Japan's Foreign Aid Challenge [1 ed.] 9780203845622, 9780415585231

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ROUTLEDGE LIBRARY EDITIONS: JAPAN

JAPAN’S FOREIGN AID CHALLENGE

JAPAN’S FOREIGN AID CHALLENGE Policy Reform and Aid Leadership

ALAN RIX

Volume 14

    LONDON AND NEW YORK

First published in 1993 This edition first published in 2011 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2010. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk. © 1993 Alan Rix All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 0-203-84562-5 Master e-book ISBN

ISBN 13: 978-0-415-56498-4 (Set) eISBN 13: 978-0-203-84317-8 (Set) ISBN 13: 978-0-415-58523-1 (Volume 14) eISBN 13: 978-0-203-84562-2 (Volume 14) Publisher’s Note The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent. Disclaimer The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.

Japan’s foreign aid challenge

Policy reform and aid leadership

Alan Rix

London and New York

First published 1993 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1993 Alan Rix All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue reference for this book is available from the British Library ISBN 0-415-09010-5 Library of Congress Cataloging in Publication Data Rix, Alan.    Japan’s foreign aid challenge: policy reform and aid leadership/ Alan Rix.    p.  cm.—(The Nissan Institute/Routledge Japanese studies series)   Includes bibliographical references (p.  ) and index.   ISBN 0-415-09010-5   1. Economic assistance, Japanese.  I. Title.  II. Series. HC60.R552  1993 338.9′152–dc20 92–38840    CIP

Contents

List of tables General editor’s preface Preface List of abbreviations Introduction

vi vii ix xi 1

1 The philosophy of Japan’s foreign aid

13

2 Aid at home: public response and pressure groups

45

3 The real challenge: reforming Japan’s aid administration 72 4 Policy innovation in Japanese aid

102

5 Ties that bind: Japanese aid and Asia

134

6 Japan and foreign aid leadership

161

Conclusion Notes Bibliography Index

190 197 211

219

  v

Tables

1 2 3

vi 

Guidelines for aid policy Types of Japanese NGOs Asian dependence on Japanese ODA, 1989

37 68 143

General editor’s preface

With growing speed, as we move through the 1990s, Japan in her many aspects is becoming a subject of interest and concern. The successes of the Japanese economy and the resourcefulness of her people have long been appreciated abroad. The increasing impact of Japan on the outside world, with uncertainties about her future direction, also generates suspicion and even hostility in the United States, Western Europe and elsewhere. This is now compounded by the fact that, since 1989, events in the former Soviet Union and in Eastern Europe have begun a revolution in the international system, whose outcome is as yet unclear. The Nissan Institute/Routledge Japanese Studies Series seeks to foster an informed and balanced—but not uncritical—understanding of Japan. One aim of the series is to show the depth and variety of Japanese institutions, practices and ideas. Another is, by using comparison to see what lessons, positive and negative, can be drawn for other countries. Much contemporary comment on Japan resorts to stereotypes based on outdated, ill-informed or sensational ideas. We believe that many aspects of Japan are little known abroad but deserve to be better understood. Japan has often been accused of being isolationist rather than internationalist. The postwar Constitution, with its ‘pacifist’ clause, the security protection afforded by the Japan-United States Mutual Security Treaty, the nation’s single-minded absorption in the tasks of   vii

viii  Japan’s Foreign aid Challenge

economic advance, have left her apparently less involved in world affairs than her economic strength, prosperity and sophistication would lead one to expect. In one area, however, that of foreign aid, Japan’s involvement since the 1980s has been rapidly increasing. Although the fact is not trumpeted from the rooftops, Japan by now has a foreign aid budget comparable, at least in quantitative terms, with that of the United States. Professor Alan Rix conducted research on the Japanese aid programme when it was still a modest and ill-coordinated operation, and published his findings in his book Japan’s Economic Aid, in 1980. He has now returned to the subject over a decade later, and presents a wealth of new material about the enormously enlarged Japanese aid effort of the 1990s. The implications for Japan’s place in a rapidly changing world are profound. J.A.A.Stockwin

Preface

In this book I deal with some of the most pressing issues in Japan’s international relations today. How is Japan to reform its massive aid programme to meet the new global political and economic demands of the 1990s? Can Japan exert its influence on the wider international aid community, and how will it do so? Today, the challenge of Japan’s foreign aid is an issue both for Japan itself and for the international community. This challenge extends to researchers. The complexities of the aid administration pose many traps for unwary analysts. My involvement with the study of the Japanese aid programme goes back to 1975. Throughout that time support from colleagues has been enormous, but none more so than from my good friend Gotō Kazumi. He has encouraged me over the years to keep pressing on with analysis of the Japanese aid system, and his generosity with advice has been endless. Dennis Yasutomo and Robert Orr have also given enthusiastic encouragement, as have Susan Pharr, Bruce Koppel and Suetsugu Katsuhiko. Maureen Todhunter, Purnendra Jain and Donna Weeks all assisted with this present research, while Pam Rayner’s support, as always, has been indispensable. Judy, Christopher and Michael gave all the necessary family back-up. Funding for this research from the Ohira Memorial Foundation and the Australian Research Council is warmly acknowledged. Mr Saito Hideo of the Foundation has been particularly helpful on my visits to   ix

x  Preface

Tokyo. Harvard University’s US-Japan Program and the East-West Center at the University of Hawaii provided hospitality during visits to the United States, and the International House of Japan welcomed me in Tokyo. Japanese names in the text are given in Japanese style with surname first. Alan Rix Brisbane

Abbreviations

ADB AID Plan APIC ASEAN BHN DAC EPA FEER FY GE GNP G7 G24 IFI IGGI IMF ITTO JANIC JICA JTW LDC LDP LIC LLDC MAFF

Asian Development Bank Asian Industries Development Plan Association for the Promotion of International Cooperation Association of Southeast Asian Nations basic human needs Development Assistance Committee (of the OECD) Economic Planning Agency Far Eastern Economic Review fiscal year grant element gross national product Group of Seven industrialised countries Group of 24 OECD nations aiding Eastern European reconstruction international financial institution Inter-Governmental Group on Indonesia International Monetary Fund International Tropical Timber Organisation Japanese NGO Center for International Cooperation Japan International Cooperation Agency The Japan Times, Weekly International Edition less developed country Liberal Democratic Party low income country least developed country Ministry of Agriculture, Forestry and Fisheries   xi

xii  Abbreviations

MDB MFA MIC MITI MOF MSAC NGO NIE ODA OECD OECF OPEC SAL UK UN UNCTAD UNDP UNEP UNICEF US

multilateral development bank Ministry of Foreign Affairs middle income country Ministry of International Trade and Industry Ministry of Finance most seriously affected country non-government organisation newly industrialising economy official development assistance Organisation for Economic Cooperation and Development Overseas Economic Cooperation Fund Organisation of Petroleum Exporting Countries structural adjustment loan United Kingdom United Nations United Nations Conference on Trade and Development United Nations Development Programme United Nations Environment Programme United Nations Children’s Fund United States

Introduction

Japan is a part of all our lives. Its economic strength, the global reach of its products and investments, the admiration for its success tinged with apprehension of its motives and objectives; these are all commonplace in industrial societies, and many developing countries, today. The obsession of the media with Japan does not abate. The fiftieth anniversary of the opening of the Pacific War has just passed, and questions continue to be asked about Japan’s international behaviour and its contribution to global affairs. These questions are as much a topic of debate in the corridors of Washington as they are in Tokyo, and government officials around the world, especially around the Pacific Basin, anxiously await some positive sign that Japan now knows what its objectives are. The challenge of Japanese foreign aid is a central element in this drama. Foreign aid is one of Japan’s main international activities, but it is not widely known or understood, even in Japan. Mention of ‘Japanese foreign aid’ often excites visions of the massive inflow of aid from the United States to Japan in the early years after World War II. For older generations especially, it conjures up visions of American food aid, economic reconstruction and Japanese borrowings to build its postwar economic miracle. This lingering image of Japan as an aid recipient symbolises the problem that Japan faces in telling others of its achievements in the international arena. Although Japan now provides the largest amount   1

2  Japan’s Foreign aid Challenge

of economic assistance to the developing world, citizens in countries with which it trades and where it invests know little about this. Foreign aid is not a topic that generates a lot of public interest; it is not surprising, therefore, that Japan’s aid largesse is relatively unknown outside the country. Chances are that, if it were better known, people would still put it down to another case of Japan trying to buy its way in the world. This very criticism is already one that appears frequently in Japan, where the debate about the nation’s aid role is fast-paced and occasionally fiery. If governments in other capitals are worrying about what Japan’s aid is doing and how much it is costing, Tokyo officials are far more concerned. They have to contend not only with running the aid programme juggernaut, but with defending it against domestic critics, justifying it to sceptical American congressmen, explaining it to querulous assessors from other donor countries and negotiating new aid with exasperated officials from developing country clients. The cause of many of the problems faced by Japan’s aid officials lies within the structure of the Japanese aid system and its programmes. Administratively complex and politically muddled, aid is greatly understaffed but is the one policy area that is taking a more rapidly rising share of national taxes than any other. The topic of aid is so frequently brought before public attention in Japan that the term ‘ODA’ (the formal terminology for the definition of foreign aid by the Organisation for Economic Cooperation and Development (the OECD), ‘official development assistance’) is the one used most often in the Japanese language today to refer to foreign aid and is used more frequently than its Japanese language equivalent. One can use ‘ODA’ in conversation, see it on television or read it on the front page of the Japanese daily papers; it is accepted as an everyday term, albeit a recent borrowing. In the West, the term ‘ODA’ is rarely used to mean overseas development assistance, except by aid officials in governments and aid agencies, and is more commonly understood to stand for the Overseas Development Administration. With its aid a controversial media and political issue in Japan, but Japan’s aid contributions relatively obscure and even less well understood outside Japan, it is important to assess what the aid programme means to Japan’s global role. The objective of this book, therefore, is to address three main themes: how Japan is coping with the changing demands on its aid programme; how the aid programme is

Introduction  3

structured and managed under new domestic and external conditions; and what Japanese aid policy tells us about Japan’s global objectives and capacity for achieving them. This is not an introductory survey of Japanese aid, its development and operation; instead, the book takes up a number of specific issues that are critical to understanding the directions of Japan’s aid policy today and the prospects for its future growth and change. Central among these are questions of aid philosophy, public attitudes to aid, reform of the aid administration, innovation in policy, Japan’s role in Asia and the potential for aid to assist Japan in defining a leadership role for itself in the years ahead, especially as global power configurations shift with alarming speed. Japan’s aid can certainly not be ignored in the debate about Japan’s global role; the issue for Japan is how aid can best be used to achieve Japanese goals while enhancing the welfare of the people in developing countries who need it. We will assess the central proposition that reform and innovation are widespread in Japanese aid thinking and in aid programmes, but that a number of factors limit Japan’s capacity to deliver high quality aid. These centre on administrative rigidities, political weakness and entrenched policy emphases arising from a long-standing preference for loans over grants and a strong Asian focus among its recipients. These factors also restrict Japan’s capacity to make a coordinated effort towards addressing the global problems of development and poverty in a way that can match the rhetoric about policy objectives of boosting aid quantity. Japan’s future as a world aid leader is still uncertain, despite the widespread regional impact of Japan’s aid in Asia and Japan’s higher profile in multilateral aid forums.

THE CHALLENGE OF MANAGING FOREIGN AID Until the collapse of the Soviet bloc, Western donor nations were having trouble justifying aid. The members of the Development Assistance Committee (better known as the DAC) of the OECD1 were labouring under the burdens of greater aid demands from the poor countries, severe challenges from desperate conditions in the poorest countries and fiscal pressure back home alongside increasing public questioning of the need to give money to other countries when

4  Japan’s Foreign aid Challenge

poverty, hunger and social problems were rife in recessed Western economies. The massive demands for assistance from Eastern Europe and the former Soviet Union helped revive a consciousness amongst jaded industrial country publics of the political and economic importance of economic aid. Eastern bloc countries have not yet been classified by the DAC as developing countries but assistance that meets DAC conditions can be considered as ODA. Aid to those countries is intended to be additional to other ODA flows.2 None the less, the perils for the West in not coming to the aid of these nations has been made all too obvious, and Japan along with other members of the Group of Twenty-Four donor nations has pledged assistance. The symbolic importance of aid to Eastern Europe is that it has rekindled interest in what aid is, what it stands for and what it can achieve. While aid to the Eastern bloc has a mainly political motivation because of the seriously destabilising effects of an economic crisis in that region, public consciousness of aid has certainly risen. Japan was perhaps one of the countries where open and active debate about aid was still widespread, but the DAC mood was gloomy: ‘We can see the path ahead but the terrain is rough,’ began the 1987 report of the DAC.3 By 1989, donors had signed the joint statement on ‘Development Cooperation in the 1990s’, in which they pledged to strengthen and adapt aid policies to achieve broad-based economic growth, more human resources development, participatory development and environmentally sound and sustainable development in the developing countries. These goals were to be pursued through higher aid quality, better planned and managed aid programmes (including coordinated sectoral programmes), more action to achieve effective local management and efforts to assist the developing countries themselves become more responsible for aid management.4 These are highly donor-centred objectives, as the DAC is a donor organisation. Generally, however, there has been little analysis of aid donor programmes and policies in recent years, at least in the English language literature (there has been a new wave of Japanese studies, as will be discussed in Chapters 2 and 3).5 A bland description of the operation of aid donor agencies, with some comments on overall performance, did not advance very far our knowledge of Japanese aid administration.6 We need to go back

Introduction  5

to some of the classic studies of the 1970s to get a full picture of the politics of aid donorship, for attention over the last decade has primarily been on the question of aid impact and effectiveness. Thus, following White’s 1974 work, the major studies of aid have been the report by Robert Cassen and Associates, which gave little space to the question of donor practice, and that by Paul Mosley which gave some but not enough to enlighten us further. Roger Riddell reviewed ideas about aid extensively and touched on donor objectives.7 In all three books, however, there were only a handful of references to Japanese aid, and in Riddell’s extensive bibliography there was not one citation of the literature on Japan’s programme. If donor policies have been little discussed, Japan as a donor has made no impression at all on the debate about foreign aid. The evidence that has come forward about the impact of aid provides little comfort to donors concerned to improve their aid results: aid has been found to have little effect on political leverage or export promotion, to help somewhat to redistribute income from the rich to the poor countries, but to do little to promote growth and development. While Cassen was more positive and saw some development effects, the evidence overall is not strong. Mosley also came to the conclusion that the aid allocation process by donors is not very rational or technocratically based, and that political and administrative interests are dominant. This conclusion was reached much earlier in relation to the Japanese programme, and since then Yasutomo has added a major new perspective to our study of Japanese aid motives, the necessity for strategic imperatives as an aid determinant.8 Orr has likewise reminded us of the effect of other donors’ views on policies of single donors like Japan, what Mosley called the ‘bandwagon effect’,9 although in the US—Japan case that Orr discusses there are strong bilateral motivations for Japanese accession to American pressure, not simply a Japanese desire to be seen by its fellow donors to be doing better. With this dearth of research on donor policy and practice, the question of why donors behave as they do has been left aside. A handful of Japanese analysts have argued for revival of the study of aid administration as a branch of public policy,10 but it has been mainly left to donor organisations like the DAC to examine their own practice—to ‘self-regulate’, as it were. Far more attention has

6  Japan’s Foreign aid Challenge

been devoted to analysing recipient administration as a component of understanding how efficiently aid is managed. To this point, however, the study of Japanese aid has largely been a study of the donor; perhaps too much so, for we know very little at all about the way in which Japanese aid impacts on recipient economies at the grass-roots level. One of the serious gaps in our knowledge about the Japanese aid system, as will be discussed in Chapters 4, 5 and 6, is that even the Japanese Government itself is poorly informed about how effective its aid is in fulfilling programme objectives and meeting the needs of recipients. This book will not attempt to study the management of aid in the recipient country, but will discuss instead some of the donor conditions in the Japanese case that help affect the level and scope of impact. Some commentators have discussed donor approaches to aid. Esman in 1980 reviewed the role of public administration in the management of aid, and observed a decline in enthusiasm and morale, ‘a sense that the tasks of development are too daunting, the field of public administration has little to offer, and that technical assistance may be a morally impermissible intervention in weaker and dependent societies, producing more harm than good’.11 Esman appealed for ‘reconstruction and renewal’, for innovation in the services and practices of aid agencies, escape from internal bureaucratic concerns and a relocation of the essential focus of administration on to the tasks of development: equity oriented administration imposes demands for innovation in bureaucratic structures and methods of delivery. It expands the instruments of service provision and linkage to publics beyond bureaucratic structures to include and combine voluntary agencies, market mechanisms, local governments, associational groups and even political parties. Instead of transferring known technologies, the emphasis in foreign assistance must be on innovation and experimentation, moving gradually from pragmatic, site-specific successes to tested practices that can be tried out, but not replicated or installed, where similar conditions prevail.12

Esman’s call was followed up by Cohen et al., who suggested quite sensibly that donor systems can and should learn more about the constraints on their aid policy, and about the capacities of their

Introduction  7

administrative systems.13 As we shall see, Japan’s government has been doing just that over recent years, but in the context of administrative reform rather than improvement of the aid programme per se. In line with this theme in the limited literature that is available, therefore, this book is interested in the question of innovation in the Japanese aid system. Innovation in this context also involves reform of policies and procedures; how is the Japanese aid programme responding to the multiple pressures of domestic scrutiny, recipient demands and international expectations? At the base of the problem, however, lie questions of why Japan gives aid and what it expects from aid-giving, and how such ideas are changing. The whole fabric of the Japanese aid programme is woven with a long-standing ‘philosophy’ or rationale that is being increasingly reiterated, endorsed and extended, rather than diluted. A major part of our analysis, therefore, will examine this philosophy and its effects, and we would contend that Japan’s aid rationale is still one of the major determinants of the content of aid policy. A related aspect is the domestic public response, which we take up in Chapter 2: aid officials, as White pointed out many years ago, must work within a complex array of political and bureaucratic pressures.14 In Japan’s case, the domestic context of aid has greatly influenced attempts at renewal and reform. Politics has impacted on aid policy via the public debate and aid policy-makers are now increasingly mindful of domestic reactions. Similarly, this debate has involved the growing aid lobby of non-government aid organisations, a lobby counter-poised against the fundamental philosophical thrust of the programme, and against the traditionally active and accepted aid interest groups from business and the consultants industry. In all of this, the book’s theme of innovation hinges on the capacity of the Japanese aid system to bring about fundamental administrative reform, to enable a more responsive and responsible aid programme. Esman’s concern was with the administrative aspects of aid policy, to escape from the emphasis on the central administrative processes to greater emphasis on service. The problem in Japan is also one of excessive centralism, a centralism of competing bureaucratic power structures without an identifiably responsible core. We are therefore interested in how far Japan has been able to go in achieving

8  Japan’s Foreign aid Challenge

administrative mechanisms that can improve the implementation of aid. We would suggest that it has not gone very far at all; the administrative process is still the central axis of the Japanese aid programme, because of the size of the aid flows, the complexity of the system, the dispersal of political power therein and the dominance of the prevailing aid philosophy over the type of programme that is operated. A further concern is how aid policy itself is changing within this rather intense environment of debate within Japan about foreign aid. While the aid programme is widely criticised, there has been notable innovation at the micro-level in the management and operation of aid flows, and in the nature of the aid in its various forms. While there is genuine reform taking place, it must still be asked whether this is a consistent and continuous process, and how thoroughgoing it is likely to be in the longer term, and where it might take the aid programme.

