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MILLENNIUM GOALS: US-Japan Aid Tie-up to Push Private Role

Suvendrini Kakuchi

TOKYO, Oct 5 2005 (IPS) - Japan and the United States have begun discussions to collaborate on their aid budgets and make international assistance more effective, said officials here.

The first dialogue in this direction, proposed by U.S. Secretary of State Condoleezza Rice, was held on Sep. 28 in Washington.

A Japanese foreign ministry official said the discussions focused on two sectors-creating an environment to expand private investment in developing countries and job training for youth.

”Both sectors are considered crucial for the economic growth of developing countries, which is why the U.S. and Japan decided to narrow our focus here,” the official told IPS on Tuesday.

He said projects will help developing countries reduce tariffs and other trade barriers to boost international trade and foreign investment.

”We just had the first main meeting that discussed outlines and the next step is to expand into details,” he said, asking not to be named.

Japan is the second biggest donor contributing a budget of 8.86 billion US dollars in 2004 and its generosity is next only to the U.S. which spent 19 billion dollars on official development assistance (ODA), last year.

The combination of both budgets comprises a hefty 40 percent of the world aid budget, a move that, say analysts, will naturally have major consequences on overseas assistance direction and policy.

”Japan and the U.S. are the two leading economies of the world. The move to work together has left smaller countries, that are dependent on aid, with no alternative development strategies,” says Keisuke Oohashi, a professor of international development at Keisen University.

He says the choice of sectors for US-Japanese collaboration has put pressure on developing countries to embrace globalisation and the privatisation of important social sectors such as education and health, not necessarily welcomed by the local people in these nations.

”I have always advocated an internationally-linked aid system under the United Nations which would better represent the needs of developing countries rather than bilateral collaboration,” he said.

Oohashi represents a growing feeling of unease among experts and aid activists about the new push to link Japanese ODA with that of its U.S. counterpart.

Professor Hisashi Nakamura, a well-known expert on Japanese ODA and economist at Ryukoku University, contends Japan is bowing to U.S. pressure as before.

”I am not sure U.S.-Japanese collaboration will work smoothly as the two countries do not necessarily follow similar aid policies. Tokyo obviously could not turn its back on the proposal,” said Nakamura.

He explains that Japanese aid puts priority on developing the local infrastructure in recipient countries as a means of increasing private investment, compared to the U.S. that has supported technology exchange.

Moreover, says Nakamura, job training means teaching Japanese language to students in developing countries in contrast to the programmes followed in the U.S. that are based on English.

The foreign ministry, however, denies its aid budget that plays the important role of national diplomacy, will face pressure from Washington.

”Japan will maintain its ODA principles that put priority on aid that supports the goals and desires of the recipient countries. There is no fear of U.S. domination,” insisted the official.

He explained that collaboration could pave the way to cut waste in both the Japanese and U.S. budgets by sharing consultants and staff and reducing overlapping in projects.

Analysts say bilateral collaboration could work well in areas like sharing of experienced staff and joint work between non-governmental organisations, sector that is more advanced in the U.S. than Japan.

Japanese aid has been dwindling during the past seven years to cope with the economic recession and faces the risk of further cuts next year.

Pressure is also expected to increase on the ODA budget as the country embarks on stringent structural reforms although activists are advocating an increase to meet U.S. targets of 0.7 percent of the gross national income.

Critics also argue there is public pressure to use ODA to shore-up national interests against the gloomy economic climate.

The foreign ministry reports Japanese ODA will continue to meet U.N.-led Millennium Development Goals (MDGs) for poverty-reduction and new collaboration with the U.S. will be a plus in this aspect.

Other Japanese ODA policies, such as its focus on Asian developing countries and its latest commitment to double aid to Africa, will not change, pledged the official.

But Oohashi warned of the danger of politicisation of the U.N. MDGs with the new linking of Japanese and U.S. ODA that will pursue the interests of both countries rather on a multi-national platform with other countries.