DEVELOPMENT-JAPAN: With Smaller Budget, People-Friendly Aid Needed

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Dec 30 1999 (IPS) - Dogged by domestic economic constraints, Japan’s overseas aid budget, the world’s largest, is facing a cut in fiscal 2000 that has prompted activists to call for a more people-friendly aid policy.

The cutback comes after the Japanese Cabinet approved on Friday 1.04 trillion yen (10 billion U.S. dollars) in funds for overseas assistance for fiscal 200 which begins in April next year.

This amount represents a decline of 0.2 percent from 1999, when Japan lent 1.7 trillion yen (17 billion dollars) to developing countries.

Despite the slight drop, the first in two years, the government says it has injected ample funds to help Asian nations tackle poverty and improve their hard-hit economies since the financial crisis struck in 1997.

Another priority in Japan’s upcoming aid programme will be environment and social development spending, to which Tokyo has extended an additional 3 billion yen (30 million dollars) in grants.

“Official development assistance (ODA) used to win strong backing from ruling party politicians who were eager to convey to the world Japan’s commitment to international cooperation,” one foreign ministry official recalled.

“But that’s history. Overseas aid at a time of tight fiscal conditions at home has become unpopular. Humanitarian aid is relatively easier to win support for than conventional infrastructure projects,” he explained.

The Cabinet will present the budget to the Diet in January for final approval.

A foreign ministry official said the budget plan “enables Japan, as host of next year’s summit meeting (of the Group of Eight nations) to send a positive message to Asian countries recuperating from the economic crisis.”

He explained that recent changes in Japan’s ODA structure and policy were aimed at “prioritising allocations on tangible aid, global problems led by poverty measures and social development mainly in Asia, strengthening the ODA framework, promoting information disclosure, and improving the assessment system.”

Addressing concerns about the implications of a decline in Japanese aid, the official pointed out that in dollar terms Japan would actually be increasing its foreign aid budget by some 14 percent, because it was calculated at 120 yen to the dollar when drawn up in the fall.

The dollar has fallen rapidly to 102 yen in current exchanges.

Foreign aid analysts point out that despite the fall, Japan’s overseas budget remains a landmark in the nation’s foreign policy.

“The ODA budget continues to be at the centre of Japan’s diplomacy which relies on aid, as Japan still play s a minimal role in military activities. The cut is not a major concern and can be taken as an indication of important changes in the ODA toward the better,” explained professor Fumio Kaneko of Yokohama University, an expert on Japanese aid.

Japan is the world’s top donor, but its overseas assistance stands at just 0.28 percent of its Gross National Product, or way below the aid target by the Organisation of Economic Cooperation and Development (OECD) countries of 0.7 percent of GNP.

As for the future, Kaneko sees Japan will from hereon be spending more on environmental projects, especially in Asia.

“Asian economies are now back on track after the economic crisis. Japan will still focus its ODA in Asia, but put more money into protecting the environment and other social issues,” he said.

In August, the government outlined new guidelines covering its ODA programme between 1999 and 2003. The guidelines place emphasis on aid to Asian countries to help them implement structural reforms aimed at solving their economic problems.

The Tokyo government has pledged 1.8 billion yen (18 million dollars) for a new form of grant-in-aid to promote clean energy, increased environment and social outlays to 12 billion yen (120 million dollars), and expanded reforestation grants to 2.4 billion yen (24 million dollars).

Experts say China and Indonesia will continue to be the top recipients of Japanese aid, as they have been for many years.

The government has also allocated contributions of 10 billion yen (100 million dollars) each to the World Bank and the Asian Development Bank for “social development and poverty measures mainly in Asia”.

Still, critics in Japan have long called for the country, which has encouraged Asian countries to follow the Japanese model for economic development, to pay closer attention to the needs of poorer sectors.

Indonesia’s political turmoil, which forced then President Suharto to resign in May 1998, was seen as an important lesson for Japan which had nurtured close relations with the unpopular leader.

“In the new millennium, we need the government to not work too closely with ODA recipient governments, but also increase aid to local community and grassroots movements in order to improve the efficiency of Japanese ODA,” said Kiyoko Furusawa, who teaches development and human rights at Keisen University.

Aware of the criticism of its aid policy, the government, while decreasing general grants by 1.7 percent to 112.3 billion yen (1.12 billion dollars), has approved double-digit growth in funds for child welfare, removing anti-personnel land mines and reforestation.

Child welfare funds have been raised to 6 billion yen (60 million dollars), and spending for anti-personnel mines to 2.7 billion yen (27 million dollars).

Also, 355.3 billion yen has been allocated for bilateral technical assistance, up by 0.3 percent and including the dispatch of senior volunteers, development of human resources and student assistance.

The budget plan also calls a new system for disclosing information, another pressing request from grassroots organisations lobbying for more meaningful aid programmes by Tokyo.

The current assessment system is limited to results of ODA projects, but activists both in Japan and aid receiving countries have long batted for the government to address calls for debt relief, a pressing concern for developing countries.

Kaneko explains that it is difficult for Japan, which uses the nation’s enormous postal savings to provide ODA loans, to approve of a secure plan for debt relief.

“But Japan will soften its stance in the future on the issue in order to cooperate with growing international support for some kind of debt relief,” he predicted.