JAPAN’S AID AND LEADERSHIP Related to the issues of innovation and reform is the extent to which these are directed towards a domestic or international audience, and how far these reforms are designed to suit the recipient, or the donor and its fellow members of the DAC. Just as the domestic expectations of Japan’s aid performance are growing, so are international expectations. The reasons are clear enough, for in terms of raw cash and kind Japan is undoubtedly a major force in international foreign aid. In 1991 it disbursed US$10,951 million to the developing countries, international agencies and multilateral development banks. This was more than any other aid donor (in 1989 Japan in fact had been the top donor and it became so again in 1991), and constituted 18.8 per cent of total DAC spending. It continued Japan’s steadily rising aid disbursement that has grown almost unabated since the late 1970s, itself a deliberate policy target. Despite the total aid flows from Japan, numerous other indicators show that Japan is not ‘number one donor’. On most measures of ‘aid quality’ (its concessionality for the recipient) Japan is near the bottom of the OECD donor’s table and has been for some years. Japan is likewise the target of much criticism, both at home and abroad (as

Introduction  9

we shall see in Chapter 2), for serious biases and problems in its aid programme, which in recent years has spilled over in Japan into intense scrutiny by the press and government agencies of alleged waste, mismanagement and even corruption in the aid system. What then does this huge aid flow tell us? As a pillar of Japan’s foreign policy, the aid programme and Japan’s aid behaviour are indicators of Japan’s international role and allow consideration of Japanese global leadership, a concept which normally implies some degree of moral legitimacy. In inter-national affairs it also involves rule-or agenda-setting, and the ability to produce or induce follower support from other nations or their governments. Leadership may also carry with it the need to bear the cost of maintaining the rules, providing necessary public goods (such as foreign aid) and managing the consequences. Leadership is also increasingly seen as a form of ‘entrepreneurship’ (to use Young’s argument), which involves ‘a combination of imagination in inventing institutional options and skill in brokering the interests of numerous actors to line up support for such options’.15 I have discussed elsewhere the concept of, and possibilities for, Japanese international leadership16 and showed that, in the context of Asia, Japan has been active over the longer term in shaping an Asian Pacific order that accepts Japan as an economic power on its own conditions, but abjures the concept of Japanese leadership through overtly dominant behaviour. Attempts to maximise the conditions for effective Japanese action do not constitute a style of leadership in the Washington mould, nor one designed to satisfy Western expectations of what Japan should be doing to raise its international profile or increase its international contribution… It is a style of leadership that aims at creating long-term Japanese influence in the region, and has been a successful form of longstanding entrepreneurial leadership, that has carved out a regional role for Japan as investor, trader, aid donor and political actor.

The aid context does not by itself greatly affect the bigger question of whether or not Japan will take over the hegemonic mantle of the United States and, if so, how quickly. Aid features little in the scenario of authors such as Rosecrance and Taw, whereby Japan is on the same path as the ‘hegemons of yesteryear’, in providing

10  Japan’s Foreign aid Challenge

public goods, bearing systemic costs and thereby taking the road to ultimate decline. For them, other factors are far more important in the long run, notably attempts to cut back trade balances, greater direct investment in the economies of its trading partners, increased military spending, more joint venturing with foreign companies, wider market access into Japan, greater domestic consumption, lower savings and enhanced leisure.17 We would argue, however, that aid is nonetheless a major feature of the creation of an Asian sphere of influence, even if Japan’s aid programme has not yet brought about an enhanced Japanese impact on the global aid debate or if it is not yet confirmed that Japanese aid has had a significant development impact. Japan has certainly taken a lead as donor to many developing countries and, as we will discuss in Chapter 6, is the dominant donor in Asia, in Pacific and, increasingly, in other regions. Even in Latin America, Japan gave more aid to over half the region’s nations than did the US or France, traditionally the major donors.18 Their aid was concentrated heavily on former colonies (in France’s case) and political support in countries like Guatemala, Costa Rica and El Salvador (in the case of the US). Yet in the US—Japan context the two countries work closely together in several areas of aid policy, and Japan’s aid agenda is continually to increase and improve its own programme for its own purposes rather than simply to outdo the United States. In 1989 and again in 1991 Japan outperformed US aid; its interest as a potential global rival to the United States is to continue to allow the US to bear the substantial costs of leadership, such as client state support in Central America. Japan’s interests as a donor are better served by maximising its clientele. Our questions, therefore, do not broach the quite separate issue of hegemony. Rather, they relate first to whether Japan is carving out for itself a particular role as an aid power, and second to what Japan’s aid policy can tell us about Japanese international leadership style, practice and aspirations. This is only part of the broader question of whether Japan is becoming (and whether it seeks to become) an international leader. Our major leadership concern in this book is the role that Japan might be playing as an aid leader. Of itself aid quantity does not confer legitimacy as an aid leader, so we are interested in matters already raised above: the scope of Japan’s aid initiatives, its

Introduction  11

attempts to improve aid delivery and effect, the seriousness with which it is addressing global issues in aid. ‘Sector-specific’ leadership, such as in global development efforts, is one scenario that Kent Calder sees as a possibility for Japan.19 An important theme of this book is that even such limited leadership, or regional leadership in Asia, hinges on Japan’s capacity to manage its aid programmes effectively. Leadership based on Japan’s international standing as an aid donor is likely to be unconvincing on the basis of past performance; thus we will assess what basis there now is for Japanese leadership in the aid field, and what current trends can tell us about Japan’s wider global role. Questions of innovation and reform in aid are therefore counterbalanced against the issue of Japan as an aid leader. Each affects the other, and the specific issues of aid policy raised in the book are important to both major themes. While the book addresses these themes, it does not attempt to point the way forward, except in so far as it suggests some alternative administrative models. Where Japanese aid is going, and how it will adapt its policy over the coming years, is not an easy judgement to make. Yet some possible directions will be clear from this book, and the likelihood of different scenarios can be discussed. It is important to note here that there are several aspects of Japan’s aid that are not dealt with in the book. While significant, they are beyond the scope of the book. One has already been mentioned, that concerning the nature of the Japanese aid impact at the recipient end. We do not examine budgeting or the financial management process; judging from the importance of the aid budget and wellpublicised problems with financial control in aid, there is a need for such studies. We have not delved in any depth into aid as a response to the Third World debt problem, partly because this concerns much more than just Japan’s ODA, and partly because other research on this, and the relationship between Japan and the multilateral development banks, is under way.20 The business and political connections with aid are not explored; some aspects have been discussed recently,21 while the whole story begs a book of its own. There are thus many more worthwhile studies to be made of Japan’s aid. Aid is such a dominant aspect of Japanese foreign relations, domestic budget politics and business— government relations that our lack of proper understanding of the processes at work hampers

12  Japan’s Foreign aid Challenge

our full appreciation of the contemporary Japanese political economy. This book takes up some of the main issues of Japan’s foreign aid; it is a dynamic and controversial policy area with great international impact, but is it also becoming a convincing basis for Japanese leadership in the international aid arena?

Chapter 1 The philosophy of Japan’s foreign aid

Now that Japan has achieved the status of the world’s largest donor of official development assistance, the philosophy of Japanese foreign aid is of great public interest, especially for taxpayers who are footing the bill. Japan’s reputation as an aid donor has never been free of criticism (as we shall see in Chapter 2), and much of that has centred on the motives and objectives in giving aid, particularly in view of Japan’s poor record on aid quality when compared to other donors. Until recent years aid did not have a high public profile in Japan, nor did it attract much press or political comment. The formal explanations for aid-giving emanating from the government and the private sector were therefore accepted without too much scrutiny. Today, however, there is close public attention paid to the underlying philosophy of Japan’s aid, and the government is more aggressively articulate in defending the reasons for its aid policies. The higher the international aid profile of Japan, the more intense is the scrutiny of the Japanese aid philosophy, both at home and abroad. This chapter1 examines this ‘philosophy’ and considers what factors, including social imperatives, affect it and the motivations   13

14  Japan’s Foreign aid Challenge

which underlie it. The status of ‘aid power’ or ‘aid leader’, a frequent comment about Japan today, anticipates a universalist element in the aid philosophy, a capacity for adaptation and innovation. As in any donor nation’s agenda, there are several layers of objectives that make up what can be called the ‘aid philosophy’; these layers are not immutable or fixed in relation to each other, but priorities change over time. Japan’s aid philosophy in the 1990s is shaped by a very different set of principles from that which prevailed in the middle of the 1970s.

THE OFFICIAL EXPLANATION The Foreign Ministry’s 1991 ODA ‘white paper’ features the latest explanation of Japan’s aid-giving (the 1990 edition concentrates on rebutting criticism of Japanese aid, and will be discussed further below).2 The primary reasons for giving aid, according to the ministry, relate to Japan’s recognition of its interdependent relations with international society, and to humanitarian considerations. They are, says the report bluntly, the basic concepts behind Japan’s aid. Furthermore, there follows from that an emphasis on ‘aid for development’ but aid that is also aimed at encouraging self-help in the recipient nation. There are five underlying rationales for Japan’s aid programme, all stemming from Japan’s perceived international responsibilities as a rich nation to provide aid, as the world’s greatest creditor nation, as a country economically dependent on the less developed countries (LDCs), as a peace-loving nation and as the only advanced non-Western nation. These rationales are obvious enough, and suggest why the Japanese aid programme has grown the way it has in the last decade and why Japan has become such an important part of the world aid community. But they leave many questions unanswered, and do not help us very much to understand the extent of humanitarian motivations. The stated rationales are fine expressions of principle, but tell us little about the fundamental objectives of the Japanese Government, which incorporate a strict economic and political rationalism lying behind the vague public statements about the purposes of Japan’s aid, and a consistent preoccupation with a range of internal policy objectives. In

The Philosophy of Japan’s Foreign aid  15

this, Japan reflects the experience and practice of other major donors, but none of Japan’s goals reflect a consistent development philosophy, except in its emphasis on the need for recipients to help themselves to achieve development and growth.

CULTURAL ANTECEDENTS We can learn much from public pronouncements on aid such as those above. But foreign aid is more than just concepts or philosophy; it is about wealth and poverty, but it is a drama involving people, money, technology, equipment and political and bureaucratic decisions. Over time, a donor’s aid objectives can change, but the continued existence of an aid programme presupposes that not only the donor’s political and economic interests, but also its social and cultural needs and values, are being fulfilled. This link between aid policy and socio-cultural values is important. Prevailing cultural norms certainly influence the way nations behave: Louis Halle described foreign policy as ‘our attempt to affect the best possible reconciliation between our intrinsic national character and the pressures of the extrinsic world in which that character has its being’. In thinking about our foreign policy, he adds, ‘we ought to understand ourselves as well as our environment’.3 The domestic sources of foreign policy have been widely debated in the literature, and Japan has received significant attention in this debate.4 In Japan’s case, the focus has been on issues of economic security, resources, export promotion and investment, as well as the role of the private sector in determining policy, and the interplay between business, the governing party and the bureaucracy in policy outcomes.5 In a policy area such as foreign aid, where taxpayers’ funds are given to assist the welfare of people in other countries, and where (in Japan at least) there is no effective means of public scrutiny of aid policy, the social legitimacy of the aid programme is paramount. But what is the domestic context of Japanese aid? Japan’s foreign aid experience reflects important historical and cultural characteristics. Japan is quick to remind others of its own rapid modernisation process from the Meiji period (1868–1912) onwards, based on deliberate adaptation and learning from the

16  Japan’s Foreign aid Challenge

West, strong internal leadership and control, conscious policies to promote education and national awareness, and imperial expansion to support domestic economic growth.6 It was a successful formula, and as a result the principle of self-reliance among recipients has been entrenched in Japan’s current aid policies. At the same time, a sense of charity towards the less fortunate is weak. This has been widely commented on in relation to the aid programme and its perceived absence of humanitarian values. Some commentary suggests that this may well be because of the lack of a universalist Christian ethic in Japan, and the marked absence of a concept of charity outside the family in Japanese social and religious practice. The Ministry of Foreign Affairs (MFA) highlights Christian principles as one element of Western European support for aid, in contrast to Japan, alongside these nations’ historical stocks of wealth, high per capita incomes and being accustomed to living with peoples of other races.7 There is also explicit recognition of the weakness of charitable values in the aid programme in the 1989 MFA aid report.8 The MFA exhibits an almost obsessive concern for Japan being separate and different (especially in social and cultural terms) from other donors, and the aid white paper is typically peppered with comparisons between Japan’s approach and that of American or European donors. The push for economic development during the Meiji period confronted problems of Japan’s resource scarcity and the need for markets. This was one factor that led to the expansion of a mercantilist trading policy, and an exploitative colonialism. But Japan also exhibited a strong sense of insularity and isolationism which has not disappeared, and the aid programme reflects this: it has operated not from a global viewpoint but from the highly particularistic standpoint of Japan’s narrow national interests. Several Japanese authors have commented on Japan’s racial unity and its island-nation consciousness as contributing to strains in its international relations.9 Yano Tōru berates Japan’s pursuit of domestic self-interest and urges a shift away from ‘the logic of Japan’s statist identity’. A sense of globalism is missing in Japan’s approach, he argues, and he claims further that what was touted as a neutral and all-embracing policy in the 1980s— zenhōi gaikō or omni-directional diplomacy—was, in fact, despite its title, carefully targeted (primarily towards Asia), closely linked to the identification of a Japanese ‘security sphere’ and geared to a ‘political’

The Philosophy of Japan’s Foreign aid  17

(as opposed to a ‘bureaucratic’) style of diplomacy.10 This highlights a second characteristic of Japan’s foreign policy, an affinity with Asia historically and in cultural terms, which has led to a predominant emphasis on Asia in Japan’s aid flows (see Chapter 5). A third characteristic is Japan’s hierarchical view of the world, a cast of mind that is of enormous importance to its aid policy. Herbert Passin described this hierarchy some years ago, identifying the developing countries as well down in the rank order of status and influence.11 While these rankings have altered somewhat over the years, and some Asian capitals are now sought-after posts for ambitious young Japanese diplomats, Japan’s attentions, even some aspects of its aid policy, are turned to seeking recognition and acceptance from its fellow donors of the advanced industrial club, not from its poor aid recipients. Consistent with a sense of hierarchy and insularity is the phenomenon of exclusivity in Japanese dealing with foreign cultures. This is mainly relevant in relation to the Japanese presence in the LDCs, as Nakane Chie has demonstrated.12 What is of interest here is the way these cultural values interact with the ongoing aid policy process. It is this interplay that helps shape Japan’s aid policy. Social and cultural values help set the parameters within which policies develop, and the speed at which they might change. Aid policies therefore provide a vivid reflection of a donor’s social values and culture, despite the strength of political, economic or bureaucratic considerations. In Japan’s case, cultural values have helped shape aid rationales, and official explanations are always ready to proffer contrasts between Japan’s cultural background and those of other donors, to help justify the Japanese programme.

DONORS AND AID-GIVING There are a number of standard arguments about aid rationales for donors generally. John White is sceptical about the relevance of ‘motives’, but he does say that to identify the precise mixture of motives ‘would require an exercise in social psychology’.13 Although he considers that donor activity is probably best described by a complex mix of motives at any time, motives can help us understand why donors adopt certain policies. The literature on aid identifies

18  Japan’s Foreign aid Challenge

four main categories of donor motivation, which may change in importance over time and which will reflect a number of donor priorities, including domestic social or cultural values however weakly articulated. First, there is a group of ‘humanitarian’ motives aimed at achieving the alleviation of poverty in the Third World through support for economic development. Many of these will be misguided, as several authors have pointed out, and, as Wall has argued, ‘it is dangerous to justify aid programs entirely in terms of such objectives’.14 Undoubtedly, however, development objectives become prime considerations for aid agencies on a day-to-day basis, although it is clear that the concept of ‘development’ is not interpreted uniformly or consistently by aid officials in donor countries. The problem of development cannot be ignored, however it is interpreted. Some would argue that rich nations have a humanitarian responsibility to assist poorer nations, and much of the debate has centred on the extent to which humanitarian concerns influence the type of aid programme or its quality. Nations with a Judaeo-Christian tradition are said to be more likely to act from charitable motives, whereas others (like Japan) are less inclined to do so.15 A number of commentators have put the case for foreign aid-giving as a duty of the rich and powerful nations. Indeed, Cropsey, while not finding a duty to help the poor to lie in charity or the principles of democracy, did see such a duty in America’s place as ‘a great nation—firmly to wield a mighty power in a mighty cause’. Seymour Rubin, in the title to his book, The Conscience of the Rich Nations, goes so far as to imply guilt as a motivating force for aid-giving.16 The second and third categories of motives embrace political explanations of donor rationales. These focus on donor objectives of image-enhancement, and on the promotion of national security. Kudos as an outcome of aid-giving is universal and is usually a factor in both donor domestic politics and a donor’s foreign relations. The security argument has often been based on the doubtful premise that aid produces economic growth, which in turn encourages political stability and the benefits to donor interests. This notion has been a maxim of Japanese foreign policy towards Southeast Asia for most of the postwar period, and has been especially important in arguing the case for Japan’s ‘economic security’.

The Philosophy of Japan’s Foreign aid  19

Security motives also have their economic side, and a fourth major category of aid motivation has to do with donor economic self-interest. In particular, the returns accruing to donors from preferred access to LDC markets, resources and aid contracts (such as with the former colonial aid-giving powers) have not been ignored in the literature, just as they are constantly at issue in donor debates about aid: for example, the concern within the Development Assistance Committee (DAC) with mixed credits, associated financing, tied aid and their links to donor export enhancement.17 The above four major reasons for giving aid derive from deeply rooted practices and sentiments of society. Aid officials need a mandate and a mission: to carry out their task within the bounds of policy legitimacy, they require a sense of how recipient need compares with donor largesse. Some domestic understanding of, and agreement about, the fundamental purposes of a donor’s aid, therefore, is an essential underpinning of an aid policy. How these objectives are interpreted by the aid practitioners, or indeed whether they are understood (or taken notice of) at all, will affect how aid is accepted in the domestic political and social context, and therefore whether and how that policy continues to operate.

