JAPAN: Shrinking Aid Budget Spells Trouble for Poor Countries

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Jun 28 2007 (IPS) - Heavy cuts in public spending continue to dig a deep hole in Japan’s influential aid budget, which latest figures say has already reduced Tokyo from being the world’s leading donor at one point to third place among the top 22 major international lenders.

According the Foreign Ministry, Japan’s budget for official development assistance for fiscal year 2007, which started in April, is 729.3 billion dollars (5.92 billion U.S. dollars) at current exchange rates. This represents a drop of 38 percent from a decade ago.

"Japan now holds third place among donors. Reducing aid will affect development projects in recipient countries, so we are striving hard to increase the official development assistance (ODA) budget, which has not been spared from the overall slashing of the public budget," said an official who preferred to be not named.

Japan fell to second place in 2005. This year, it trails the United States, which has an aid budget of around 22 billion dollars. Britain has now overtaken Japan by providing 12.6 billion dollars, in keeping with a policy among Western donors to boost aid to combat international terrorism by reducing poverty.

In February this year, Richard Manning, chair of the Development Committee of the Organisation for Economic Cooperation and Development (OECD), reported that Japan could slip to fifth place in 2010 as donors such as France and Germany increase their assistance budgets.

Manning urged Japan to get its fiscal accounts in better balance but "also consider priorities of overseas cooperation", according to a report by Kyodo news agency.

Japanese ODA is seen as playing a vital role in the economic development of poor countries by providing much needed yen loans, grants and technology, both bilaterally and through multilateral aid organisations such as the World Bank, Asian Development Bank (ADB) and the United Nations.

Against such a backdrop, point out experts, there is a fear that a steady slash would dramatically affect aid programmes to reduce global poverty and slow down achievement of the United Nations Millennium Development Goals, which call on donor countries to spend of 0.7 percent of gross national income in development assistance.

Oxfam International, a leading development organisation, responded to the latest cut in Japanese aid by explaining that this would mean less aid going to places like Africa. It also means less money going toward children’s education and provision of health services and so on, according to Oxfam International London Representative Tricia O’Rouke.

Japanese officials also acknowledge the implications of the reduced aid budget. They add that the benefits of giving development assistance must be promoted to the public here by showing that economic stability in other countries protects Japan’s interests as well.

Experts say Japan’s new ODA spending, in fact, reflects this strategy that will affect developing countries in various ways.

For example, Ryukoko University Prof. Minoru Obayashi explains that Japanese overseas assistance is now heavily concentrated on the Middle East and moving away from Asia, which has been traditionally the main recipient of aid.

"As most of Asia grows economically, Japan’s traditional spending on infrastructure development becomes redundant. The focus is now on countries in the Middle East, which supplies oil to Japan," he told IPS.

Reconstruction aid to Iraq – the government had announced 5 billion dollars in 2003 – is also a top priority, reflecting Japan’s similar foreign policy interests with the United States, its key ally.

Yet another stark example of ODA and national interest affecting recipient countries is the rising interest in human security, according to Kay Ito, a lawyer and head of the non-government organisation Human Rights Watch here.

The government defines human security as the need to protect human lives, livelihoods and rights in conflict areas and links the dispatch of Japan’s Self-Defence Forces abroad as part of its diplomatic efforts in this regard.

"While this is a good policy, there is also the concern that aid to governments that cannot provide the basic amenities to its people because conflicts can ignore the issue of human rights in this situation. Many governments involved in conflicts are also responsible for the breakdown of national security. Human security aid must take this aspect into account," she explained to IPS.

Africa is also emerging as a new focus in Japanese ODA this year, a thrust that experts contend is the result of China’s increasing aid to the region as well as the greater focus on eradicating poverty by the West.

Aid to Africa comprises around 11 percent of Japan’s total ODA budget, slightly higher that the previous 10 percent figure in the past, and is expected to rise further next year when Japan hosts the Tokyo International Conference on African Development.

Preserving the environment is yet another priority in the latest ODA programme. Japan has promised more than 100 million dollars to help countries save energy to combat global warming under a new Asian Development Bank fund decided in May in Kyoto.

Japan is a leader in energy saving technology. China’s ozone polluting smog is now affecting the western coast of Japan, according to researchers, providing yet another reason for ODA playing a role in protecting the country’s national interest.

(*CORRECTED REPEAT)