Fault Lines – Defence bills, warning flares, Pacific cheques
Welcome to the latest edition of ASPI’s Fault Lines.
Every fortnight, ASPI’s Defence Strategy Program monitors the actions and developments shaping the regional order and Australia’s security.
This edition covers the period from 4 September to 17 September 2026. Subscribe here to receive every edition of Fault Lines direct to your inbox.
Northeast Asia
We’ll take six of one and half a dozen of the other
It’s budget preparation season in Japan and South Korea, and the two countries’ defence ministries have spent the summer hard at work on ambitious funding requests for the next financial year. Japan’s, released on 31 August, proposes matching this year’s ¥8.8 trillion (A$79 billion) request – as a starting bid. Key items in that request remain unpriced, pending the Takaichi government’s promised revision of Japan’s three keystone strategic policy documents later this year. Once that revision goes through, the final approved budget for fiscal 2027 could easily exceed ¥10 trillion. South Korea’s defence budget request – presented to the National Assembly on 3 September in the spirit of what we may assume was friendly competition – contemplates an unprecedented 8.8 percent year-on-year increase to 73.3 trillion won.
The two budget requests have a lot in common. Developed countries with money to spend (or, in Japan’s case, a willingness to politely ignore eye-watering levels of public debt) are converging on high-profile investments in AI, drones, standoff weapons and missile defence. This is no surprise to anyone plotting trend lines out of Ukraine and the Persian Gulf. Having the high-tech industrial nous to build much of that capability at home is the proverbial cherry on top. Both countries also face a similar demographic problem: conscription or not, a shrinking military-age population gives you a good incentive to substitute machines for people wherever you can. But it’s where the budgets differ that you begin to see the very different problems that Seoul and Tokyo are trying to solve over the next few years.
The South Korean budget request, before it’s anything else, is aimed at building out capability to the jointly agreed standard required for wartime OPCON transfer – the long-foreshadowed handover of command authority from Washington to Seoul in the event of a war on the Korean peninsula. The large-print, bold, underlined entries on South Korea’s shopping list are therefore what you’d expect of a force intending to take on more responsibility for deterring and, if need be, managing the hypothetical Korean War II. That means improving command and control and intelligence capabilities, accelerating the deployment of medium-range drones and close-in air defences, and stockpiling munitions for high-end rocket artillery. That also means outright doubling the spend on South Korea’s home-grown fighter, the KF-21, bringing it into mass production and initiating follow-on development for improved ground-attack capability in the KF-21 Block II.
Japan’s budget request, by contrast, is aggressively about the maritime domain. The ministry wants new frigates, new patrol vessels, new uncrewed maritime-surveillance aircraft, new sea-launched cruise missiles, new submarine-launched cruise missiles, further testing on two massive new 12,000-tonne Aegis System Equipped Vessels, Tomahawk cruise missiles on all their existing Aegis destroyers and F-35Bs on all their helicopter carriers. Long story short, if it even remotely involves salt water and blowing things up, Japan’s defence ministry probably wants it. That makes sense for an island country, and makes an awful lot of sense for an island country that can’t help but notice Chinese carrier groups’ increased willingness to swan around the Pacific. There’s also North Korea being North Korea, and Japan’s need to scramble fighters twice a day on average to respond to two major nuclear-armed neighbours flying combat aircraft within inches of its airspace.
The thing is, most of Japan’s capability requests are still unquantified and unpriced. The ongoing review of Japan’s three strategic documents hasn’t yet figured out what shape Japan’s military should have five years from now, nor what the government can afford. One of the big question marks hanging over that process is also the most conspicuous difference between Japan and South Korea’s budget requests: a brand-new line item, valued at 96.6 billion won, for kickstarting Seoul’s nuclear-powered submarine program. Speaking to the press on 11 September, Japan’s defence minister Shinjiro Koizumi took a question about that. No decision has been made, he said, but nuclear propulsion certainly has not been ruled out for Japan’s future submarine force.
News from abroad
- When either Korea looks over the fence, what it often sees is the other’s rapidly maturing precision strike and air defence systems. North Korea commissioned its second guided missile destroyer, the 5,000-tonne Kang Kon, at Wonsan on the Sea of Japan on 6 September. With another destroyer, Choe Hyon, on the west coast, that’s now one for each coast. These would be questionably useful in a fight, but the ominous spectre of North Korean sea-launched nuclear weapons makes a destroyer one more thing that would demand finding, fixing and finishing early in a conflict. This happened to be one of the many things that the fourth US–Japan–South Korea Freedom Edge exercise from 7 to 11 September was about. That is, benchmarking the three countries’ ability to integrate maritime domain awareness and targeting data in collective anti-surface warfare and missile defence activities. Hours after that exercise ended, North Korea responded with a suite of missile tests over the Sea of Japan. Pyongyang later claimed that the drill combined tactical ballistic and cruise missiles, attack drones and large-calibre rocket artillery under an integrated fire-control system.