TRENDS IN OFFICIAL AID EXPLANATIONS In the Japanese case, there has always been considerable disagreement among the official practitioners about the main objectives of aid, although all of the above four types have featured at some time. This has tended to institutionalise the organisational and policy divisions within the government charged with the development and execution of aid policy. The main aid ministries have taken a heavily defensive approach to the giving of aid, and it is therefore useful to examine how Japan’s aid policy has been explained by the Japanese Government since Japan first began its official aid programme.18 There is no strong uniformity in official explanations of Japan’s aid. Over the years, diversity of approach has encouraged competition within the aid administration and has tended to blur the distinctions between particular motives for aid. It is often said that the Ministry of Foreign Affairs seeks to enhance Japan’s security and image

20  Japan’s Foreign aid Challenge

through aid, whereas the Ministry of International Trade and Industry (MITI) has primarily trade promotion in mind, and the Ministry of Finance (MOF) has kept the purse strings locked tight. The reality is rather more complex and changeable, and the various ministries have exhibited highly diverse explanations for Japan’s aid programme. Using a method developed by Inada to categorise emphases in explanations of aid as they have been revealed in the Foreign Ministry’s annual Gaikō seisho (the annual report on Japan’s diplomacy) and MITI’s economic cooperation report from 1970 to 1982, we can also go back to 1957 to get a fuller picture.19 These data show that the primary concern of MITI and the Foreign Ministry from 1958 until the early 1970s was trade promotion and resources acquisition for Japan. Greater understanding of the LDC position by both MITI and the Foreign Ministry was not expressed until the mid—1960s. Humanitarian issues did not feature until they were prompted by developments in the United Nations Conference on Trade and Development (UNCTAD) in 1968, something which also spurred Japan to recognise the political ramifications of Third World development (that is, issues of political stability). Similarly, the arguments for a sense of donor ‘responsibility’ or ‘duty’ to the poor appeared when Japan first became involved with the DAC in the early 1960s, and these were reflected particularly in Foreign Ministry statements. That ministry also mentioned intermittently the importance of aid to world prosperity and peace. For the period 1970–82, Inada detects in MITI a far more consistent approach to aid rationales than that revealed by the Foreign Ministry. MITI held firmly to three main arguments supporting ‘economic cooperation’: securing essential raw materials; LDC development as a means of assisting world economic stability; and humanitarian concerns. Other less frequently aired but reasonably regular motives were: strengthening the Japanese economy through stronger international ties; ‘aid equals political stability equals international harmony’; and ‘Japan’s responsibility as an advanced nation’. The MFA, by contrast, only had one key theme during the whole period, that of Japan’s international role and its support for Japanese economic development. This attitude was, according to Inada, expressed strongly from 1975 to 1982. Less important themes were ‘strengthening ties with LDCs’ (for a few years following the oil crisis), LDC economic development as a contribution to world peace

The Philosophy of Japan’s Foreign aid  21

and prosperity (1970–74 and 1980–82), comprehensive security which emerged after 1980, and LDC welfare (the humanitarian argument) which has been a regular but secondary theme since 1975. This picture is most revealing. It indicates distinct shifts in Foreign Ministry arguments for aid in response to particular international issues between the late 1950s and early 1980s, such as the oil crisis and the international debate over basic human needs. At the same time, the search for recognition and the fulfilment of presumed responsibilities as a donor were always to the fore. MITI, by contrast, unblushingly stuck to strictly economic rationales, notably those involving policies protective of the Japanese economy, but nevertheless reflecting the LDC development/humanitarian concerns of the international aid debate, partly because one of the functions of the white papers was to explain the whole problem of North— South relations. Another source of official thinking on these questions, Japan’s domestic economic plans, naturally considered aid and economic cooperation in the light of domestic economic need. After brief mentions of economic diplomacy and cooperation in the first and second plans, the third (Income Doubling) plan of December 1960 emphasised the benefits to both Japan and the LDCs of enhanced economic cooperation, and forecast economic cooperation reaching 2.9 per cent of GNP in 1970 (in fact, official and private flows only reached 0.93 per cent of GNP in that year). By the fourth plan of 1965, the authors in the Economic Planning Agency had come to grips with the question of Japan’s more widely spread interests in the world economy, and spoke of Japan’s ‘international responsibility’. By 1967 this had extended to arguing the ‘interdependence’ of the LDCs and the advanced countries, and the need for Japan to adopt a more ‘independent’ approach to is own economic cooperation programme. The sixth plan of 1970 took this argument even further, in pointing to the role of economic cooperation in ‘balanced international development’. Underlying this concept, however, was the primary objective (expressed in the early plans of 1955, 1957 and 1960) of trade promotion and domestic economic growth.20 This was entirely in keeping with the MITI/MFA evidence presented above of excessive concern for domestic objectives. To be fair, however, this was to be expected in the national economic planning process. Official evidence over the period 1957 to 1982, therefore, does not alter the dominant view of the purposes of Japan’s aid as

22  Japan’s Foreign aid Challenge

supporting domestic economic and social needs: improved economic circumstances, better assurance of resource supplies and overseas recognition for a nation come of age as a donor. These ideas stem from a desire to please and to profit; over this period there was no strong public case made for an aid policy less attuned to Japan’s needs and directed more towards LDC priorities.

ASIA IN THE EARLY AID PHILOSOPHY The emphasis on Asia is a notable feature of the official doctrine, particularly in relation to Japan’s ‘responsibility’ in giving aid and in view of the close trade, resource and investment links with that region. The first MFA foreign policy report of 1957 laid down some of the basic principles of Japan’s policy towards Asia, which remain in force today: it spoke of the region as ‘the key to peace’ for Japan, tied to Japan through geographical, racial and cultural links, not to mention closer economic relations. The report stressed the mutual advantages of relations with Asia, and the now long-held (if misguided) connection between economic development and political stability was put forward: without peace, prosperity and progress, the MFA suggested, Japan’s development would not be assisted.21 The then Prime Minister, Kishi Nobusuke, was committed to a strong Japanese economic push into Southeast Asia (partly to alleviate trade difficulties caused by worsening of relations with China) and proposed in 1957 a ‘Southeast Asian Development Fund’, although one to be financed mainly by the United States.22 The second diplomacy report of 1958 stated bluntly that the economic prosperity of Asia was a ‘necessary condition’ of Japan’s political and economic stability. In 1959 this was extended to include Asian ‘social stability’ and economic prosperity, while in the 1960 edition the ‘political stability’ of LDCs was cited as a problem area. Japan’s responsibility became an issue in terms of its natural role in Asian development as Asia’s largest economy and, more pointedly, because Japan depended on the LDCs for 45 per cent of its trade at the time.23 Japan’s concern was always how to use its Asian aid policy to safeguard its interests. Asian development was more a means of achieving Japanese objectives than a goal in its own right.

The Philosophy of Japan’s Foreign aid  23

Recipient-oriented lines of official thinking were apparent, nevertheless, with the establishment of the Overseas Economic Cooperation Fund (OECF) in December 1960, based on monies set aside for Kishi’s fund in 1957. A senior QECF official stated in 1961 that the main principle of aid should be recipient development (although not forgetting Japan’s own development needs).24 This sentiment was echoed by an MFA study in 1965, which pointed out that Japan lacked a basic central focus for its economic cooperation philosophy, and suggested that recipient development, not Japan’s interests, should be given priority.25 This view strengthened as the political role of the developed world became more obvious in the UNCTAD forum, especially from 1968. The creation of the OECF was the first official step towards an aid policy that could be said to pursue LDC development interests, even if it was not recognised at the time and no real development financing took place until a few years afterwards.26 The OECF provided a mechanism ostensibly separate from export promotion, offering loans at an interest rate well below that available from the Export-Import Bank. The first OECF yen loan to Taiwan in 1965 was issued at 3.5 per cent over twenty years, compared with the Eximbank rate of 5.75 per cent normally over about fifteen years. The OECF also marked a break with the heavily private-sector-oriented initiatives in the development of Japan’s aid relations with Asia in the 1950s, although for several years the OECF’s primary funding activity was its ippan anken (general projects) support for Japanese overseas investments, especially in raw materials. Nonetheless, the fund represented a deliberate government commitment to Asia and to the concept of regional economic development. The OECF remained under-used until the middle of the 1960s, since the trade promotion policy of the government dictated that the Eximbank was the main channel for government loans. Administratively, too, it took several years for the fund to establish an identity and purpose separate from the larger and politically more powerful Eximbank. A more complex international aid debate, a fiercer domestic war of words over the fundamental directions of aid policy and sharper demands from Japan’s Asian partners brought the role of the OECF into prominence. Its Asia-directed charter, its more concessional loans and stronger political pressure to increase its budget made the OECF

24  Japan’s Foreign aid Challenge

the central agency in the Korean aid settlement of 1965 and gave it the main carriage of official aid to Indonesia after 1967. Establishing the OECF was originally a bold move, designed to extend Japan’s aid horizons and create new directions in aid policy, building on Japan’s ties with the Asian countries, already identified as the centre of its aid programme. The Asia-centredness of the Japanese aid programme is weaker in the 1990s than it was in the 1960s—just over 60 per cent of bilateral ODA is now directed to Asia, compared with nearly 100 per cent in 1970—but Japan’s aid is still dominant in Asia. The 1989 MITI economic cooperation report makes the point that the traditionally high proportion of Japanese aid going to Asia has its origins in the region’s strong ties with Asia; additionally, however, says MITI, Japan had a strong humanitarian concern in giving aid to Asia because, without Japanese aid, the heavily populated countries of Asia such as India and China would not have been able to obtain sufficient aid funds and the aid receipts per head of population would have been very low indeed.27 The OECF has been the main channel for this flow of funds to the major Asian recipients, although concern for aid levels, development and humanitarianism in assisting China, India and Indonesia has only been part of the picture.

NEW OFFICIAL RATIONALES Current official views on the purposes of aid are best seen in the rationales put forward in three important official documents on Japanese aid: the 1985 report to the Minister for Foreign Affairs from his Advisory Committee on ODA (ODA jisshi kōritsuka kenkyūkai); the MFA’s 1984 book on the philosophy of Japanese economic cooperation (Keizai kyōryoku no rinen); and MITI’s 1989 economic cooperation ‘white paper’ (Keizai kyōryoku no genjō to mondaiten).28 These reports represent an accessible official interpretation of Japan’s objectives from the latter half of the 1980s, and reveal some important prevailing attitudes about the ultimate purposes of Japan’s aid. We shall look at the MFA’s most recent aid report later.

The Philosophy of Japan’s Foreign aid  25

The report of the ODA Advisory Committee (p. 2), set up to give the Foreign Minister some ideas on ‘effective and efficient’ aid delivery, spends seven lines on the question of an aid philosophy.29 They read as follows: The basic philosophy of aid in the sense of ‘why do we give aid?’ is explained in terms of ‘recognition of mutual interdependence’ and ‘humanitarian considerations’. We regard this attitude as fundamentally correct. However, in Japan’s case, we must consider its special circumstances as a peaceful nation, an economic power, and one with a very high overseas economic dependence. At the same time as aid is an international responsibility, Japan contributes to world peace and prosperity and we must also stress those aspects that are the most appropriate means of ensuring, in turn, our own peace and prosperity.

This statement highlights several important themes— humanitarianism, interdependence, Japan’s resource security and national security— but pleads a special case for Japan: Japan’s circumstances require it to look more carefully at the contribution of foreign aid to Japan’s peace and prosperity. This is special pleading in the same vein as the argument that, because of Japan’s more limited experience in giving aid, we cannot expect a fully fledged aid philosophy to have yet developed. How Japan’s ‘special circumstances’ differ from those of similarly resource-poor industrial countries such as Germany or the Netherlands is not specified, just as why Japan should not have an aid philosophy after over thirty years of aid-giving and nearly forty years of economic cooperation is not explained. Of course, the ODA report was one dealing with greater ‘effectiveness and efficiency’ in ODA, so we could have expected a hard-headed look at this issue although there is no real attempt to explain what an effective and efficient aid programme should look like. The concept of the ‘special case’ for Japan put forward by the Advisory Committee above, and the rationale still maintained by the Foreign Ministry, derives from the MFA’s 1984 publication on aid philosophy. It is an intriguing argument, having its origins in the comprehensive security debate popular after about 1980. The book begins with a summary of the general international philosophy of aid, identifying ‘humanitarian and moral considerations’ and ‘recognition

26  Japan’s Foreign aid Challenge

of interdependence’ as the main features on which there is some sort of international consensus among the Western industrial countries. These two principles have since become the standard official response to questions about Japan’s aid philosophy—although, as we shall see later, some in the bureaucracy are unhappy with the formula’s vagueness. After a chapter on the programmes of the other major aid donors, the report makes the point that many of the motivations for aid are universal ones, but that each donor has individual criteria and conditions that need to be taken into account. These special considerations in Japan’s case are, first, its status as a peaceful nation (as imposed by its Constitution). Its contribution to world peace, therefore, is to play a role in improving relations between the North and the South through its economic cooperation. This is a ‘cost’ of its peace policy: to play its part in efforts for world peace, strengthen Japan’s international negotiating power and at the same time contribute to Japan’s security. A second ‘cost’ derives from Japan’s status as an economic power, partly because of its need to participate in international economic management, but more directly because of the need to give more official aid to counterbalance the massive size of private investment in developing countries. The Japanese economic ‘over-presence’ needs to be offset by judicious ODA contributions to recipient social infrastructure. This is certainly a ‘cost’ of economic success, since the report points out that the importance of ODA in this respect will grow as Japan’s economic strength increases. A third special reason given for Japan’s aid is its use as a buffer against overseas economic dependence, especially in resources. ODA helps by assisting economic stability in developing countries and encouraging pro-Japanese attitudes. In this way it helps to counter the precarious position arising from Japan’s economic dependence, by forging stronger links with supplier countries. A fourth special ‘Japanese’ reason for aid-giving lies in Japan’s experience as a recently modernising non-Western country, and the lessons that this may hold for developing countries today, as well as the positive contribution that Japan can make in bringing the North and South together. ‘This can rightly be called’, the report pompously adds, ‘Japan’s world historical mission.’30

The Philosophy of Japan’s Foreign aid  27

This chapter of the report concludes by stating that Japan, because of its special position, has greater reason than other advanced countries to uphold the humanitarian and interdependence arguments for giving aid. This is why Japan has rigidly stuck to those two arguments. Furthermore, Japan’s comprehensive security objectives mean that aid is a ‘cost’ to be borne by Japan in building and maintaining the international order; there is little altruism to be expected here. This is not an argument for comprehensive security as another aid rationale. It is rather a justification for aid in view of Japan’s special circumstances, which require a comprehensive approach to external policy problems.31 Comprehensive security was the underlying foreign policy approach, into which aid (along with other policies) was expected to fit. Yasutomo’s conclusion that this report was partly an MFA public relations exercise to persuade a sceptical public32 is correct; it was certainly not aimed at a foreign audience, least of all an LDC audience. The philosophy as enunciated stands as the most detailed public account of Japanese aid rationales. It is blatantly selfserving, somewhat paternalistic, and gives only lip-service to any serious development objectives. It broke no new ground in defining an appropriate role for the major donors, especially Japan. Instead, it elaborated on the role aid was expected to play in Japan’s economic security strategies. It does, however, contain some interesting clues as to motivations, to which the chapter will return. MITI’s public approach to aid is more direct, matter-of-fact and low-key than that of the Foreign Ministry; but like the MFA it is also coming around to recognising the international impact of aid and the way in which it is explained by the Japanese Government. Until the 1989 MITI economic cooperation report, little was said about aid philosophy. For example, in the 1985 edition a few lines were tucked away in a discussion of the aid target. The policy was frank and terse, substantially unchanged from its long-held attitude to the role of economic cooperation and aid. In short, MITI acknowledges the close ties between Japan and the developing countries, and the substantial contribution made by Japan to their economic development. Economic cooperation efforts are necessary for Japan, because of its limited domestic market and lack of resources, and a need therefore to maintain good relations with economically stable developing countries. It is very much a ‘comprehensive security’ perspective.33

28  Japan’s Foreign aid Challenge

The 1989 edition, however, comes to grips with the wider debate on why Japan gives aid. It adopts what it calls the ‘universal philosophy’ for aid-giving based on humanitarian considerations and the recognition of interdependence between the developed and developing countries. On the humanitarian aspects, MITI explains obliquely as follows: the term has tended to be interpreted to mean only the direct assistance to the livelihood and welfare to the poorer levels in the developing countries, but it also includes assistance to raise the economic strength of the developing countries. That is, it is extremely important to directly assist the lower income groups in the developing countries, and we are cooperating in this way in line with Japanese policy. But it is important to recognise that ‘a wealthy country’ and ‘a wealthy people’ are basically the same thing.34

This is one way of explaining the Japanese preference for aid that is directed towards the economic infrastructure of the recipient countries. It certainly does not reflect much in the way of debate about the political economy of development, nor the realities of political and social structures in many of the nations receiving most of Japan’s aid. MITI also argues that donor efforts need to be looked at in terms of the different situations of each donor: in Japan’s case, this includes a very high dependence on trade with developing countries and an historical need for resource security. Indeed, says MITI, ‘for Japan, maintenance of resources security will continue to be an important problem. The “contribution to resource security” aspect of Japan’s economic cooperation philosophy can be said to be a universal aspect that has persisted over the years.’35 These three official statements on the objectives of the Japanese aid programme exhibit a common thread relating aid and economic cooperation to economic security objectives; quite explicitly they make the aid programme subservient to Japan’s long-term economic stability, by helping to mould an external environment more compatible with Japanese interests. Recipient development as the fundamental goal of aid is not, however, given major priority.

