DEVELOPMENT-JAPAN: Tokyo Sharpens Aid as Diplomatic Tool

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Feb 4 2002 (IPS) - As its mammoth aid budget heads for yet another cut, Japan is trying to find ways of sharpening the use of overseas development assistance as the country’s most powerful diplomatic tool.

Officials and experts here say the need to streamline aid policy and use has become greater because of pressures brought by recession on the world’s largest aid donor, whose budget is being cut by 10 percent in the fiscal year 2002 that begins in April.

The Finance Ministry has outlined a draft allocating 910.6 billion yen or 7 billion U. S. dollars for fiscal year 2002, which begins in April.

It marks the third straight year of a decline in Japan’s overseas assistance, and is the first time the amount has fallen below the trillion yen (7.7 billion U.S. dollar) mark since 1992.

“The new trend is to keep the lid on funds and to also develop stricter spending control patterns,” says Yasuko Hayase, a population development expert at the quasi-governmental Institute of Developing Economies here.

Hayase points out that the new cut in overseas – the reduction in the next budget was announced in December after overall budget slashes sought by Prime Minister Junichiro Koizumi — have forced the managers of Japanese aid to select priorities.

Overseas development assistance, she contends, will be increasingly divided on the basis of the needs of the recipient countries and on themes, such as environment or conflict resolution, that are Japan’s priorities especially after the Sep. 11 terror attacks.

The old way of preferring to extend large amounts of money to poor countries and calling it aid, cannot be supported anymore, she says.

Experts point out that new changes in approach are already underway. In late January, Japan, despite the drop in its next aid budget, pledged a new package of 500 million U.S. dollars for Afghanistan over the next three years.

In addition, Tokyo announced in January a package of 12 billion yen (92.3 million dollars) for conflict prevention.

Tokyo, trying to show more commitment to humanitarian aid, also pledged 240 million yen (1.8 million dollars) in emergency aid to Tajikistan from next year, and 120 million dollars for the U.N. High Commissioner for Refugees.

“The smaller budget is no reason for alarm,” Yoko Kitazawa, a development activist, says on Japan’s official development aid. “Despite cuts, assistance will still be extended to certain countries that need the aid, which actually a welcome trend in Japanese aid.”

Critics have often faulted Japanese aid for not so much helping the poor as being a tool for promoting Japanese interests, such as lucrative contracts for its firms in developing countries.

Last week’s feud between former Foreign Minister Makiko Tanaka and a ruling-party politician, Muneo Suzuki, accused of barring non- governmental organisations from the Afghanistan reconstruction conference here in January, also raises the issue of the uphill struggle that civil societies face in trying to be a partner in Japanese aid.

Kensuke Onishi, head of Peace Winds, one of the rejected NGOs, comments that he “does not trust the government all that much,” in reference to aid programmes for developing countries.

Experts hope the distance between the bureaucracy and NGOs will be reduced too, as Japan reviews its aid policies. After all, “the government is forced to make the best out of smaller budget and this means more relying on NGOs. This is why we have hope for the coming year,” says Hayase.

Experts also say Tokyo has to develop new ways of projecting its international profile better, because its ways are doing so are limited. For instance, unlike the United States, Japan’s constitution limits it from playing a huge military role overseas.

But one area where analysts see no changes in aid priorities coming in the next fiscal year is the tradition of Japanese aid leaning heavily toward Asia, which gets 60 percent of it’s the aid pie.

Japan’s focus on Asia was underlined by Koizumi’s January visit to South-east Asia, during which he committed Japan to closer economic cooperation with South-east Asian countries and announced a free- trade pact with Singapore.

The government also announced special aid packages to Vietnam, Cambodia, Burma and Laos, the newer members of the Association of South-east Asian Nations (ASEAN) that have a lot of catching up to do with the other members.

Tamisuke Watanuki, visiting speaker of the House of Representatives, promised an 8 percent increase in Japanese aid to Vietnam as early as last year. Japan extended to Vietnam 750 million dollars in fiscal year 2001, which ends this March.

But China – until now has been the biggest recipient of Japanese soft loans — will be one of the ‘losers’ in Japan’s shrinking aid budget, judging from a foreign ministry report on official development assistance.

The report points out that due to the reduction of the budget for soft yen loans, the government will have to scale back new pledges for yen loans in the future. Loans dominate the Japanese aid that goes to China, which receives some 25.9 billion yen (200 million dollars) from Japan in a year.

“No doubt, Japanese aid is undergoing some crucial changes as a result of domestic economic recession,” adds Kitazawa.

Yet foreign governments that receive Japanese aid are not the only losers in the reduction of Tokyo’s aid budget — Japanese firms, which have traditionally received contracts related to the country’s overseas aid projects, are worried too.

The troubled construction industry, which has enjoyed the benefit of having 4 percent of aid-tied loans, is a case in point.

“We will be hard hit,” says Shizuo Ono, managing director of the Overseas Construction Association of Japan, who is lobbying the foreign ministry to increase aid spending since domestic public works are already on a downward trend.