JAPAN: Cutting Aid According to Clout

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Jan 10 2007 (IPS) - Japan, bent on becoming a significant regional player in Asia, is shaping its overseas development aid (ODA) budget to improve the country’s global visibility and meet strategic interests in the new fiscal year that begins April 2007, according to foreign ministry officials.

Citing growing public pressure to reach these national goals – ODA, a hefty 6.13 billion US dollars, even after an almost four percent drop from the 2005 level – a senior official said there will now be focus on such themes as peace building in the Middle East and maintenance of stability and prosperity for Japan.

Yet another important theme is the ODA role in promoting trade and investment based on the approach that the private sector plays an important role in reducing poverty in developing countries.

‘’Japan’s ODA is standing at crossroads as new challenges emerge in the world and domestic criticism calls for more visibility. We are developing new guidelines that can deal with this changing picture,’’ reporters were told at a briefing at the end of December.

Japan launched its ODA programme in 1954, a decade after its defeat in World War ll. The budget represented the country’s war repatriation effort and its impressive postwar economic growth record.

Later, in keeping with its position as the second richest economy in the world, its total ODA budget led the world in the 1990s and became the most important diplomatic tool for the country.

Japanese ODA comprises soft yen loans, – around 40 percent of the budget – grants and technical assistance. South-east Asia and East Asia receive the lion’s share followed by South Asia and Africa.

However, the last nine years have seen a consistent drop in the ODA budget, specially the last five, despite a rise in aid to Iraq that in 2005 amounted to 13,146.6 million dollars in debt relief.

Faced with a declining budget, attributed to widespread slashing of public expenditure to curb national debt, the 2006 ODA White Paper, released last month, clearly signals specific spending for development overseas.

Foreign ministry officials, who may not be named under briefing policies, did not rule out financial support for reaching the United Nations Millennium Development Goals (MDGs) that are aimed at halving global poverty by 2015.

‘’The new focus in Japanese ODA does not mean the government will ignore the MDGs which will also form an important pillar in our assistance programme,’’ an official said, acknowledging that Japan will not increase its budget to meet the U.N. goal of donors spending 0.7 percent of Gross National Income for poverty reduction.

Other international donors, mostly from the Nordic countries, have increased their assistance programme to reach the U.N. goals, followed by France and Germany reaching around 5 percent of Gross National Product. Japan now spends around 0.2 percent of its GNP trailed by the United States.

Japan’s new ODA thrust, according to analysts here, illustrates a key aspect of government policy under Prime Minister Shinzo Abe of pursuing closer ties with the U.S. and Europe in response to security threats in the region – hence the high debt relief for Iraq.

Abe, who has called for a debate on the revision of the Japanese Constitution that prohibits a military role for Japan overseas, left on a five-day tour of Europe Tuesday where he will meet with the leaders of Britain, Germany and France to promote a greater global security role for Japan and discuss the North Korean nuclear threat.

‘’Japan’s strategic interests now focus on regional security and a step away from bilateral aid that marked Japanese ODA before,’’ explained Prof. Hisashi Nakamura, an expert on development and the South Asia region at Ryukoku University.

Nakamura pointed out that as economic development has taken root in Asia, Japan aims to maintain its clout – especially as emerging Asian powers such as China and India are also now extending aid to other countries – by concentrating on regional security.

The Japanese foreign ministry has expressed concern over the growth of China’s aid programme that it feels ought to adhere to international goals.

Japan has also undertaken a regional approach – its Mekong regional development programme is a case in point – which Daisuke Hiratsuka, economist at the Asian Development Institute, describes as important for strategic interests.

‘’Japan’s economic role in Asian economic growth now takes the leadership in the form of regional development. This role carves for itself a special approach compared to new donors,’’ he said.

Africa will receive more Japanese ODA, in time for the 4th TICAD, (Tokyo International Conference on African Development) to he held in 2008, when Japan will host the Group of Eight (G8) summit.