The Philosophy of Japan’s Foreign aid  29

EXPLAINING JAPANESE AID: WHAT JAPANESE COMMENTATORS SAY Explanations of Japanese aid motives have generally agreed on the three major donor objectives outlined at the beginning of this chapter: economic welfare and security, self-aggrandisement, and political influence and leverage, with some disagreement about their relative importance. Together with the evidence presented above, the primary explanations are those of national economic interests and political leverage.36 Both of these take several forms. In the case of economic interests, Japan is said to have sought (through its aid) export promotion, domestic economic rehabilitation (in the 1950s and 1960s), resources acquisition and overall economic security. In political terms, the main issues have been bilateral leverage, promotion of political stability in recipient countries, regional stability and improvement of relations with other donors. Some of these would come under the rubric of ‘strategic aid’ as analysed by Yasutomo. With Japan, the humanitarian role in assisting the poorer nations has tended to be put in terms of Japan’s ‘duty’, either as a major world economy or as an important regional economic power. According to John White, this ‘duty’ originated as no more than an attempt to improve Japan’s image: a push for international respectability and a demonstration of Japan’s good faith as a member of the international community.37 Indeed, part of the reason for other members accepting Japan into the Development Assistance Group (DAG), the first international donor committee, and then the DAC was to help Japan appreciate its responsibilities. As we have seen, the fulfilment of this duty figures significantly in Japan’s official aid rationale.38 There is no suggestion that Japan needs to be charitable; only that Japan’s position of greater economic strength imposes certain responsibilities (gimu) towards those poorer countries with which it has to deal. These fairly predictable and inadequate explanations present some difficulties. In the first place, many commentators have pointed to the change over time of the importance of these different objectives, something we have noted in relation to the official explanations. A second issue is that of definitions. As is well known, the terms ‘economic cooperation’ and ‘aid’ have long been used interchangeably

30  Japan’s Foreign aid Challenge

by many connected with the Japanese aid programme. While today there is greater precision in usage, with ‘aid’ being reserved for the more concessional (usually ODA) aspects of the overall programme, the term ‘economic cooperation’ probably best encapsulates the thinking which is at the basis of Japan’s aid policy. Aid, for the Japanese, has always had a price; reciprocity has always been built into the aid programme.39 A third complication has been the diverse views of aid evident within the Japanese aid system itself. As Rix has pointed out, conflicting ministry ideas and attitudes about aid led to distinctive processes for different types of aid. As discussed above, however, there was variation over time within ministries, as well as between them.40 There are several essential domestic concerns which influence the aid programme. First, as noted above, Japan’s case is supposed to be ‘special’, because of its economic situation and supposed contribution to world peace. This means, in effect, its special need for stable supplies of resources, for markets and a better international image. The point has also been made that Japan’s shorter experience of aid-giving means that its approach will be different from that of other donors.41 Yet, Japan has been involved with the DAC since its inception, and in that sense has no less experience as a donor than many others. Second, Japan still seeks to be accepted as a ‘responsible’ nation, in spite of its considerable and proven international economic influence. This is reflected in Japan’s need to fulfil an unspecified ‘duty’ to give aid, and to use aid as a buffer against LDC criticism of Japan’s economic influence. Third, Japan regards itself as a cultural link between North and South, because of its own recent development experience, and because it sees its own culture as influenced by both East and West. This has not always gone as far as references to Japan as a ‘bridge’ or ‘model for development’, but when linked to a sense of ‘mission’ and to Japan’s cultural and racial differences from Western Europe, the implication of a special Japanese relationship with the developing world (especially in Asia) is obvious. Unfortunately, the weakness of Japan’s emphasis on recipient development as a goal of Japanese

The Philosophy of Japan’s Foreign aid  31

aid rather undermines the implied empathy between Japan and the developing nations. Fourth, and as something of a contrast to the preceding, there is an impression of aid being regarded as a burden, not an opportunity or contribution. It is a kosuto (cost) or gimu (duty) for which efforts (doryoku) always have to be made and where only an economically feasible (keizairyoku ni miatta) amount is ever possible. Finally, and more importantly, the aid philosophy has been regarded as fundamentally and blatantly defensive in nature— defensive of Japan’s reputation, of its economic diplomacy, of its resources supplies, of its overseas investments and presence, its trade and its basic security. Indeed, foreign aid motives encapsulate a number of insecurities in the Japanese view of their position in the world. The appeal to ‘security’ as the underlying reason for giving aid was traditionally the central argument for domestic support of the aid programme. The legitimation of Japan’s foreign aid policy, therefore, has been argued officially in terms of protecting domestic interests.

THE NEW WAVE: AID PHILOSOPHY IN THE 1990s Japan’s new status as one of the two largest aid donors has prompted a reassessment of the way in which aid should be justified and explained. This is aimed at both domestic and international audiences, and seeks specifically to rebut criticism of Japan as lacking an aid philosophy. It marks an important step in the tighter articulation of a Japanese aid philosophy, and is seen most starkly in the 1990 edition of the Ministry of Foreign Affairs’ aid report, where the role of aid in Japanese foreign policy is frankly acknowledged: aid is accepted as a key factor in bilateral relationships, an important influence on international relations (China, Burma, Eastern Europe and the Gulf are cited as examples) and central to changes in the international economic power structure. Japan in the 1990s will seek to bring about a peaceful, stable and prosperous international society, and contribute positively to building a global society freed from poverty and one that is tolerant, open and

32  Japan’s Foreign aid Challenge

liveable. Our international contribution through aid, in accordance with this foreign policy, will seek to play an even greater role as an important part of this process.42

This statement makes no specific commitments; its interest lies rather in the identification of a major role for Japan in the international system, and the explicit positioning of aid within the Japanese foreign policy context. This is analogous to the argument by Igarashi that to the six Japanese objectives for aid that can be so far identified (reparations, trade promotion, comprehensive security, strategic aid, LDC economic welfare, economic power responsibility), a seventh should be added, the perspective of Japan as an aid power with international status.43 MITI has recognised this also, and has argued forcefully for economic cooperation policy that, first, makes a proper contribution to world problems such as environmental degradation and debt relief; second, helps the process of transition to free enterprise economies for the countries of Eastern Europe; and third, gives Asian economic development the support it needs.44 The Foreign Ministry’s strong defence of its aid philosophy reflects Japan’s new standing as an aid power, and the wider public recognition not only of the need for a sharper articulation of aid objectives and philosophy, but also of the continuing support within public debate on aid of a philosophy carefully geared to Japan’s special needs and interests. There appears to be little resiling from the demand for Japan-centredness in the aid programme when debated at home. Abroad, the internationalist message is strong. We shall focus on the MFA argument, then move to examine the wider debate about the new aid philosophy. The MFA does not depart from the basic arguments of ‘interdependence’ and ‘humanitarian considerations’ as the foundation for aid, but it does recognise other reasons—national responsibility, a return to world society from a country that has gained much from it and ‘clubbing together’ with other donors for concerted policy action. These are minor variations on familiar themes, yet the MFA also sets out other reasons for Japan to give aid: its position as an economic power, the largest creditor/surplus nation, one with a high dependency and a need for peace, and the only non-Western advanced nation.45

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Again, these reasons are not altogether new, although the clearer emphasis is. However, there are specific aspects of the aid philosophy which are ‘Japanese’, says the Foreign Ministry. In contrast to the universalistic emphases on freedom and democracy espoused by the US, or the expansion of French culture sought by France, Japan places importance on encouraging ‘self-help’ by the recipient, on separating aid from political considerations and on respect for recipient independence and priorities. The self-help argument is not new. Prime Minister Ikeda made the point in 1963 that assistance to developing countries needed ‘the spirit of self-help within these nations’.46 The approach is now treated as the major development focus of Japan’s aid and is argued forcefully, with references to Japan’s own economic development experience and its ‘national will’ for self-reliance unequivocal in their implications. It has gone as far as the government’s Audit Bureau recommending that increased efforts to encourage recipient self-help are necessary in order to lessen the problems the Bureau has detected in aid projects —problems that stem from recipient inadequacies that will presumably be rectified by more recipient responsibility.47 But Japan’s experience as an aid donor might infringe some of the above principles on occasion, and the most significant admission in the new MFA stance is that ‘We believe that it is appropriate to maintain in principle the approach to aid adopted hitherto, while at the same time adjusting this approach to aid when necessary in the light of the requirements of international cooperation’.48 This espoused flexibility is especially important because the report raises several questions about what Japan should be trying to do with its aid: in contrast to its particularistic, pragmatic emphases, should it (like the US) be trying to foster freedom and democracy in implementing aid; should it as a peace-loving nation restrict aid to developing countries with large arms expenditures; or should it be enforcing its own preferred development models on recipients? All of these possible alternatives are currently under debate, and point the way to a more interventionist and political aid philosophy: this is the ‘new wave’, the possibility of a more insistent Japanese approach to aid-giving.

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The aftermath of the 1991 Gulf War sorely tested the Japanese position expressed here. Some in the Japanese Government proposed, in the light of the massive destruction occasioned by the war, that Japanese aid be withheld from countries exporting or spending excessively on arms. It was seen as a way of ‘fleshing out ODA principles’,49 but although there was some support for the new policy to be used sparingly by officials, it was also seen as difficult to manage and likely to lead to a reduction in aid expenditures, something about which the Japanese Government would not be happy. In support of the change, however, one report argued that Japan’s basic aid philosophy was outdated, in the light of Japan’s role in assisting Iraq in recent years, and Japan’s now high profile in international forums because of its prominence as an aid donor.50 If nothing else, the Gulf War brought home to Japan some of the implications of its senior donor status: greater international questioning of its aid policies, and the need to accept responsibility for the longer-term effects of its aid-giving. The MFA’s assertion of the need to reassess its basic aid philosophy was indeed timely; the pretence that Japan’s aid does not carry any political considerations will perhaps be laid to rest for good with the recognition of at least the serious political ramifications of being a donor with major influence over a recipient’s domestic policies. This issue was confronted by the Foreign Ministry in its 1990 report, along with vigorous arguments designed to counter criticisms of Japan’s aid as being overly commercial, not geared to LDC economic needs, based on large projects, wasteful of resources and with little development effects, not caring of the environment and overly reliant on LDC requests. The MFA report clearly committed Japan to a programme of economic assistance that is ‘separate from pure humanitarian aid’,51 and overtly political in its objectives. A major set of policy principles announced by the then Japanese Prime Minister Mr Kaifu in April 1991 was perhaps the most forthright statement ever from the Japanese Government about how aid funds would be allocated. It sprang both from post-Gulf War attitudes that Japan needed to do more to contribute to the maintenance of international security, and from a desire to redress Japan’s reputation for commercialism in its aid philosophy. It is also likely that the policy statement was designed to indicate to certain recipients (China, India,

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Pakistan and Burma (or Myanmar) in particular) that high levels of aid were inconsistent with high levels of military spending. The Kaifu statement52 made it clear that in the implementation of Japan’s aid, ‘due consideration’ would be given to recipients’ trends in arms spending, trends in the development and manufacture of weapons of mass destruction (including nuclear weapons), arms exports, promotion of democratisation, movement towards a market-oriented economy, and protection of freedom and basic human rights. The Foreign Ministry emphasises that the policy will not alter the type of aid program that Japan has built up to date, but that it will involve close examination of the ‘cultural, historical and social conditions’ of recipients. Where there are cases in which there are clear violations of Japan’s principles, ‘we need to encourage the recipient to improve the situation, and if necessary we must take a firm stance in reassessing our aid policy towards that country’.53 The ministry freely admits that little can be achieved by Japan itself, and that the issues (which it accepts have not been raised with recipients in the past) will need to be discussed frankly and openly.54 Minshuka shien, or assistance for democratisation, is the term Japan uses to describe the aid it has given to Eastern Europe. It is also being seen as applicable more widely to assistance to countries where ‘good governance’ is an objective. With this aid Japan is, according to the report, taking part in an international framework for aid that is attaching political conditions to that assistance. The report states as follows: At present Japan, as a state that adopts freedom and democracy as a fundamental value, is cooperating in an international framework for democratisation assistance. Within Japanese aid policy as well, we must give proper consideration to assistance for countries making efforts towards democratisation.55

Significantly, while the report says that this method of aiding Eastern Europe is currently considered an exception, it will not continue to be considered as exceptional—that is, it will become a regular element of the Japanese aid programme. Thus the 1991 MFA report makes clear that Japan has suspended aid in the past where democratisation and human rights have been at issue (Myanmar in 1989 is the main recent example), and that this is a continuing option for Tokyo to adopt.56

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In addition, Japan is also giving aid where economic conditions are attached to the aid given. This is the support given to LDC internal economic and social policy reforms which are a condition of the aid package. It is not yet part of purely bilateral assistance, but is seen in the joint financing arrangements (such as structural adjustment loans) that Japan has with the World Bank and other bodies. As the MFA report points out, Japan itself does not attach conditions as its programme is based on recipient requests and recipient priorities, but the co-financier’s conditions can be applied. There is a strong hint here of greater Japanese interest in these approaches, when the report says, obliquely but with assurance: Henceforth, on the one hand Japan should adopt a finetuned approach by properly considering the conditions attached by the World Bank/IMF and support them when it is thought appropriate, while on the other hand studying the international environment of the developing countries and the political and social conditions of the country in question, and through dialogue urging them to adopt the policy direction which we feel we should support.57

Thus the Foreign Ministry is moving towards a much more specified set of policy objectives, or at least a new set of additional objectives. In its 1991 report, therefore, it presents the ‘guidelines’ for aid decisions that it sees accompanying a formal aid philosophy. These are set out in Table 1, and indicate that officially there is a fine-tuned set of criteria that clearly establish a basis for the pattern of aid to which we are accustomed, but also open the way for the implementation of the new political principles for aid. In June 1992 these were extended to include ‘preservation of the environment’ alongside economic development as the two major goals of the aid programme and, significantly, the new policy was formally endorsed by Cabinet as the new ‘ODA Charter’ (ODA taikō). The question is: can and will these principles be applied as a central element of aid decision-making? Early reports are that Japan pressured Pakistan to sign the nuclear non-proliferation treaty, while Prime Minister Miyazawa indicated that the political and human rights situations in Myanmar and Indonesia might be taken into account in aid decisions.58 But a Foreign Ministry official was quoted as saying that the political principles were ‘amorphous. No one knows exactly what they mean…it is

The Philosophy of Japan’s Foreign aid  37

very difficult.’59 Certainly, Japan has not let the incident in Dili on East Timor in November 1991 affect its aid to Indonesia, a decision dubbed not too inaccurately by one sub-editor as ‘Japan goes limp on human rights aid-cut bravado’.60

Table 1 Guidelines for aid policy

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THE WIDER DEBATE IN JAPAN The level of discussion in Japan about the aid programme is intense, as we shall see in Chapter 2. It points to the need for Japan to reassess aspects of its programme management; but more than that it points to strong dissatisfaction with the aid philosophy amongst both observers of, and Japanese participants in, the aid programme. Comments also point strongly towards the desire for more explicit recognition of the theory of self-help as a basis for aid-giving. The Keidanren (Federation of Economic Organisations, one of the main business groupings in Japan) has proposed a redefinition of Japan’s aid philosophy (and an improved system for implementing aid). As a representative of Japan’s largest manufacturing, trading and commercial interests, the Keidanren’s views are indicative of much private-sector opinion. The Keidanren argues for a much more explicitly articulated philosophy, embodied in an aid charter:

The Philosophy of Japan’s Foreign aid  39

This model…is based on the belief that the developing countries themselves should play the leading role in their economic development and that Japan’s ODA is designed to complement their self-help efforts to end poverty. This belief reflects Japan’s experience as both donor and donee. The model puts emphasis on humanitarian aid to meet the ‘basic human needs’ in the developing countries, such as food and medical service. This type of aid is based on the traditional principle of humanitarianism, widely accepted in the US and Europe, that the rich nations should help the poor and needy nations. We also put strong emphasis on the other type of aid that is aimed primarily at supporting economic growth in the recipient countries by helping them develop manufacturing capabilities and build their nations. The Keidanren model also takes fully into account not only the environmental concerns in the host countries but also the global environmental issues.61

Such views typify the rationalist economic theory dominant also in government. A similar set of attitudes was revealed in a survey of top personalities in the aid field in Japan by the Kokusai kaihatsu jānaru (International Development Journal, Japan’s leading journal on development issues and aid affairs) in October 1988. The need for Japan’s aid to contribute to world peace and economic growth was seen as important, but alongside that the principle of self-help was regarded as central to an aid philosophy—but at the same time, aid which is aimed at getting the LDCs to improve their own performance has to be much more finely tuned to the needs of individual recipients, and undiscriminating programmes that ignore different LDC conditions have to be removed.62 One view on the self-help theory is that it could be a model for others. A well-known economist, Iida Tsuneo, argues that ‘perhaps that phrase is too weak to be called a philosophy, but in an age in which doctrinaire ideologies and obsessions with the past are increasingly anachronistic, the Japanese attitude towards aid may very well represent the wave of the future’. He has since argued that a nebulous aid philosophy is a virtue, in not imposing restrictive approaches on recipient development.63 The opposition parties have also been active in the debate. A draft bill on international development cooperation put forward by the Kōmeitō’s Nakanishi Tamako of the Upper House in October 1989 has as its basic principles

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Para. 3 Respect for sovereignty International cooperation must be conducted on the basis of the principles of mutual respect for sovereignty, equality, and mutual non-interference in internal affairs. Para. 4 Support for efforts for self-help International development cooperation must be conducted on the basis of supporting the self-help efforts of the government and people of the developing areas.64

In calling for sovereignty, however, this approach runs counter to the more interventionist official line, and its attitude towards self-help is to recognise the role of both ‘people’ and ‘government’. One of the most trenchant recent comments on the official aid philosophy in fact comes from a research group within the Economic Planning Agency (EPA). It argues that Japan at present has no ‘statist philosophy’ (kokka rinen) that can be applied to aid, unlike the US ideology of freedom and democracy and European ideas on the welfare state.65 In addition, the basic aid philosophy currently used— the notions of mutual interdependence and humanitarian concerns— is too universalistic to be of real practical relevance. These notions cannot reflect the special emphases or objectives of Japan’s aid, and provide no real guidance to the average person as to what Japan’s aid is about. Similarly, they provide no clear indication of the long-term objectives of Japanese aid, or of the sorts of messages that should be communicated to the outside world. The group’s report proposes that a more explanatory statement of Japan’s aid philosophy would be that it is ‘based on mutual interdependence and humanitarian considerations, to assist the autonomous economic growth of the developing countries in order to raise the (regular) living standards of the world’s peoples’. Furthermore, seven principles for implementation are suggested as a way of clarifying the philosophy of Japanese aid. They are: selection of emphasis in aid consistent with the recipient’s stage and type of development; adoption of a diverse mix of aid programmes; systematic implementation of aid processes; improved ‘soft’ aid (human resources) in economic planning; aid that has public support; aid that is fully understood in the recipient country; aid that can respond flexibly to changing conditions. In the end, the report argues, an aid philosophy should emerge from an active public debate, but it

The Philosophy of Japan’s Foreign aid  41

is this debate that has been lacking in the Japanese case, at least until the last few years.66 In fact, the Foreign Ministry’s 1991 statement of principles of aid goes a long way towards achieving this objective: it does move to a unified and specific Japanese position of principle, and provides specific criteria to flesh out the longer-term objectives of improved living standards and economic structures. Again, the question remains whether they will be consistently applied. Recent discussion in Japan about the need for a stronger corporate sense of philanthropy also highlights the gap between traditional concepts of ‘mutual aid’ and growing demands for less domestic orientation to aid activities.67