- North Korea’s first direct road connection to Russia – that’s the bridge on the river Tumen we covered a while back – opened on 7 September. Meanwhile there’s been considerable progress at the Chinese border: after more than a decade of delays, it looks like customs facilities on Pyongyang’s end of the New Yalu River Bridge are finally complete. The whole thing’s nicely timed with the anniversary of North Korea’s founding on 9 September, which saw messages from Beijing and Moscow reaffirming their strategic ties; those ties could now, or could soon, gain a lot more potential economic depth.
Southeast Asia
Some turbulence expected
Just two months after a violent standoff involving water cannons at Scarborough Shoal, China deployed a trio of armed JL-10 jet trainers to intercept Philippine maritime patrol aircraft near the disputed feature on 2 September. The Chinese military released footage appearing to show the encounter, which Manila confirmed a few days later.
China has deployed fighters to intercept Philippine patrol aircraft around Scarborough Shoal before, but this is probably the first time it’s used armed JL-10s to do that. JL-10s can perform light-combat and air-policing missions if necessary. They’re cheaper to operate than J-16 fighters and manoeuvrable at low speeds, making them an economical choice to intercept a relatively slow-moving maritime surveillance aircraft.
Less than a week later, tensions shifted to the Spratlys. According to the Philippine Coast Guard, the Chinese military fired multiple flares at a Philippine maritime patrol aircraft on 7 September. After challenging the aircraft by radio, Chinese forces discharged flares from Subi and Mischief reefs. The Philippine Coast Guard also released a video of the incident. China maintains personnel at outposts on Subi and Mischief, the two largest artificial islands it occupies in the Spratlys.
The tensions also spilled into unusually public diplomatic sparring. During a Q&A at the Seoul Defense Dialogue on 8 September, a Chinese military attache handed Philippine Defence Minister Gilberto Teodoro a handwritten note reiterating China’s rejection of the 2016 South China Sea arbitral ruling. Teodoro bristled at the interruption, read part of the note aloud and retorted that of course China was upset about the ruling ‘because you lost.’ China’s foreign ministry, which has previously sanctioned Teodoro over what it called ‘irresponsible remarks’, responded by accusing him of ‘grandstanding and lying’, but his retort drew enthusiastic reactions online in the Philippines.
Amid all this, the Philippines continued to demonstrate its expanding maritime security cooperation with other countries. On 12 and 13 September, Philippine, US and Canadian forces conducted the 20th Multilateral Maritime Cooperative Activity in the Sulu Sea, on the other side of Palawan from the South China Sea.
News from the neighbourhood
- The Philippines held historic parliamentary elections in the Bangsamoro Autonomous Region on 14 September, a major milestone in the transition from decades of insurgency towards autonomous democratic government. The peace process in the mostly Muslim, nearby region of Mindanao has helped free Manila to shift its defence focus from internal security towards external threats, including in the South China Sea.
- Thailand and Cambodia took their maritime boundary dispute to international proceedings on 15 September, even as relations remain strained by their land-border conflict. The case will be a test of the region’s willingness to use the United Nations Convention on the Law of the Sea and international dispute-settlement mechanisms to manage contested maritime claims.
- Myanmar junta leader Min Aung Hlaing visited Vietnam on 4 September and Cambodia on 11 and 12 September, continuing the government’s efforts to rebuild ties with its Southeast Asian neighbours. Min Aung Hlaing’s red-carpet treatment drew criticism from human-rights groups as Myanmar’s civil war continues. The treatment also signalled Hanoi and Phnom Penh’s willingness to bring Myanmar in from the cold, further chipping away at the junta’s post-coup isolation within the Association of Southeast Asian Nations. In Vietnam, Min Aung Hlaing secured a deal to deepen defence ties, including expanded cooperation in military training, officer exchanges, search-and-rescue operations and disaster response.
