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Despite Tsunami, Japan Resumes Aid to Myanmar

TOKYO, Apr 5 2012 (IPS) - Japan’s plan to resume official development assistance (ODA) to Myanmar, announced this week, is problematic for a country faced with a dauntingly large disaster recovery budget for areas hit by the earthquake and tsunami last year.

But proponents of renewing ODA to Myanmar (also known as Burma) argue that the move is important for Japan, a country that seeks to boost its diplomatic clout in the world through development funding.

In an editorial in December 2011, the ‘Nikkei’, Japan’s leading financial daily, criticised the nation’s falling aid budget – Japan has slipped to sixth place from being topmost international donor in the 1990s – pointing out that ODA has traditionally earned the country international respect and economic growth.

The editorial said that “the resumption of foreign aid for Myanmar is expected to further promote democratisation of the southeastern country as well as to help Japanese firms establish a foothold in that market.”

The contrasting viewpoint, however, questions the prudence of hiking ODA against Japan’s own economic problems – growth for the past decade hovers at less than two percent of gross national product.

Critics point to the looming expenditure, estimated to be over 222 billion dollars to rebuild damaged infrastructure and business in the earthquake and tsunami devastated northeastern coastal areas, as a key national priority.

Indeed, former prime minister Naoto Kan had declared after the Mar. 11 disaster last year that Japan will be cutting its foreign aid budget of around five billion dollars further to help fund a supplementary budget for reconstruction.

Japan has been slashing its ODA budget for the past 14 years to cope with increasing public expenditure to meet the needs of an ageing population, reducing fiscal debt and a high value yen that is encouraging Japanese companies to move to cheaper manufacturing sites abroad.

Prof. Kei Nemoto, expert on Myanmar and Southeast Asia, contends that domestic pressures will mean Japan will pledge ODA to Myanmar on a piecemeal basis rather than go ahead with large new commitments.

“Taking a decision to extend aid to Myanmar is an extension of Japanese diplomacy that is closely aligned with Western policies that support the democratic process in the country by investing in its economic development,” said Nemoto who teaches at the Sophia University in Tokyo.

“Yet, Japanese support will be cautious given its own domestic restraints,” Nemoto added.

Japan is planning to announce a restart of yen loans to Myanmar when its civilian leader, President Thein Sein, visits Tokyo later this month to attend the Japan-Mekong Summit.

Under review also is the cancelling or partial waiver of Myanmar’s debt of 5.8 billion dollar development loan extended for projects before aid – both loans and grants – was frozen in 2003.

Foreign Minister Koichiro Gemba, commenting on the latest election results in Myanmar, said Japan is committed to backing democracy and national reconciliation based on political and economic reforms now enacted in the country.

Gemba praised the victory of the National League for Democracy, led by opposition leader Aung San Suu Kyi, in the by-elections held over the weekend.

Analyst Toshihiro Kudo at the Institute of Developing Economies, a quasi-government think-tank, forecasts a fast developing bilateral relationship between Japan and Myanmar that will focus on promoting economic ties.

“Cooperation with Myanmar is important for Japan that is attracted to the country’s natural resources and young labour that can support Japanese companies that are investing abroad,” he opined.

On the democratic and human rights front, Kudo explained that Japan will be supporting more reforms but, in keeping with its traditional stance of pushing for compromise politics, will prefer to wait for results rather than take a hardline approach.

“In contrast to the Western push for human rights improvements, Tokyo’s diplomacy with conflict-ridden countries follows a more carrot approach with promises of rewards for democratic steps,” he said.

A step in this direction is Tokyo’s plan to provide funds to set up a Japan friendship centre in Yangon that will serve as a platform to promote technological and cultural cooperation.

Experts view the new structure, to be established later this year, as setting the stage to include educational projects to foster the modernisation and globalisation of the isolated country.

The gentler approach, according to Nemoto, will serve Japan to regain its presence in Southeast Asia, a thrust that is needed against the growing influence of China during the past decade.

Grassroots organisations based in Tokyo that have worked long on environment destruction in Myanmar and human rights violations among its ethnic minorities hope that the resumption of Japanese aid will be linked to development that respects people.

Yuki Akimoto, expert on Myanmar at Mekong Watch, a Japanese non-governmental organisation that works to prevent negative environmental and social impacts of development in the region points to stoppage of Japanese aid for hydro-electricity projects in keeping with the international aid embargo.

“We assume Japanese yen loans will be earmarked to revisit the construction of the (Salween) dam, a project that will be monitored closely by us,” she said.