WHAT IS JAPAN’S AID PHILOSOPHY? There is no doubt that Japan now has an articulated and public philosophy of foreign aid. While it has changed over time in some of its detail, an emphasis on trade, resources (including resource security) and national image has always been paramount. It has paid lip-service to the traditional canons of the donor approach, but reflects some fundamental objectives of Japanese foreign policy. However diverse the intentions and policies as between ministries or the Japanese aid community generally, the perceived need for aid policy to protect Japan and its range of national interests is shared by them all. The priorities in the aid programme do not include the improvement of aid quality (in fact, it is probably true to say that it has never been a priority), but rather the lessening of Japan’s particular vulnerabilities (resources, foreign criticism and susceptibility to shifts in the international economic climate), and at least the efficient delivery of aid. Foreign aid receives support in Japan because it is seen to be a protective policy; the ‘quality of mercy’ and the principle of noblesse oblige are not viewed as being able to make Japan more secure. Nevertheless, the remarkable persistence over thirty years of official adherence to the domestic-centred, security-oriented arguments for aid testifies to the weak sense of legitimacy which aid administrators and politicians attribute to the notion of foreign aid. This is perhaps not surprising in the tension of the Tokyo aid bureaucracy, the

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absence of political authority and the generally poor press that aid receives. There have been benefits arising from this approach: it has been a defensive policy, and helps to justify to taxpayers the massive cost involved. The traditionally narrow Japanese aid philosophy reinforces several key features of the aid programme: organisational diversity, dominance of officials and the lack of firm political control, an internal focus and weak public projection. The philosophy is an inward-looking set of precepts. The preoccupation with economic returns has translated into policies in which aid quality has been a low priority. This attitude has not simply been one of budget economising; it has its origins in Japan’s view of the need for countries to stand self-reliant in economic development (as Japan did), not to expect handouts and charity, and for the developing countries to become involved in cooperation and exchange with Japan, not reliance on largesse. Japan has until recently largely avoided the moral debate on aid and development, as it has with most international issues. The social vision put forward has been one of ‘economic self-reliance’ and ‘selfhelp’ on the part of recipients, and the Japanese have not been greatly troubled by the finer points of the debate about ‘who benefits?’. This has had the effect of keeping Japan out of meddling in recipient domestic economic and political systems, and out of ideological issues about which regimes should or should not receive aid. Unfortunately, this has left Japan with little experience of the donor leadership status which the excessive emphasis on quantity and the resort to the stock explanation of the reasons for aid-giving have thrust on Japan. We are at least now witnessing the beginning of the end of this dichotomy. While some long-lived domestic-centred arguments still persist, there are clear new directions in Japanese aid philosophy, a new universalism that shows a sensitivity to international events, a recognition of Japan’s aid power status and a new movement towards greater emphasis on major international policy trends. More importantly, there is also a clear trend to use aid pragmatically— not just in the broader sense of ‘strategic aid’, but at a micro-level in political and economic dimensions. In specific policy terms, the Ministry of Foreign Affairs plans to enhance the humanitarian aspects of its aid by specific poverty-alleviation measures (through emphasis on education in particular, plus skills training and job

The Philosophy of Japan’s Foreign aid  43

training), greater aid for public health and medical care, emergency disaster relief and help for refugees. It also aims to focus on globalscale issues such as conserving the environment, the drug problem and over-population, and recipient-focussed problems such as that of women in development. Coupled with the intentions (discussed above) of linking aid to such issues as economic and political reforms, or to recipient policies on arms purchases, these constitute a major instrumentalist shift in Japan’s aid philosophy.

CONCLUSION The official articulation of motives for Japanese aid since 1957 reflects the close watch kept by policy-makers on the social and political relevance of aid policy. It is a record of how the aid-makers read the climate for aid growth, and tells of a process whereby foreign aid policy hugged close by the demands for external policies to fulfil specific domestic needs first and foremost: export promotion, economic growth, resource acquisition and assurances that Japan was accepted by others as a responsible international citizen. This has also meant that aid has reflected some of the basic cultural characteristics of Japan’s approach to other societies, and has reiterated the concept of a ‘special role’ for Japan, because of its Asian heritage and historically recent experience of growth and development. Was Japan’s philosophy simply a means of rationalising the policy required in the circumstances of the times? It depends on how the history of Japanese aid is interpreted: a conscious choice to become a donor; an accidental slip (after a flurry of reparations agreements) into wider trade promotion activities that became a fully fledged aid programme; or the manipulation of Japan by the US and its allies into a more ‘responsible’ role in the Colombo Plan, the General Agreement on Tariffs and Trade (GATT), the DAC and the OECD? There is some truth in each of these interpretations, but the consistency with which several of the elements of the philosophy have been expressed since 1957 indicates that they are more than excuses. Furthermore, the unfailing linkage between these objectives and the content of Japan’s aid policy (notably economic return, security and

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kudos) is strong evidence of consistency of purpose. Now that we are seeing a change in the way that Japan approaches the articulation of its aid philosophy, it will be important to observe how and to what extent the basic purposes of aid blend new ideals and old habits in the light of the new concerns of the aid philosophy and Japan’s new global status as an aid power. One of the main tests of the acceptability of aid, let alone the rationale for it, is the nature of public acceptance, or criticism, of the programme. We turn now to consider that problem.

Chapter 2 Aid at home: public response and pressure groups

Foreign aid makes good copy; a juicy scandal, a suspect tendering process, a failed project or hints of political interference can always be found. The aid programme can easily be criticised— either too big or too small, too open to interference or too closed to outside inspection, too soft or too hard on the recipient, too focussed on one direction rather than another. The size of the Japanese aid programme makes the public interest aspects of aid a major issue at home; not just that, but aid projects are Japanese taxes at work. The Japanese publishing industry has latched on to foreign aid as a big sales item, as it has done for many a controversial issue over the years. Aid books are now high profile products for publishers and retailers alike, and a spate of volumes on Japan’s foreign aid programme have been given big ticket treatment in the main bookstores for a couple of years now. There is even a book about the exposés of aid.1 Newspapers have run lengthy series in the morning editions on the foreign aid programme, bringing the good and the bad before the public in a very direct manner. The Yomiuri shimbun, the newspaper with the largest morning circulation

  45

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in Japan of nearly 10 million, ran a series in late 1989 that took up one-third of the front page of the main morning edition over nearly five weeks.2 What has brought about this surge in public interest in a subject that in other countries is treated with yawns and raised eyebrows? Unquestionably it is the fact that Japan is now a top-ranking donor of aid in terms of quantity, and that this fact is widely touted in Japan. The Japanese public likes to hear about Japan’s achievements, and this is certainly one of them. While the tradition of investigative journalism in Japan is rather shallow, there have also been many highly publicised allegations of mismanagement and other problems in the aid programme. In addition, the ‘in-depth series’ approach to issues by the newspapers is highly professional and, since newspapers are normally part of a large publishing corporate network, these series will often become books and thereby remain before the public eye even longer. This interest in aid is also linked to greater openness in aid administrative processes, enhanced government publicity of aid activities and the push for reform of the aid system. Through media attention and exposure, public attitudes are reflected in the domestic discussion about foreign aid. This chapter will assess the nature of this public debate about Japan’s aid role and responsibilities, including a number of publications that have appeared in recent years dealing with aid. It is fair to say that a significant number of books deal with the shadier aspects of the aid process, or look (albeit sketchily) at the impact of aid on the recipient countries, something which has generally not figured greatly in the official discussion of Japan’s aid. The public debate cannot be, and is no longer being, ignored by government—criticism is too strident and open to be overlooked. Aid policy now has to take account of public response; moves within government to reform the aid system gain support from outside comment. Likewise, the debate feeds on the evidence of need for reform. We will also examine another major aspect of growing public involvement in aid—the expansion of the non-government organisation (NGO) role as a participant in the aid process. The public profile and reputation of aid and public support for voluntary participation in aid delivery are closely interrelated. Indeed, alongside media interest in aid has come growth in public pressure groups taking up aid issues. NGOs are a manifestation of the positive side of such pressure, the desire to participate in aid to

Aid at Home: Public Response and Pressure Groups  47

achieve a different and perhaps more effective type of aid than the official variety. It is also an area of tension between the entrenched government aid programme and an inexperienced but increasingly more active private aid sector. Aid philosophy at this level is clearly very different from the official views canvassed in Chapter 1.

PUBLIC OPINION Official spokesmen in Japan claim that ‘a distinctive feature of Japanese aid experience is manifest in its success in maintaining a national consensus in favour of aid-giving’.3 Japanese public opinion is still rather supportive of the aid programme, although there is no evidence to show that this is the result of government initiative or action. Saying ‘still’ implies that opinion may turn negative; certainly the evidence from other donor countries is that, while the idea of foreign aid to the developing countries is accepted, public interest in aid programmes is generally low and, when put against other government spending priorities, aid tends to come off badly.4 Until 1982 Japanese who advocated increased foreign aid outnumbered those who thought it should be reduced. A recent Prime Minister’s Office poll of October 1989 showed that those who felt aid should remain at its current level or be reduced numbered 52 per cent, well above the 39.5 per cent who supported its increase. This turn-around has been gradual, and there is still a strong majority who feel that aid assists the developing countries, even if not all endorse increased spending. If anything, the group responding ‘no opinion’ in the survey results has shrunk, so that attitudes are now more polarised. But in 1988 nearly 70 per cent thought aid was helpful to the LDCs, although there has been a growing tendency for respondents to feel more supportive of the benefits to Japan arising from the aid programme. When asked what Japan should do through its aid programme to make its contribution to the world in line with its economic standing, 37.2 per cent in 1988 said that Japan should assist with technical personnel, while 26.9 per cent emphasised scientific and technical cooperation. ‘Loans’ and ‘donation of money or machinery’ were supported by only 11 per cent, a minority of those surveyed.5

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Other surveys by the Economic Planning Agency have shown that Japanese feel that the internationalisation process can best be helped by telling the world about Japan’s culture and achievements (39.4 per cent) or by improving aid through people, by sending overseas cooperation volunteers (33.9 per cent). This would point to a desire to show Japan’s idealism and youth, and less enthusiasm for giving aid as financial contributions; indeed the 1989 Prime Minister’s Office poll showed that the number who definitely wanted aid cut had grown by one percentage point to 8.2 per cent from 1988.6 The reasons for supporting an increase or maintenance in the aid programme are mainly the perceived need to contribute to stability and world peace, the expectation of humanitarianism, the duty of a successful trader to help others and the overall value aid has in achieving Japan’s foreign policy objectives. Of these, the peace and stability argument is the major one, and has been consistently so since 1981. The humanitarian rationale has fluctuated, but about a third of the respondents have seen this as important. Other arguments about Japan’s prosperity being linked to political stability abroad, and the need for aid as a means of securing overseas resource supplies, have fallen markedly in significance as rationales for public support for aid. Surveys of people identified as ‘experts’ reveal that similar sorts of rationales for aid are endorsed, although ‘support for LDC self-help’ has tended to be the major one. Others include humanitarianism, elimination of poverty, world peace and freedom/democracy. However, over 60 per cent approved the concept of the fourth aid target, despite its massive size, and felt that Japan should strive to achieve DAC average levels across major aid indicators. Just under a majority felt that the emphasis in the aid programme should be on Asia, although over one-third saw aid to Africa as necessary. There was a strong difference of opinion amongst those favouring aid to Asia, nearly half believing that it was at a sufficient level and that aid could be directed more usefully now to other regions. About onethird, however, saw the emphasis on Asia as worth continuing, so as to assist the process of world economic growth.7 In broad terms, it could be said, as Nishikawa maintains, that ‘the Japanese people’s feelings about ODA are lukewarm at best, and decidedly mixed’.8 Yet this may be too negative an assessment, for while a minority favour increasing aid, nearly one-half agree with the maintenance of the current levels, which are the highest in the world

Aid at Home: Public Response and Pressure Groups  49

in any case. The figure we need to watch is that of support for actual reductions in the aid programme, and the reasons given, but those in this category are still less than 10 per cent of the total. At the same time, the Foreign Ministry assessment that ‘overall, we can say that there is broad support amongst the public for the current aid situation’ is too uncritical.9 The conclusion of a recent Economic Planning Agency report is that ‘the public understand the importance of international cooperation as a part of the spread of internationalisation’. It goes on to say that the public appreciates the need for some sort of Japanese contribution to the global situation but that, rather than financial aid, efforts on the human resources side are felt to be the preferred option for Japan to follow.10 The report also makes the point that the support base for aid within Japan is likely to increase, since approval of aid amongst the young, the better educated and those with experience outside Japan is higher, and that the latter two groups are the ones most likely to increase within the Japanese population. The report is therefore optimistic about future public endorsement for the aid programme. This is not entirely misplaced, for the figures do show a ready acceptance of aid as a part of government policy, even though there is some reluctance to increase it above its already high level. However, the major focus of the aid debate is not at the level of public opinion, whatever the dictates of the democratic process. The aid programme is affected primarily by political sensitivities, fuelled by wider public discussion of aid, and reflected in the parliamentary arena. Because the Japanese political process provides for questioning of civil servants in parliamentary committees, bureaucratic policymakers become quickly exposed to the heat of political scandal involving aid. These occasions are not frequent, nor long-lasting, but they can be intense. The key factor, therefore, in public debate about foreign aid is its political sensitivity, which relates essentially to scandal or the scent of it. None the less, public opinion, except at the ballot box, is not a major determinant of aid policy. Aid has always been a poor vote-catcher in the Japanese electoral system, and this is unlikely to change. It would be true to say that the Japanese public until recent years heard little and knew less about the Japanese foreign aid programme. But the country’s rise to the top of the table of aid donors has changed all that, as media attention has focused on Japan’s achievement.

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Furthermore, the government has in recent years been keen to enhance its public relations for aid, highlighting both education about aid and development, and general PR about the Japanese aid programme through printed materials, television programmes and other media. International Cooperation Day, now observed on 6 October each year, was instituted in 1987, while even that ubiquitous medium of Japanese popular culture—the cartoon—was used to publish The ODA Story (Manga ODA monogatari) in March 1990, which, along with the animated video, was distributed to 848 schools throughout Japan—a truly Japanese answer to the ‘aid gap’ in Japanese public education! The material was typical of the highly positive message directed at children about the aid programme, a message depicting happy, healthy foreign faces, shiny new Japanese equipment and serious-looking Japanese aid workers. Reports indicated a positive response to these cartoons,11 although a manga-bred generation of school children would be unlikely not to respond in that way. Cartoon-style explanatory material on aid was already in circulation, and glossy magazines extolling the benefits of supporting training for young people from the developing countries are frequently to be seen in waiting rooms and foyers around the country. The MFA’s ODA report lists thirty-two publications from the MFA, Japan International Cooperation Agency (JICA) and the Overseas Economic Cooperation Fund (OECF) which are designed as public information material; thirteen of these are published in English and other foreign languages as well as Japanese, emphasising the desire of the Japanese Government to further its public relations activities towards the developing countries and, most importantly, other donor countries.12 At the same time the government sees the non-government organisations involved in aid as important channels for aid education and promotion, and is encouraging NGO growth and spread, for the public education effects as well as for their direct contribution to the aid effort. The government’s main objective here is ‘development education’, to foster public awareness of aid issues. Its approach is three-pronged: educational activities, release of information and encouraging popular involvement in aid, notably through NGOs and the role of local government in international cooperation. Yet the task of educating the public about the benefits of international cooperation faces serious competition from media coverage of the aid programme, which has

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tended to focus on its problems. The government’s line is primarily an emotive one, focusing on the positive image of aid workers and the people of the developing countries: for example, the cover of the 1991 Foreign Ministry aid report shows a world within a heart, a reference to Japan’s goodwill message to the public about aid. This is linked closely with the ‘international duty’ argument prominent in the official rationale.

AID AND THE NEWSPAPERS These government public relations efforts are, in the end, relatively recent; media attention is also something that has arisen only in response to the upsurge of interest in Japan’s aid profile and the corresponding increase in foreign interest in what Japan is doing. Yet, precisely because media coverage of aid and the wider literature on aid inform public debate and influence public sentiment, it is necessary to appreciate the scope of the discussion and its purpose, both to excite and to inform, although it often seems that it is mainly the former. Until the early 1980s only a handful of books had been written in Japanese on aid or economic cooperation, apart from purely academic works on the economics of development or trade ties with Asia. The political aspects of aid were dealt with only marginally to the major focus of debate, the development process. One of the most interesting of this group of earlier works was by a former technical aid worker in Indonesia, who wrote from the ‘front line’ of the aid process, describing the difficulties and failures of some aspects of Japanese aid.13 This was the beginning of a long lineage of critical comment about the difficulties and potential failure of aid projects. It was a constractive and informed analysis, unsensational (in contrast to some current criticisms of aid) but devastating in its conclusions about the inability of businesses and governments to manage a relatively straightforward agricultural aid project. It was not until 1983 that a book appeared in Japan that began to examine the Japanese aid programme with a critical eye. Previous writers had tended to explain rather than criticise, but Matsui Ken’s contribution was to begin the closer examination of what the Japanese programme was trying to do.14 I shall discuss this book in more detail

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below, but it is significant that a critical approach to aid was not widely evident in Japan until the mid—1980s. Today, however, aid cannot escape the intense scrutiny of the Japanese press. Let us look at some of the recent newspaper analyses of the Japanese aid programme. In 1989 two major series on aid appeared in the daily newspapers, the Yomiuri series mentioned above, and a major series in the Mainichi shimbun which ran over a nine-month period from March until November.15 Both were typical of the type of detailed and revealing journalism that marks series such as these. The first series from the Yomiuri concentrated on reports from projects in various countries, focussing in its first article on the Japanese businessmen and consultants waiting (in vain, as it turned out) in Vietnam for the resumption of Japanese aid. The second profiled a failed industrial project in the Philippines, the victim of a feasibility study which neglected to point out the inappropriateness of the location of the project. The other articles were in the same vein, detailing problems with projects brought about by difficulties with the aid system in both planning and delivery. The articles pointed to lessons that should be learned from those experiences, and emphasised problems that have been well known from other assessments of the aid programme, including a major study by the Management and Coordination Agency (see Chapter 3). These problems included: the need for careful feasibility studies, the difficulties of weather forecasting, an improved evaluation system, proper debriefing of returned experts, better matching of aid administrative staff numbers with the tasks required of them, careful assessment of political conditions, debt blowouts due to yen appreciation and improved linking of capital and technical assistance. This type of aid exposé was new to the daily newspapers. It was not, however, surprising to the government, which had been evaluating projects such as these for several years, and knew of the problems to which the Yomiuri pointed. Similarly, the Audit Bureau received publicity in December 1989 for its report on aid programmes, in which it found that 6 out of 56 projects that had been assessed ‘did not produce effective results’ and were, in fact, ‘totally ineffective in accomplishing their stated aims’.16 What was different was the extensive public airing given to these problems.

