’s defense budget will grow 1.5 percent next year and top 5 trillion yen ($41.4 billion) for the first time, driven by costs for U.S. base relocation and growing personnel expenses, the government’s draft budget showed on Thursday.

Japan's Finance Minister Taro Aso attends a news conference at the Finance Ministry in Tokyo December 24, 2015. REUTERS/Issei Kato

Defense outlays for the year starting April 2016 are set at 5.05 trillion yen, the fourth consecutive rise since Prime Minister Shinzo Abe took office in December 2012 and ended a decade-long decline in such spending.

Under Abe’s leadership, the ruling bloc in September pushed through parliament hotly-contested legislation that allows Japan’s military to fight overseas, for the first time since its defeat in World War Two, in defense of a friendly country under attack.

Japan is allocating 59.5 billion yen to cover costs for the planned relocation of the U.S. Marine Corp’s Futenma air base on the southern island of Okinawa. That compares with 24.4 billion yen for the current fiscal year.

The United States and Japan agreed in 1996 to close Futenma and move its functions elsewhere on the island. However, relocation has stalled due to opposition from Okinawa residents worried about noise, pollution and crime and resentful of what they see as an unfair burden for the U.S.-Japan security pact.

The central government is planning to press ahead with reclamation work for the Futenma relocation despite a court battle now under way with Okinawa Governor Takeshi Onaga over the project.

Growing personnel costs will also boost defense expenditures as public sector salaries have been on the rise, reflecting higher wages in the private sector.

Items on Tokyo’s shopping list for the coming fiscal year include six F-35 stealth fighter jets made by Lockheed Martin Corp (LMT.N) and 11 units of AAV7 amphibious assault vehicles made by BAE Systems (BAES.L), as Japan fortifies island defense.

It has been locked in a territorial spat with China over a group of East China Sea islets, with patrol ships and military aircraft from both countries routinely shadowing each other near the islands, stoking fears that an accidental collision could trigger a clash.

The government cut the procurement of Osprey tilt-rotor transport aircraft, built by Boeing Co (BA.N) and Bell Helicopter, to four units from the initially planned 12 after maintenance and other expenses were estimated to be higher than originally expected.

($1 = 120.8500 yen)

Reporting by Nobuhiro Kubo; Writing by Kiyoshi Takenaka; Editing by Richard Borsuk

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