DEVELOPMENT-JAPAN: Gov’t Opts for Selective Aid Policy

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Dec 15 2000 (IPS) - Strong opposition from the international community has softened the Japanese government’s move to cut its official development assistance (ODA) budget drastically next year but experts warn that the world’s top donor is no longer willing to lend as generously as it had.

“Japan’s ODA budget is being reviewed with the focus on quality rather than quantity and the new policy is quite popular with the public,” points out Kenichi Maruyama, an expert on China at the Institute of Developing Economies, a quasi-government think- tank.

The bombshell dropped in November when Shizuka Kamei, the top policy planner at the ruling Liberal Democratic Party, called for a 30 percent cut in the ODA budget, citing two reasons.

He argued that Japan faces a tight fiscal situation and doubts have been raised as to whether ODA is truly appreciated by the recipients.

Of the 85 trillion yen (772 billion U.S. dollars) fiscal 2000 budget, ODA accounted for 1.05 trillion yen, or 9.48 billion U.S. dollars, down 0.2 percent from the previous year.

But the Japanese media reports that the ruling coalition has settled for a 3.0 percent reduction for fiscal 2001 in light of growing opposition to drastic cuts.

A letter by UN Secretary General Kofi Annan to the Japanese prime minister Yoshiro Mori on Wednesday sought to persuade the government to continue with its present aid programme.

The government has promised that assistance already pledged in the form of loans and grants, will not be affected by the proposed cuts starting in April 2001.

Asia, that gets the lion’s share of Japanese ODA — around 62 percent — is expected to be the main losers.

Kamei, well known for his conservative and populist views, is considered a top player in the LDP and coalition government. His proposal for a drastic cut was based on a report by a party team that included academics.

The report pointed out that while Japan’s official development assistance programme aims to contribute to the stability and growth of developing economies, the results have not always been that way.

China, Japan’s second top recipient, is under special scrutiny in the report. The study finds that despite millions of dollars extended to China during the last two decades, a period that contributed to the country’s economic growth, Beijing continues to increase its military spending year after year in contradiction to the principles of ODA.

China received 1.22 billion U.S. dollars in ODA aid in fiscal 1999 following Indonesia, which got 1.60 billion — that included a special package during the financial crisis.

Guidelines outlined in 1995 state that ODA will not be extended to countries with high military budgets and poor human rights records.

The latest move to reduce the ODA follows on the heels of several similar moves by the LDP since 1997 when the prime minister at that time proposed a 10 percent cut.

Ever since the year-on-year growth in the ODA budget has been held to zero percent. But experts contend that the new reduction will hold next April given Japan’s severe fiscal crisis and growing public opinion against corruption-tainted projects in developing countries.

Kiichi Miyazawa, Japan’s influential finance Minister, told the press last month that while ODA is important, “the assistance should be reviewed because there may be parts that are provided out of habit”.

The Yomuiri Shinbun, Japan’s leading newspaper, explained in an editorial on Nov 27 that Kamei’s proposal deserves special attention given the fact that the ODA budget stands at about 10 percent of Japan’s total public-works projects responsible for the current fiscal deficit.

The newspaper also pointed out that recipients have not submitted proper reports on grants and yen-loans extended by Japan to “ensure the money was used properly”.

Foreign Minister Yohei Kono, who is not keen on cutting ODA, acknowledged the going is tough. He said he would work towards keeping afloat Japan’s ODA budget, which he stresses is the pillar of Japanese diplomacy.

“A reduction would not be in Japan’s interests,” he insists, echoing aid experts who also argue that Japan’s foreign aid only amounts to 0.28 percent of its gross national product, and a cut is too small to affect the economy.

Inge Kaul, Director of Development Studies at the United Nations Development Programme (UNDP) said in a recent development seminar that reductions in Japan’s aid will hurt developing countries.

She explained that Japan must place its ODA in a global perspective. “Take for example a problem in India, such as the growing rates of tuberculosis, there. In a global age it is in the interest of Japan to provide funds for the eradication of this disease because it can affect Japan as a result more people travelling,” she says.

Maruyama, of the quasi-government think-tank, says that Japan should not slash aid to poor countries but should revise aid to China that is reporting high growth rates and an increase in foreign cash flows.

“Aid to China can take a different form such as for environment and health projects rather than expensive infra- structure that is still the line,” he says.

DEVELOPMENT-JAPAN: Gov’t Opts for Selective Aid Policy

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Dec 15 2000 (IPS) - Strong opposition from the international community has softened the Japanese government’s move to cut its official development assistance (ODA) budget drastically next year but experts warn that the world’s top donor is no longer willing to lend as generously as it had.
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