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The second Yomiuri series (entitled ‘The Road to Reform’) focussed on the policy problems of the aid programme, the implications for Tokyo of the project failures in the field. Again, the articles addressed what were familiar issues to the bureaucrats, but of great interest to the taxpaying public. The articles highlighted many of the points made by the first Management and Coordination Agency report on aid administration, released at the same time. It was unequalled publicity for the report, but an even more important public airing of some of the fundamental problems of the aid administrative system.17 The first article pointed to the absurdity of the competition between ministries in the aid system, such as the separate ‘white papers’ on aid published by the Ministry of Foreign Affairs and the Ministry of International Trade and Industry, or the transfer of Tokyo bureaucratic squabbles to the project overseas. Another pointed to the ever-increasing aid budget and the emphasis on big spending, to the neglect of small-scale projects and the resources available in non-government organisations for this sort of work. The perennial difficulty of getting hold of skilled personnel able to work in the aid field, and Japan’s very low staffing ratios in the aid programme, were highlighted. In the Japanese employment system, as the article explained, getting a posting to an overseas project was detrimental to a worker’s career. The low priority given to ‘soft’ types of aid, such as technical assistance, skills training, education, etc., as opposed to the solid infrastructure-based ‘hard’ projects, was also a source of concern, as was the system of perfunctory project evaluation that was common in the Japanese aid system. These were tough and realistic assessments of the aid programme, and although unavoidably based on a selection of projects, did highlight the major problems. Translations of the Yomiuri articles appeared for English language readers in its counterpart, the Daily Yomiuri.18 A different approach was taken by the Mainichi shimbun team. The book published subsequently to the newspaper articles was about ‘The International Aid Business’ or, as it was printed in English on the cover, ‘The True Colors of Official Development Assistance’. It looked behind the official rhetoric of aid and the bland descriptions of projects, to uncover the rather seedier world of ‘aid business’—the tenders, the commercial competition, the politicians and ‘fixers’. Given the huge size of the Japanese aid programme, the

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direct implication of the book is that this scale of funds is irresistible to Japanese companies and their political clients. The articles themselves focussed on aid projects in Southeast Asia and the Pacific, and highlighted many of the persistent attitudes held both overseas and in Japan about the Japanese programme—that it is designed for narrow Japanese domestic economic purposes, and strongly directed towards support for Japanese companies (such as the example of ‘food production assistance’ intended to assist the declining Japanese fertiliser industry).19 These images are, as with the Yomiuri series, drawn from a sample of projects with no claim to being representative of the overall programme. But long-standing critical attitudes towards Japanese aid are hard to dispel, and make easy targets for careful journalists. At the same time, these sorts of analyses are helpful in understanding the broader aid process. In particular, the role of the private sector in driving the ‘aid cycle’ has been the subject of analysis for some years,20 but specific project information such as this has added greatly to our knowledge of how the system works. The role of the political world is detailed as well, serving as go-between linking business and the bureaucracy, or pressuring foreign officials and Japanese decisionmakers. Attention is drawn to the Liberal Democratic Party’s Special Committee on Overseas Economic Cooperation, which has long been the focus of attention in assessing the role of politicians in Japanese aid decisions. In the Mainichi book is an interview with one of the members of the committee, Oki Hiroshi, a former official in the Ministry of Foreign Affairs and knowledgeable about the aid process.21 It goes as follows: Q: What does the Special Committee discuss? Oki: We look at how much aid goes to different countries. Whether there’s too much to the Philippines or not enough to China. We don’t talk about individual projects. If politicians did that it would become a bit tricky. Q: There are some who say that the ODA process should be more open… Oki: There are views in both the government and opposition that the people can’t see what’s being done overseas, so we

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should report to the Diet in more detail. But when I was in the Foreign Ministry I had the experience of looking after ODA. Bureaucrats don’t like to have to report in detail to Parliament in advance. It’s because ODA is one arm of foreign policy. Q: I hear that many businessmen try to get close to members of the Special Committee… Oki: It’s because it’s the same as public works at home. If a businessman I know asks ‘Come over, I’ve got something to talk about’, it becomes a matter of linking them up with the Foreign Ministry and JICA. Because I am thought to know something about economic cooperation, I get lots of ideas brought to me. I just link them up, and afterwards it’s the ministries who make the decisions. Q: What about something in return? Oki: Only a request to buy some party tickets [for politicians’ fundraising parties]. It’s nothing like the Recruit business. In fact, it would probably be better to stop this sort of linking people up, but… Q: I hear that there are some politicians who see ODA as a way of raising funds. Oki: Overall it’s really tough competition. If you mention ODA, companies make a fuss. Perhaps because of this the number of politicians making statements about economic cooperation has increased. The internationalisation of politicians is improving, at least internationalisation in speeches. There are plenty of such people in the opposition too. Q: How should it change in the future? Oki: It would be best if the government did it all, but given the shortage of people it’s not possible. Therefore private companies have to do it. It’s business. They want to be involved wherever they can make a profit. But it’s aid, you see. They say if companies make a profit from aid it’s not good, and the other country doesn’t improve. It’s that problem we have to sort out.

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The book makes no direct comment on the content of this interview, but the title of the short chapter gives away the intent: ‘ODA Politicians: The Reality and the Mask (honne to tatemae)’. Its tone is close to that of the ‘exposé’ literature discussed below. Above all else the book and the newspaper series on which it was based represent a considerable body of opinion in Japan seeking reform of the Japanese aid system. Yet the problem remains that aid is not a highly sensitive electoral issue, at least in contrast to nationwide argument over the self-defence forces or constitutional revision. Over the course of the history of Japan’s aid programme there have been no concerted government attempts to undertake reform and change, and the pace of its expansion has overtaken weakly anticipated aspirations for reform. The aid system in Japan is structured in the same way as industrial policy; a process of ‘cooperative capitalism’ where government, business and officialdom are interdependent. This is discussed in more detail in Chapter 3 on aid administration. Another recent series on Japan’s ODA was published in the Nihon keizai shimbun, Japan’s main daily economic newspaper, in December 1990. Rather than a journalistic analysis, it consisted of sixteen articles written by the Overseas Economic Cooperation Fund’s Development Problems Research Group, examining some of the major issues in the current aid debate. This type of series, as with many articles in the Nikkei, was designed mainly for educational purposes. It attempts to deflate a lot of the mythology and criticism of Japanese aid and was consistent with stronger government arguments defending Japan’s aid philosophy and its aid policies.22 For example: [Isn’t ODA recycled to Japanese companies?] It is said that ODA funds are simply recycled to the coffers of Japanese companies. What in fact is the situation? In fact Japan, amongst all the DAC countries, gives more aid in untied form where it is not linked to domestic companies. Even when Japan is criticised by other advanced countries, it is often because of the image of the old days when tying was frequent. Furthermore, if we look at actual awarding of contracts, and at loans in which untying has progressed further, the success rate of Japanese companies has fallen from 55 per cent in fiscal 1987 to under 40 per cent in 1989.

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Considering Japanese commercial competitiveness, these figures show that Japan’s ODA loans have been opened up internationally, both system-wise and in the end results.23

Some of the other questions which the articles address include: how do we measure the ‘quality’ of aid?; should we give cash to the LDCs?; what forms of aid are best?; what are the effects of aid?; can we reduce poverty?; what is the value of loans? The arguments are carefully put, and are persuasive about the value of ODA as one of Japan’s international responsibilities. They do not answer, however, the micro-level questions thrown up by the Yomiuri and Mainichi series, nor can they dissolve the negative images fostered by the numerous examples of mismanagement, waste, corruption, incompetence and inefficiency which are zealously, if one-sidedly, presented by the press and publishers. The series does not try to, but instead aims to inform business readers of the newspaper about aid issues and the latest topics, in a way consistent with broader government defensive strategies. It certainly aims to add to the public debate and help shape public opinion.

THE SCANDAL EXPOSÉS Two books typify the exposé-style of writing about aid in Japan. They cater to a mass market eager for an easy read and some scandal. They are very different from the more analytical treatment of the aid scene that we shall examine later. It is difficult to know the effects that these sorts of books can have on public opinion. They are in the same vein as the weekly magazine stories designed to amuse commuters during hour-long travel to and from home. They make no pretence to balance or careful analysis, but they quickly proliferate where an issue is picked up by the media, and the Japanese publishing industry rushes to fill gaps in demand by consumers for information and opinion. Musekinin enjo taikoku nippon (‘Japan: The Irresponsible Aid Power’), by Murai Yoshinori is a slim volume of less than 100 pages,

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priced extremely cheaply at 390 yen.24 It is based on ‘urgent on-site reports’ from the Philippines, Indonesia and Thailand, and proclaims on its lead page: Japan’s huge aid is linked to the environmental destruction of the Third World. But the public, knowing only the few things about ODA that they read in the paper, has no interest; the use of our money is being decided in secret! For what and for whom is ODA being used?25

The book takes some bad examples of aid problems and builds a case against aid and Japan’s aid programme. It points to business and political interference, the primary role of the private sector in project-finding and the distortion of the aid process through this ‘interference for profit’. The book calls for the creation of an ODA Basic Law to provide a foundation for the appropriate management and development of the aid programme. Practical solutions to some of the difficulties are not provided, despite the obvious areas that should be addressed urgently, areas which the book rightly highlights— and which will be taken up in the next chapter. A second exposé book is written by a Mainichi shimbun journalist, who has published extensively on Japanese politics and the LDP. Kokusaiha giin to riken no uchimaku: ODA ni muragaru seijikatachi (‘Behind the Curtain of International Politicians and their Interests: ODA Politicians) is in one sense an important piece of political journalism.26 As was pointed out above, politicians have a close interest in the possibility of fund-raising from ODA projects, but apart from some minor references to political involvement in some of the newspaper research on ODA, there has been no information available. On the other hand, the book provides little in the way of hard facts about political rake-offs from ODA. It does show how Japanese politicians are now far more aware of the benefits of international contacts and awareness, even though foreign affairs is a poor means of gaining electoral support. As in many such books, however, there is some useful material. For example, an interview with the DirectorGeneral of the Foreign Ministry’s Economic Cooperation Bureau, Matsuura Kōichirō, includes the following interesting exchange:

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Q:

It is often said that ODA is decided in secret. There are also calls for more freedom of information. Are there any ideas at present to open up the ODA decision process a little? M: The first principle that should be recognised is that aid is one arm of foreign policy. That is, the openness of aid all hangs on how far one should open up foreign policy to the public gaze. Nicholson, the authority on diplomacy, said that if diplomacy produces results they should be publicised. But conversely that means don’t reveal the process.27 This statement raises the question of the legitimacy of opening up the aid process, and the role of the media in making aid a public issue. Matsuura clearly regards openness as less than necessary, yet he makes no distinction between general diplomacy as envisaged by Nicholson, and the expenditure of large sums of taxpayers’ funds through an aid programme. Lack of public information has been a drawback of Japan’s aid system in the past—as witness Matsuura’s preferred approach —but public and political pressure has begun to change that, as we have discussed and will raise again in Chapter 3. At about the time of the publication of the book, in 1989, there were a number of reports on ODA in newspapers and weekly magazines that were incorrect and highly critical, and were themselves criticised for giving the public the wrong impression of aid. The media responded by attacking the government attitude to information and its reluctance to make information public.28 Public interest in aid scandals is not new. Former Prime Minister Kishi was known to be widely involved in corrupt dealings in contracts for reparations to Indonesia in the late 1950s, and questions have been asked in the Diet on numerous occasions about supposed irregularities in aid projects, notably in Indonesia, the Philippines and South Korea.29 Two recent cases involved bribes made to a middlelevel JICA official from a contractor over a development survey in Morocco, and extensive reporting of corruption surrounding aid to the Philippines in the Marcos era.30

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CRITICAL ANALYSIS OF AID While popular treatment of aid in the press has tended to feature scandals and irregularities, there has also been a serious attempt to inform public opinion. Accordingly, there is a growing body of literature in Japan critical of the aid programme, but designed to analyse the problem without resorting to sensationalism or scandalmongering. The critical works merge also with those wanting to portray the impact and importance of the aid programme without delving too far into the questions of process. These types of analyses, taken together with the revelatory studies cited above, comprise a substantial body of documentation and opinion about foreign aid, certainly far in excess of what can be seen in most (if not all) other donor countries. If the number of books for sale on foreign aid and available to the average Japanese citizen is any guide to public awareness of foreign aid, then Japan would be well out in front of other countries. The public debate about foreign aid in Japan in recent years has been active, and has generated strong arguments from several sides of the issue. But as one dissenter, Dietman Abe Motoo from the Democratic Socialist Party, exclaims, nobody has actually opposed ODA. The scandal-mongers and others concerned about improving the aid process have urged changes and improvements and some reforms better to provide aid for the LDCs, but Abe says that people have not opposed the annual increases in the aid budget, or the very idea of aid itself.31 Abe in fact does oppose aid, does oppose the ongoing increase in the size of the aid programme without proper reflection on what the aid is for and what Japan can hope to achieve by giving so much. Of course, there is no single-line budget for aid in the annual budget papers presented to the Diet, so opposition to ODA increases would involve a series of separate amendments. Abe rightly points to the combination of pressures on Japan to increase its aid responsibilities, to share the burden that Western countries have carried. This degree of opposition to aid is not seen widely in Japan, as most critical analyses catalogue the limitations of the aid programme. There are perhaps three categories of aid studies: analyses of the aid programme overall as an area of government policy; close examination of the aid process from the recipient point of view; and

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analyses of Japanese aid in the wider foreign policy context. The first and last of these categories also include detailed study of the aid process. Wider publicity of the complexities of this system has prompted an increasing number of working aid bureaucrats to write and comment on the Japanese aid programme. The growing number of aid professionals in the OECF and JICA are among this body of informed experts on foreign aid taking part in the public debate.32 The early studies of Japanese aid in the 1970s by Nishi, Ōnishi and Iida concentrated heavily on the development aspects of Japanese aid, and the way that the programme fitted into the Asian region in particular.33 Nishi was rather sceptical of the development effects of Japan’s aid, pointing to clear political and economic gains for Japan in concentrating on Asia. He cautioned throwing good money after bad to political regimes without popular support, and warned that the Japanese public would not endorse tax-supported aid programmes that had no effect. Ōnishi tackled development issues and their relationship to the specifics of the Japanese aid programme. He raised the ‘North-South’ problem and looked at how Japan’s aid system and the characteristics of its programme dealt with the difficulties thrown up by the ‘wealth gap’. His was a more optimistic assessment of the development effects of aid, although he did caution at the clash of cultures that would inevitably arise from the aid process. Iida’s book was an important statement of the conflicts that aid was bringing about between Japan and the developing countries. It laid the path for many other such analyses to follow but, unlike many others, it gave attention to the method of aiding, the mechanisms for investment and funding and the attitudes that the Japanese themselves held towards the aid process. He raised the problem that still bedevils the Japanese aid programme—that there is no widely articulated or accepted ‘aid philosophy’ behind what the Japanese are doing (see Chapter 1). Iida was prescient also in his insistence that, in the end, it is not the philosophy or the rationale that really matters, it is the way in which the aid is given and the way the developing country is treated. However, if the philosophy and rationale are criticised, at home or abroad, such criticism carries weight. This same questioning of Japanese objectives and methods is seen in the ‘second generation’ of books on aid, beginning with Matsui

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Ken’s 1983 volume.34 Matsui himself was a former finance and aid bureaucrat turned academic, and was able to look more carefully at Japan’s aid performance over a longer period than was possible for earlier authors. He argued that despite the strong criticism of Japan’s performance over a number of years, as a donor it had still done a good job. Furthermore, given Japan’s situation as a resourcepoor country with a small military role, it was to be expected that economic cooperation would become a form of bargaining power in foreign policy. However, becoming a power in the aid field did not mean simply throwing money at a problem; that can often lead to the sort of economic and trade conflicts that aid is trying to avoid. Matsui supported the notion that government funds had to be increased if aid was to grow and he cautioned against wasting money and against the onset of corruption of the aid process. He finally also argued that the Japanese had to be positive about their aid and constructive about the way their programme approached the problems of development. One of the most recent critical accounts of Japanese aid typifies the segmentation and sophistication of the critique. Sumi Kazuo’s 1989 book is essentially an attack on the environmental destructiveness of the aid programme, and the limitations of the environmental impact procedures of the Japanese aid machinery.35 While a committed book, it points to a number of important developments in the aid scene in Japan in recent years: first, the emphasis in public criticism on particular aspects of the aid programme; second, the appearance of pressure groups supporting or attacking parts of the aid programme; third, the increase in the number of aid ‘handbooks’ designed to provide easier access to the Japanese aid system for Japanese participants. There are less opportunities for the developing countries to get hold of that sort of information. The growth in information about the mechanics of the aid system and the increasing diversification of critical analysis highlight the growing transparency and openness of the Japanese aid machinery. At the same time, critics like Sumi maintain that ‘the greatest obstacle to further research is the fact that so little information about the Japanese aid system is made public’.36 Sakurai gets to some of the procedural difficulties in his 1985 book on the legal problems of development cooperation.37 A scholar who has worked closely with MITI and the Foreign Ministry on

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aid matters, his study of the complex procedures of the aid system complements an official publication such as the Foreign Ministry handbook for intending participants in the aid programme.38 Alongside this are information books on the commercial participants in aid and the tendering processes such as the Keizai gijutsu kyōryoku binran (‘Economic and Technical Cooperation Handbook’),39 or the numerous publications from the stable of the International Development Journal (albeit largely non-critical), or the Association for the Promotion of International Cooperation (APIC), which is funded by the Ministry of Foreign Affairs.40 There is no shortage of information about Japan’s aid programme (now, indeed, lists of successful tenderers are also made public), and certainly far more is available on a public basis than in many other donor countries. Whether, however, it is the right sort of information to enable proper assessment of aid is another matter; Sumi would certainly argue that it is not. Likewise, the aid evaluation reports made public are largely shorn of the detail of the on-the-ground assessments. Another example of the more focussed study of types of aid is Inō’s 1989 book on technical cooperation.41 This is one of a number that have appeared already and will continue to appear in greater numbers as Japanese technical experts gain more overseas experience and commit their experiences to paper. Inō was an expert in railways and writes of his work in this field while at the same time assessing Japan’s technical cooperation programme. It is in the same vein as the Sumatra study mentioned earlier, but set at a more personal level than the classic account of the path-breaking activities of Kubota Yutaka in Southeast Asia in the 1950s and 1960s.42 Analysis of the recipient end of the aid relationship is beginning to gather pace. The 1989 volume edited by Suzuki Nagatoshi comes from the Institute of Developing Economies and is a comprehensive study of some aspects of Japan’s aid delivery in the LDCs. Rather different is Toriyama’s 1989 view of aid and development as a means of bringing peoples together, a plea for universalism and Japan’s internationalisation.43 The final category of works on aid are those that place it within the broader Japanese foreign policy context. Most studies of Japan’s foreign relations now incorporate aid within their analysis; being one

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of the major activities of the Foreign Ministry, aid is rather difficult to ignore in this context. The first major contribution is a 1990 book edited by Igarashi; others are likely to follow.44 These publications indicate the rapid development of the public debate on aid in Japan. Aid is a growth area of publishing for a variety of reasons, mostly negative. If nothing else, there is an active public argument about the subject that is a useful sounding board for government officials and political leaders. Because aid reaches into so many corners of the Japanese political economy, and because of the potential for problems in aid delivery under the cumbersome aid administration, a constant level of public discussion of aid has promoted both popular awareness of aid and a firmer platform for government public relations efforts.