- Vietnam’s bamboo diplomacy – characterised by flexibility and pragmatism – was on display this fortnight, with President To Lam visiting Russia (from 7 to 9 September) and France (9 to 12 September) while Prime Minister Le Minh Hung also participated in the BRICS summit in New Delhi (12 to 13 September). On the summit’s sidelines, senior Vietnamese and Indian defence officials agreed to deepen defence cooperation, including maritime ties and defence-industrial collaboration, as Hanoi continues to diversify its security partnerships and keep its options open.
Oceania
Cheque, please
Solomon Islands Prime Minister Matthew Wale has survived the no-confidence motion that whisked him from the Pacific Islands Forum leaders meeting last month. Wale’s former home affairs minister, Manasseh Maelanga, withdrew the motion the day before it was set to be debated, after it became clear that Wale had the numbers. The very next day, leaked text messages from Australia’s high commissioner in Solomon Islands to Deputy Prime Minister Francis Sade revealed that both countries had already given in-principle agreement to a new security treaty. Australia hoped to have that finalised before the Solomon Islands budget is handed down in November; that budget’s now been pushed back, but what that means for the deal is unclear. Either way, Australia is much closer to locking in a security deal with Solomon Islands than anyone outside the corridors of power expected.
Wale’s predecessor Manasseh Sogavare had preferenced relations with Beijing over Canberra, so it’s fair to assume that negotiations for this deal got going only after Wale came to power in May this year. If so, it’s progressed with unprecedented speed by diplomatic standards. It’s also got quite the price tag attached: the leaked texts suggest a total cost of more than A$930 million. Of that, A$142 million will support Wale’s free education policy; another A$47.8 million will go towards unspecified ‘visa improvements’ and ‘security requests from the Solomon Islands’.
Pacific Island states have long wanted a more open visa regime for their citizens going to Australia, but just about none of Australia’s recent regional deals have provided that. The main exception’s Fiji, where Australia got a new formal alliance in return. ‘Visa improvements’ could mean almost anything, but if a more streamlined visa pathway shows up in the final text of the treaty, that’s significant, and it’d say a lot about the lengths Canberra feels it must go to in order to keep Solomon Islands leaning its way.
What we also learned from the leaks is that the way Australia does development financing in the Pacific might be in for a pivot. The Solomons agreement, as far as we can tell, envisions Australia funnelling a little shy of A$2 million into each of Solomon Islands’ 50 electorates. While Australian funding for constituency-level projects is on the one hand nothing new, normally that’s been done through traditional grants tied to specific projects. What’s in the pipeline here is instead funding given in support of local politicians’ ‘development priorities’. While we lack much of the detail here, that seems to suggest an entitlement-like allocation to every electorate, similar to the so-called constituency development funds that Australia previously shied away from. And shied away for good reason: whereas China and Taiwan have a long history with that kind of approach, historically Australian authorities have held concerns around how transparently the money in those funds would be spent. Solomon Islands seems to have implicitly acknowledged those concerns; in 2023 it tightened laws regulating constituency-level financing, citing a need for stronger governance.
Sogavare, now opposition leader, didn’t seem too pleased with the prospective deal. His office released a statement accusing Australia of foreign interference to help Wale survive the no-confidence motion. Sogavare has demanded that the treaty be revealed in full along with ‘draft texts, negotiating mandates, financial commitments, conditions, security obligations and implementation arrangements’. This is an atypical practice before a treaty’s formal signing, to be sure, and in context not a little ironic. It wasn’t so long ago that Matthew Wale was in the opposition leader’s chair, asking for then-prime minister Sogavare to make public the text of the security deal he’d just signed with China. Sogavare refused. Four years later, the text of that treaty remains undisclosed – a fate that the Australian treaty, which will need to grind through the usual parliamentary process in Canberra, cannot replicate.
News from the family
- US Deputy Secretary of State Christopher Landau undertook a whirlwind trip around the Pacific this fortnight following on from the Pacific Islands Forum leaders’ meeting in Palau. He announced US$100 million for disaster relief in the Federated States of Micronesia and the return of the US Peace Corps (a humanitarian volunteer force backed by the State Department) to the Solomon Islands for the first time since 2000. He also announced that the US would look into upgrading a wharf in Kiribati just three hours’ flight south of Hawaii. While still in Palau, Landau announced US$50 million for upgrading a port in partnership with New Zealand on Penrhyn Atoll in the Cook Islands – a WWII-era US naval and air base. Landau explicitly linked the upgrade with a US–Cook Islands critical minerals deal signed earlier this year.
This article was originally published in Fault Lines, ASPI’s fortnightly newsletter that monitors the actions and developments shaping the regional order and Australia’s security.
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