THE PRIVATE AID LOBBY: NON-GOVERNMENT ORGANISATIONS An important indication of non-government involvement in the aid programme and the pursuit of Japanese goals and interests in aid is the level of private-sector participation in the aid programme, or the ‘aid business’. This has been partly dealt with in the Mainichi shimbun analysis and, to some extent, by Rix and Orr. Another indicator of growing relevance is the rise of non-government aid organisations, or NGOs. One of the important new phenomena on the Japanese aid scene is the proliferation of non-government organisations concerned primarily with development issues and the delivery of economic assistance. The link between public attitudes to aid and opinion about who should pay for aid has been shown in Australia, for example, to be close. With Japanese NGOs having a limited history and narrow exposure in Japan, their role in enhancing the public debate on aid (as occurs in other donor countries) is still undeveloped. NGOs are a common and accepted feature of aid in other donor nations, often said to be due to the stronger traditions of noblesse oblige and charity in those nations. In some donor countries, NGOs have become an integral part of the aid delivery system, working in cooperation with the governments.

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Our TV screens frequently portray the work of NGOs in disaster or famine areas across the world. Japanese NGOs tend not to feature, although some of them are there. NGOs in Japan are a part of the aid system, in that many of them receive government support. But at the same time they are a part of the domestic political environment of foreign aid, in that NGOs are interest groups, just like consultants and trading companies. They are, however, a new pressure group phenomenon in Japan, and still relatively weak, but they are increasingly organised, have a growing public profile and are becoming recognised by the public and government alike as having a legitimate role to play in aid delivery, although the government is keen to ensure some consistency and integration between government and NGO activities. Japanese NGOs, in the form of charitable organisations, go back to the end of the nineteenth century, and the main objective of many was to provide assistance to victims of leprosy. These, and the ones formed in the early decades after the end of World War II, were active mainly at home, particularly in assisting the sick and poor in both rural and urban areas. Just as the strong Christian traditions in Western countries produced more and more activist charity groups, the early NGOs in Japan were similarly largely Christian in their origins. In recent years, the religious basis to NGOs has remained but many other groups within society have also come together to form NGOs. Private organisations first began to take some part in overseas aid activities from 1960, and in 1972 the OISCA Industrial Development Body first received assistance from the government. Most Japanese NGOs have come into existence in the last fifteen years or so, with some government encouragement, following publicity given to Vietnamese refugees, the African famines and similar crisis situations. The overseas experience of most Japanese NGOs is rather limited, and their funding base is usually fragile.45 DAC statistics show that Japan’s NGOs have a much weaker position within the domestic aid structure than similar organisations in other DAC member countries. The amount of NGO-generated funds is rather higher than for many smaller DAC donors, but it is considerably less than NGO funds in Canada, France, the Netherlands, Sweden, the UK and especially Germany and the US (whose figure is over fifteen times that of Japan). Likewise, government support for

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NGOs was higher in a few DAC countries, but Japan on the whole provided a higher proportion of government support to voluntary agencies. Nonetheless the ratio of NGO own funds to ODA was lower in Japan than in any DAC country except Belgium and Italy, although others, such as Denmark and France, are not much above Japan.46 As of early 1991, the relationship between Japan’s NGOs and the aid system is still maturing. The Foreign Ministry sees value in NGOs assisting the ODA programme by involving more citizens in development work, taking Japanese programmes to countries where official aid is not possible (such as Vietnam), in broadening the process of development education and in improving Japanese awareness of the conditions in developing countries.47 Upwards of 300 NGOs exist in Japan, and the Fourth Medium-Term Aid Expansion Plan calls for stronger official support for NGO activities. The Japanese Government has already responded in various ways to the expanding aid role for the NGOs. In this the government is sensitive both to domestic public opinion about the need for ‘humanitarian aid’ and to pressure from developing countries themselves for a greater involvement of Japanese NGOs in aid programmes. For example, the Foreign Ministry in fiscal 1989 instituted a new subsidy programme to provide up to half the cost of specified NGO projects. The programme is used to support small-scale humanitarian development projects that the ODA system cannot manage. The average amount of each subsidy in 1990 was US$26,000. In addition, the Foreign Ministry’s new programme for small-scale grant aid is one in which NGOs are seen as important for implementation. Thus, of the 95 projects carried out in fiscal 1989, 47 were by NGOs, five of which were Japanese NGOs. In 1990, 50 of the 92 projects were NGO-managed, 2 projects by Japanese NGOs. Government subsidies for Japanese NGOs were only US$3 million in 1970 but rose to US$10 million in 1975, then gradually increased to a massive US$113 million in 1987. Support has since dropped back to US$73.7 million in 1989, and US$71.9 million in 1990. The amounts coming from Japanese NGO’s own funds have been growing as a proportion of the total aid they spend and in 1989 topped US$122 million, bringing the total disbursement through Japanese NGOs in 1989 to nearly US$196 million.48 Another unusual and important government initiative to assist NGOs is the ‘International Volunteer Savings Scheme’, launched

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in January 1991 by the Ministry of Posts and Telecommunications. Holders of post office savings accounts can elect to have 20 per cent of their after-tax interest donated to NGOs through the ministry. A deposit of Y100,000 would provide 560 yen in support of NGOs. By March of 1991, 2.1 million citizens had enrolled, generating 1.1 billion yen in donations. In June 1991, the first distribution of funds provided Y913.6 million to 102 organisations for 148 projects. Most of these were in the medical, education and children’s welfare areas. An important feature of the scheme is that it is separate from the regular NGO subsidy arrangement and is not limited by the yearly budgeting system. It is also an important means of public education on voluntary aid, since the scheme is promoted at all of the 24,000 post offices throughout the country.49 Nonetheless, while the government sees an important adjunct role for NGOs in the Japanese aid programme, and is providing reasonably large sums to support NGO projects (although much lower as a percentage of ODA than countries such as Canada, Switzerland, Norway, the Netherlands or Germany), NGOs are still struggling. Let us look first at the profile of Japanese NGOs. In the January 1990 NGO Directory published by the Japanese NGO Center (JANIC), 199 bodies are listed, in the categories indicated in Table 2. Many of category I-A and I-B groups are single-issue bodies or those with limited scope of activities. The ones listed by JANIC are nonetheless the major Japanese NGOs, but many are small and new and operate from a very small financial base. Furthermore, most concentrate their activities on Asia, with others spreading their work over Africa, the Pacific and Latin America. Most, however, do operate in more than one region. JANIC identifies as the main problems facing NGOs those of restricted funding, lack of technical skills, insufficient support from the general public, immature domestic networks and the difficulty of training and keeping staff.50

68  Japan’s Foreign aid Challenge Table 2 Types of Japanese NGOs

A wider definition of NGOs to include those involved in work other than development cooperation puts the number in Japan at about 300 (only about half of which are more than a decade old), with those whose primary purpose is overseas aid work numbering only 110, and with only about 100 personnel in total working regularly in LDCs for these organisations. Only nine engage in projects worth over 100 million yen, in total covering over half of all NGO aid.51 The small scale of most of Japan’s NGOs is obvious, and the slow growth of the NGOs’ own funds is also striking—1985 and 1990 figures show them about the same (just over US$100 million, although they dropped down and rose again in the interim period). The effects of the Volunteer Savings Scheme on NGO finances is yet to be seen, but it may have the effect of reducing collections by the NGOs themselves. Saito identified four main strands of NGO development, noting that the main group is composed of those that moved into development cooperation work from their pre-existing role in other fields, especially semi-government bodies. These are typical of the ‘farming out’ of small-scale aid work from the hard-pressed central ministries. Many grew from citizen-based organisations that became active internationally with the Vietnamese refugee and African famine crises of the late 1970s. A second strand grew up from the

Aid at Home: Public Response and Pressure Groups  69

1950s alongside commercial and industrial spin-offs from the aid programme, and remains close to Japanese business interests. Third is ‘grass-roots’ populist NGO activity from the early 1980s, helped by internationalism at the local level, and widening government support for NGOs, but mainly very small scale. Finally, there is also a group of religion-based NGOs, although these have developed slowly.52 There is thus something of a problem with identifying just what an NGO is in the Japanese context. The Japanese rendition is usually ‘non-government groups’ or ‘non-profit groups’ or ‘nongovernment aid groups’. The NGOs themselves are pushing for a wider understanding of the term to include the non-profit and private aspects, but also an acceptance that these groups are ones involved in humanitarian assistance work, not political or religious activity (although some groups have political or religious origins). In addition, NGOs attract their funds from a variety of sources and not a single source. In being ‘private’, they recognise that the traditional understanding of the term ‘private sector’ (minkan bumon) in Japan is that of regular business activities of a non-government nature, but NGOs are seen to be outside the regular business sector (because of the lack of a profit motive and a commercial orientation) and as involving ordinary citizens in their administration and activities. The concept of ‘the third sector’, denoting an area of cooperative involvement between government, local government and the private sector, has not yet taken on in Japan in a big way, although local government is keenly involved in aid work. Indeed, local government aid activity is an important feature of local efforts to ‘internationalise’ and ‘globalise’. Local government bodies are linked to the implementation of aid through their hosting of trainees coming to Japan under JICA auspices. In 1990, 433 such trainees were supervised by local governments. Yet, like NGOs, local governments are not altogether happy with what they see as a subordinate role in a complex and inefficient central aid management system. They also regard their work as highly effective ‘grass-roots’ cooperation.53 Japanese NGOs see themselves working on three basic principles: a neutral stance; humanitarian benefits; and cooperation with the grass roots of recipient societies. In practice, these principles translate into the following code of conduct for activity: emphasis on mobility, flexibility and attention to detail in project planning and execution;

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small-scale projects may be the focus, but economic efficiency and effectiveness are paramount; appropriate technology as the basis for technology use; emphasis on environmental considerations.54 The principal concern for the major NGOs is how best to relate to the official aid system. The government’s Project Subsidy Program is regarded as administratively too complicated, with complex application procedures, inefficiencies in projects due to the single-year budgeting system and limits on the types of projects (with an emphasis on hardware rather than software such as personnel).55 The Foreign Ministry is not considering any block grant system for NGO support, but is urging NGOs to increase their scale of activities and expand their international cooperation experience. This may be assisted by cooperation with overseas NGOs, something which the Japanese NGO organisation is encouraging, as are overseas activists.56 There is no doubt that the government values the contribution of the NGOs because of their ability to work at the grass-roots level, in a flexible way, on a small scale and often by using new approaches to development. They show Japan’s ‘human face’ and can improve Japan’s reputation for giving charitably. They are also valued because they are widening the pool of talent and experience in aid from the wider, non-professional community, given their largely volunteer and charity-based ethic. Although the Japanese Government wants to use NGOs as a convenient aid delivery vehicle and is providing high levels of subsidies and project funding, the attitude in Japan is still far from regarding the NGOs as partners in development projects, or indeed often as the front line of emergency aid or community projects, in the way that the major Western aid systems do. Although Japan is a top aid donor, there is a great deal of learning to be done on both the government and the NGO side before an effective longer-term working relationship can be established.

THE GOVERNMENT, PUBLIC OPINION AND PRESSURE GROUPS The government’s expressed preference is for less openness in the aid system than most commentators would prefer. The media pressure in recent years has been intense, and on the whole it has not been the

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politicians but the officials who have borne the brunt of explaining and justifying aid. The nature of Japan’s political administration places bureaucrats in a highly public position in defending government policy; in response, they have done so much more aggressively and frankly than in the past. For example: Japan’s ODA, though presently subject to intense criticism at home, will remain one of the cornerstones of Japanese foreign policy. Criticism is in a sense understandable, considering that not until the mid—1980s has the government undertaken to publicise details of Japan’s aid activities, decision-making process and guiding principles. Nor has it attended to the under-staffing of the aid apparatus and implementing agencies, or to other institutional deficiencies. The five-year period under the present fourth mediumterm ODA target is an important one for readjustment.57

Public pressure is encircling aid administrators on three fronts: from heightened public awareness of and attitudes about aid; from the intensive media coverage of problems in the aid process; and from greater involvement of the general public in aid via NGOs. As private citizens take a greater part in funding through the Volunteer Savings Scheme, and the activities of NGOs spread more widely, we are likely to see greater public interest in what happens to aid funds and how aid projects are managed. The intensity of public scrutiny of the aid programme, both through the press and otherwise, is likely to increase. That scrutiny has undoubtedly affected the way in which aid is presented to the public in Japan, although its impact on the management and administration of aid has not been the only one, for there are other complex factors— including international opinion— that impinge on government decisions about aid programmes. Yet, greater public awareness of aid problems has had a part in encouraging reforms in policy and in the management of aid. This is the subject of the next chapter.

Chapter 3 The real challenge: reforming Japan’s aid administration

Japan’s huge aid programme, one of its most accessible windows to the world, is the product of day-to-day decisions across the whole of the Japanese government system. Responsibility for aspects of aid policy is extremely diverse, involving eighteen central ministries and agencies plus several implementing agencies. Traditionally, competition between those bodies has confused the purposes of Japan’s aid and obstructed effective overall direction of the programme. Organisation has been diffuse and procedural routines have dominated. While there have been minor changes and reforms in recent years, bureaucratic politics and the influence of complex organisational rivalries have not been diluted. There has never been an aid ministry in Japan, although suggestions along those lines have been made since the 1950s. Nor is there any single line of political responsibility for aid, and major change to the system is therefore difficult. For one of Japan’s most important aspects of foreign policy, however, a better administrative system is necessary, one that is able to cope with increased demands on Japan’s aid now and into the future. Analysing Japanese aid as a function of administrative processes is not new.1 Programmes in the United States have been examined in the same way,2 and many of the criticisms of Japan’s programme derive 72 

The Real Challenge: Reforming Japan’s aid Administration  73

from characteristics of the aid system that are administrative in origin. This chapter addresses some of the administrative difficulties of the Japanese aid system, and considers the possibilities for meaningful administrative reform in a policy area that has a high public profile and broad economic effects at home and overseas, and in which entrenched interests are strong. THE AID SYSTEM APPRAISED The operation of Japan’s aid administration, as Orr demonstrates, has altered little from the model described by Rix. The main characteristics of the system include, first, a wide diversification of programme responsibilities and budget allocations. There is at the same time a lack of unified political responsibility for aid, a powerful implementation role for government agencies and the private sector, and a significant input to programme development from the private sector. A four-ministry committee approval system exists for deciding on loans, but overall financial responsibility for aid lies with the Ministry of Finance, leading to policy coordination at budgetary level rather than in an aid policy context in the policy ministries. Meanwhile, the Foreign Ministry claims incorrectly that it has overall responsibility for the aid programme. This system has been under serious attack from commentators, from both inside the government and outside, for some years. Most of the criticism has focussed, in the first instance, on the overall structure of the aid machinery and resulting problems in coordination between different aspects of aid. The basic processes of aid decision-making, including budgeting, have also been targeted, especially the microprocesses of aid implementation (surveys, approvals, etc.). Limitations on the operation of the machinery (staffing levels, etc.), have been seen as a primary reason for such problems.3 Let us examine some of these in more detail. Overall structure The most serious problem, according to critics, is that of tatewari gyōsei, the competitive, vertical structure of the aid administration

74  Japan’s Foreign aid Challenge

which prevents extensive horizontal communication between the many elements of the bureaucracy involved in aid.4 This problem is built into the system through budget allocation especially, and the division of responsibilities between ministries over different aspects of the aid programme. These divisions have been a part of the programme since its inception, but even in 1990 during the resolution of budget requests two new agency budgets were approved, including one for the National Land Agency, making a total of eighteen national ministries and agencies receiving ODA budgets.5 A related issue is that of political responsibility, or the lack of it. No minister in Japan has total oversight of the programme. The only place where such oversight is possible is in the Budget Bureau of the Finance Ministry, and the Ministerial Consultative Committee on Overseas Economic Cooperation, a body set up in December 1988 consisting of fourteen members chaired by the Chief Cabinet Secretary (a minister in the Japanese political system).6 The Prime Minister is not a member of this committee. No clear path of political coordination for aid is therefore available, and disputes between parts of the programme have no means of formal resolution. A further issue concerns the status of the implementing agencies, the Japan International Cooperation Agency (JICA) and the Overseas Economic Cooperation Fund. In 1991 the OECF was thirty years old, and JICA nearly twenty. The OECF manages a budget larger than the aid budget of any of the ministries. Both agencies are the base for most of the professional expertise on aid in Japan, and yet are placed in minor line administrative positions, and often staffed by supervising bureaucrats sent down from related ministries (a practice known as amakudari in Japan).7 JICA is particularly prone to this form of control, given the complex structure of its relations with several ministries. A 1989 study showed that the top three executives, six of the eight directors, eight of the seventeen department heads, plus other deputy directors and division chiefs were transferees from the ministries of Foreign Affairs, International Trade and Industry, Finance, Agriculture, Welfare and Construction.8 JICA’s management structure in fact reflects the broader spread of responsibilities in the aid system. These major divisions across the system are primarily a problem in Tokyo, where the four-ministry group (MFA, MITI, MOF and EPA) needs to approve the major decisions about loan projects. This

The Real Challenge: Reforming Japan’s aid Administration  75

undoubtedly ensures some measure of coordination of approach to projects, but none of these bodies will necessarily be directly involved in the project’s implementation. The four-ministry mechanism is one that originated in the early days of aid-giving, when these four were the main players and because the OECF (the loans agency) is nominally responsible to the EPA. There are other consequences of this spread of responsibilities. Both the MFA and MITI produce bulky annual aid reports. The MITI volume began in 1957, but the MFA only started its report in 1987 (an expansion of its annual release of detailed aid statistics), as a result of MITI’s emphasis on ‘economic cooperation’ rather than ‘ODA’. Examples of other effects are more serious, however, such as the failure of a skills training centre in Indonesia because of disagreements between MITI and the Ministry of Labour over how it should be run.9 Aid decision-making processes One of the basic principles of the aid process is that of singleyear budgeting, and the need to spend allocated funds in that fiscal year. This is a source of great frustration to those involved in implementation, and can involve substantial carry-over of funds from one year to the next, or rushed completion of tasks in order to spend the funds in time. A separate problem is the principle of ‘request first’ as the basis for all aid-giving. This is the requirement that the recipient should request aid, and that Japan should not offer it first (yōseishugi). However, a fundamental conflict arises, between the greater Japanese attention being given to country, region and sector aid planning inside Japan, and the Japanese reluctance to interfere in the LDC’s own decision-making on what aid is required. JICA’s president calls for a much greater internal consistency about its approach to countries and regions (this means, in JICA’s case, crossing boundaries between internal departments that are in fact controlled by outside ministries).10 NGOs are being involved in grass-roots project work, and small-scale grant projects are being given top priority, while the greater involvement of the private sector (including non-Japanese consultants and contractors) is being encouraged. Such pressures can

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only lead to a further breakdown in the principle of ‘request first’; we already see reports of many examples of projects originated in Japan or by Japanese companies, and the Foreign Ministry, as explained in Chapter 1, has foreshadowed a more interventionist approach to project lending.11 There is official consideration of the ‘offer approach’, where a specific type of aid project is suggested to a recipient—an offer to Mexico of a large loan to help clean up Mexico City’s air pollution was the first of these (part of Japan’s pledge to the 1989 Paris G7 Summit to spend 300,000 million yen over three years on environmental projects), and more could follow in areas of aid with global impact, such as the environment. A further phenomenon, arising from financial limits on aid implementation, is the effect of the emphasis on large-scale infrastructure projects, financed by loans. It suggests a tendency towards the ‘spendability’ of projects in order to consume allocated budgets and avoid the grass-roots complications that can entangle smaller projects. Operation of the machinery It is now widely recognised that Japan’s aid programme is grossly understaffed. OECF staff in March 1991 numbered 280, an increase of 24 per cent over 1980 while overall ODA spending increased 2.8 times over the same period and OECF disbursement expanded 2.7 times. The MFA’s aid staff in 1990 was 329, larger than that of the OECF but with a much smaller aid budget. Diplomats working as aid officers in Japanese embassies worldwide helped inflate the figure, although those staff act as the main channel for aid delivery where there are no OECF or JICA offices locally available.12 Japan’s ODA staff are responsible for nearly twice as much aid per staff member as in the US, and nearly four times as much as in Britain or Canada.13 New staff are being added each year to OECF and JICA establishments, but the net increase in the 1991 budget was 11 for the OECF and 44 for JICA. In the OECF’s Manila office, for example, there are five Japanese officers, with a project load of 31 for each of the three officers responsible for project administration in the field.14 These deficiencies in skilled personnel to operate the system are serious impediments to more effective implementation and planning.

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A related problem is the unavailability of sufficient skilled technical staff.15 Major efforts are being made to provide JICA with improved personnel resources.16 The staffing issue is linked to a further matter, the role of the private sector in the Japanese aid programme, an issue that excites ongoing controversy. Research some years ago showed that the private sector was the driving force in the aid cycle, notably in project-finding and management.17 Some would point to the concept of the ‘aid business’ as fundamental to the operation of the aid system, and concern about criticisms of ‘back-room’ decisions has led the government to publicising the names of successful tenderers for Japanese projects.18 At the same time, the private sector is essential to the smooth operation of the aid programme, and the government goes to great lengths to provide potential participants with the knowledge of how the system works.19 A contentious feature of the aid system is the link between the philosophy of aid and the approach to aid-giving, and the machinery itself. The emphasis currently on targeting for high levels of aid expenditure means that the aid administration must respond to directives from above that place the emphasis on broad quantity targets first and foremost. The Japanese system is concerned with ‘moving money’ as a prime object of the aid process which, when combined with a divided, complex and understaffed aid system, places emphasis on larger projects and quick expenditure, and creates pressure up and down the system where quality improvements are being attempted. Notwithstanding major quality gains that have been a feature of the Japanese aid programme over recent years (to be discussed in the following chapter), broad government policy remains wedded to the quantity targets approach—the new focus on Japan’s ‘international contribution’ from 1991 has been further reflected in the large budget increases for aid in the FY 1992 budget, at 7.8 per cent well above the average budget expenditure growth of 4.5 per cent.20 Programme coordination One of the major structural difficulties in the aid system is coordinating technical assistance and loan aid, and yet this is fundamental to most projects. Similarly, effective matching of

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loans and grants to particular countries, and bringing together the separate responsibilities of different ministries to avoid overlap, have proved to be problematic. These difficulties are the direct result of having separate implementing agencies for loans and technical aid, with capital grants and multilateral aid also carried out by separate ministries. We shall examine several aspects of this problem in more detail below. The micro-processes of aid One of the major complaints from Japan and recipient countries is the complexity of the aid system. There is no single ‘window’, no single assessment authority, no single process of country assessment. Country, region and sector programming takes place both in implementing agencies and in the ministries and separate research centres. It is a confusing scene, and the administrative processes involved in each type of aid are different, not to mention complex.21 This problem will also be discussed further below.

THE AID ADMINISTRATION AND PUBLIC DEBATE Japan’s rise to prominence as an aid donor has brought with it not only criticisms of the administrative aspects outlined above, but a myriad of suggestions about how the aid system might be improved. We shall examine the official appraisals presently, but it is worth perusing other comments. One important contribution to the debate has been that by the Federation of Economic Organisations, or Keidanren, which has for many years been committed to pushing for reform of the aid system. In 1987 the Keidanren presented its ‘Blueprint for Upgrading Foreign Aid’ which made specific proposals for improving the administration of loans, the coordination of grants, technical assistance and loans, and ‘prompt and transparent’ aid administration. The ‘Blueprint’ identified single-year budgeting and the ‘request first’ principles as aspects that required reform. In addition:

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Four government agencies are involved in yen loans… Their involvement should focus on promoting a policy dialogue with borrower nations on the form of economic cooperation; the evaluation of individual projects should be left to the organisation responsible for implementation.22

The Keidanren’s proposals in August 1990 were sharper and more wide-ranging, with new suggestions for more third-party evaluation, integration of aid administration, more emphasis on environmental considerations, more NGO support and a greatly expanded public information role. They also came out strongly in support of the concept of a government-endorsed ODA charter as a basis for ongoing reform of aid principles and practice. Later in this chapter we will examine the relevance of the aid charter idea.23 A recent analysis puts the problems of aid administration down simply to a lack of staff—both in absolute numbers of personnel and in skilled staff.24 Matsui Ken points out that scholarly attention has focussed primarily on questions of the need for administrative unity, for overall coordination of aid activities, for more authority to the implementing agencies— and ultimately for a single aid agency.25 We shall assess this aspect of the debate below. At this stage, it is sufficient to appreciate that the problems of Japan’s aid administration are a serious topic of public debate, like the more newsworthy scandals and mismanagement stories discussed in the previous chapter. The problem is well recognised; the solutions are harder to find. One critic, Sumi Kazuo, a specialist on global environment, is scathing in his view that the Japanese aid system is unable to cope with problems of the environment, and unable to inform public debate, because of the closed nature of the aid system—complex machinery, specialised jargon, labyrinthine decision processes and a lack of public information about what is occurring.26 Other voices echo the accusation about lack of openness, the ‘smoke-filled rooms’ theory of aid decision-making. This gained popularity in the weekly magazines,27 and has been reflected also in attacks on the role of politicians and business in aid, and in proposals by Japan’s opposition parties for an international cooperation law (see below). There is broad consensus in public debate about aid in Japan that changes are necessary to improve the aid system. The official

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documents frankly recognise the need for improvement, but the MFA rejects the notion that administration is disorganised and explains the situation in the following way, in quite forthright terms, laying the blame on the original conception of ‘ODA’ as a common denominator for measuring aid: In fact, Japan’s aid administration is unified under foreign affairs authorities in relations with the developing countries as recipients. That is, government-based aid, in terms of a unified policy, is implemented with our overseas missions as the contact point outside Japan, with the Foreign Ministry coordinating everything. Furthermore, implementing aid that needs to be carried out in many specialised fields, it is good that the specialities of each ministry and agency and their know-how and personnel are mobilised. Also, most of the ODA budget is operated by the Foreign Ministry and the Finance Ministry. Some is the responsibility of other ministries and agencies, and there is an argument that this makes the budget dispersed and hard to fully understand. However, ODA was originally a concept conceived to enable comparison of the aid achievements of countries with different financial systems, involving different fiscal years, budget-making methods and aid implementation. The outcome of Japan’s aid performance was that funds were used in a way that did not exactly fit the concept of ODA, so to accurately report Japan’s efforts in aiding developing countries, all the figures were assembled without regard to which agencies were responsible for what. As a result, ODA came to be implemented by a range of ministries and agencies, but this is much the same as the situation in other aid donor countries.28

The latest Foreign Ministry aid report, however, has softened this approach somewhat by emphasising the process of allocating greater responsibilities to implementing agencies in delivering aid. But it has not resiled from a fundamental defence of the decentralised and divided aid system, even though officials freely acknowledge its lack of transparency. TOWARDS REFORM: THE SŌMUCHŌ REPORTS In 1988 and 1989 the Administrative Management Bureau of the Management and Coordination Agency (Sōmuchō) released two

The Real Challenge: Reforming Japan’s aid Administration  81

detailed reports on the administration of the foreign aid programme at the process level.29 These were not the first proposals on administering reform, but they remain the most comprehensive yet undertaken. The government’s Third Administrative Reform Commission which presented its final report in June 1986 recommended improved procedures, a new aid target and smoother implementation, and made other general recommendations on the operations of JICA and the OECF.30 This report, although reasonably specific and precise about what was needed in terms of general directions and objectives, was couched in such a way that no pressure was brought to bear on those sections of the administration which could effect change. Although the advisory council set up to implement the administrative reform proposals has been more specific (as we shall discuss below), it has relied more on urging change than clearly demonstrating the administrative difficulties of the current system. By contrast, the Sōmuchō reports were lengthy (673 pages in all), detailed and precisely targeted in their recommendations and in pointing out who should be responsible for the action required. They were taken seriously in Tokyo. This does not mean that their proposals were agreed with or all acted upon, but they were noticed and received public airing. The newspapers took up the issues, and the second series of articles on aid published on the front page of the Yomiuri shimbun between 17 and 27 September 1989 was derived from the evidence and recommendations of the Sōmuchō studies. The first Sōmuchō report of September 1988 dealt with grants and technical assistance. Its major recommendation was that the grant aid budget and the contracting and implementation of grant aid should be transferred to JICA because of its special role as an implementing agency, leaving policy development and project selection with the Foreign Ministry. This was an unusual recommendation, as it dealt with overall responsibilities between agencies, whereas most other recommendations focussed on ways of improving administrative processes within existing administrative jurisdictions. This proposal has not yet been fully acted upon, although others have been. For example, a new ‘small-scale grants scheme’ was suggested as a means of overcoming often lengthy delays between request and Cabinet approval of grants and an exchange of notes between governments, and to provide more rapid, appropriate

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assistance. The report found that projects could take on average 1.5 years from request to exchange of notes, and 2.6 years from request to completion, and there were numerous cases where Japan could not respond effectively to requests for small-scale or emergency grants because of the complex administrative procedures required. A small grants scheme began in FY 1989, with ninetyfive projects being funded to a total of Y294 million. Half of the projects were carried out by NGOs (five of these were Japanese), others by recipient local governments, research bodies and the like. The same scale of programme was continued in 1990, ninety-two projects being funded with Y296 million. In fiscal 1991, Y500 million was budgeted for the scheme and it is proving popular within the government because it is easily managed, gives access to a new range of aid groups and projects, responds to the call for ‘appropriate aid’ and provides good publicity.31 Also targeted by the Sōmuchō was the Foreign Ministry’s lack of consultation with recipients about development needs, the absence of basic planning studies on at least 30 per cent of grant projects, the need for improved follow-up and ‘aftercare’ for projects (to avoid, for example, the lack of spare parts for machinery) and a more flexible approach to the financing of local costs for associated services (which the recipient is supposed to look after) to allow Japan to finance part of this and thus enable completion of projects more quickly.32 The Foreign Ministry is putting more into follow-up surveys of projects, and has greatly increased its basic planning studies. A number of proposals were made about improving delivery of food production assistance and cultural aid (the food aid budget later shifted from the MOF to the Foreign Ministry), but the substantial part of the report was devoted to technical assistance procedures and JICA operations.33 Some of these had to do with streamlining the acceptance of trainees into Japan, the sending of experts overseas and reducing the time taken to get machinery or material aid in-country (most items, according to the report, could not be delivered until the following fiscal year). The Sōmuchō suggested that the Japanese Government be more pro-active in its approach to project-based technical aid, by offering assistance to potential recipients to avoid lengthy delays.34 This ran counter to the ‘request first’ principles long held by Japan, and

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referred to earlier in this chapter. Feasibility studies were also a major target of the first report, which claimed that they were not adequately linked to the actual operation of projects and did not give sufficient advice about the strategic importance of projects for the recipient government. This was related to the need identified for aid plans to be developed for individual countries and regions, after extensive consultation with recipient governments. In this context the Sōmuchō saw a need to set up new programmes to link capital grants and project-based technical assistance. JICA came in for criticism, in that its operational departments were considered inefficient because of difficulties in broad coordination, and barriers to system-wide improvements. The report in fact recommended a wholesale rethink of JICA’s administrative structure, including the way the departments are organised, the distribution of staff resources across work areas of the agency and the scope of responsibility given to overseas offices (it should be increased, the report argued).35 Significantly, the report also recommended strongly against the reservation of posts at the level of department head for officials on secondment from ministries and urged improved appointment and training procedures for main-stream JICA staff. In sum, the first Sōmuchō report presented a challenge to the bureaucracy to amend some basic inefficiencies in aid procedures, and to make some fundamental alterations to the sharing of power and influence in managing grants and technical assistance. The grants budget is one of the MFA’s largest budget items and shifting it to JICA would remove one of the ministry’s major sources of bureaucratic power. Likewise, the suggestion to change departmental boundaries within JICA was a serious challenge to Tokyo aid politics, for these demarcations had been set up precisely to preserve the influence within JICA of the main ministries in their areas of responsibility, and gave those ministries a direct input into control over aspects of JICA operations. They were not about to give up that influence. Although this report has not led to wholesale changes in administrative organisation, there have been some programme improvements and the JICA president has hinted at the way there may be changes in the future to cut across rampant sectionalism in his agency:

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Until now the implementation of the work of the vertically structured operations departments has been a serious matter, but to effect fine-tuned aid, it has been pointed out that a country or regional approach is necessary… Until now there have been various criticisms of [JICA] organisation, and we have long wondered how to go about injecting regional thinking. But at last we are now at the point where we can embark upon a ‘region-and-country system’.36

Ministries responded cautiously to the Sōmuchō’s recommendations, although there was scope for some improvements recognised in a few new programmes. The Foreign Ministry expressed no clear view on the question of transferring the grants budget to JICA, other than restating current responsibilities and the need to retain them. Nor was there any direct response to the proposal for the wholesale reorganisation of JICA. Concerning the problem of certain senior posts being reserved for ministry transferees, all that the Foreign Ministry would reply was: ‘We are taking the lead in developing the ranks of internal staff to redress the fixed transfers to particular administrative posts, and in nurturing JICA employees, and we wish to continue to do so.’37 The most important aspect of the report, the question of who manages grant aid, has not been fully resolved in the way the Sōmuchō recommended. The grant aid budget has not been transferred to JICA, but the agency is now involved in a much wider range of approval and implementation activities for grant aid: notably the design, preparation and construction of projects. While not responsible for the approval of grant projects, it is the main agent in their implementation.38 This is a major advance in taking the minutiae of aid management out of the policy divisions of a mainstream ministry and placing them with a specialist agency, but full budget transfer is yet to be accomplished. The second Sōmuchō report of November 1989 dealt with the administration of loan aid, focussing broadly on project-finding, assessment and management, links with technical assistance and the operations of the OECF. The primary finding was that under the fourministry system of loans approvals, ‘no country-based aid policy that takes a long-term view has been established’. Separate country studies were found to be being undertaken by three ministries, the EPA, the two implementing agencies and an official research centre. Yet none had a long-term focus, nor were their findings shared, nor was any

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cooperation between institutions evident. The report recommended strongly that such cooperation should occur, and that there be a common government approach to aid planning based on consultation with the recipient (an approach which, at that time, ran counter to the official policy on requiring requests from recipients). This same overlap and unclear division of responsibilities were found to exist in project-finding and loan assessment procedures. Project-finding surveys were funded from different agencies with no coordination. Lack of clarity in responsibility for different loans approval procedures led to delays in making loans, even for countries which requested on an annual basis. The report even suggested that basic loan assessment guidelines be laid down for the four-ministry assessment mechanism, and that an environmental impact assessment manual be used.39 It is surprising that the four-ministry loans approval system had not previously included basic guidelines on assessing the benefits of loan projects. The OECF has had a range of assessment manuals in use since 1976, but no basic policy guidelines have been available for the ministries in their joint decision-making—and the system has been in operation since the early 1960s. The report suggested DAC guidelines of December 1988 as a model to adopt. In March 1991, the OECF published its ‘Operational Guidance on OECF Loans’, based on DAC precedents and aimed mainly at borrowers, although serving as a guide for Japan-based decisions also.40 Another set of problems with loan projects concerned the time taken in reaching a decision to provide a loan. Differences were especially noticeable between those countries which requested each year and those that did not, delays in approving requests from the latter being common. There needed, the report said, to be much clearer expectations of how long assessments could take, and much better communication between Tokyo, the relevant local Japanese Embassy and the requesting governments. In cases of countries requesting annually, an average time span of 11.2 months from request until the exchange of notes was noted, but for less regular requesters, the time scale on some projects stretched out to between 2 years and 4 years 3 months. Other proposals were put forward for streamlining approvals

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and formal agreements on loans, and for the further opening of projects on a ‘general untied’ basis, especially the consulting aspects.41 The report also highlighted problems in completing and monitoring projects, noting that delays were common and recommending close monitoring by the OECF. For finished projects themselves, similar monitoring and ‘after-care’ were seen as necessary, especially since the OECF received no project completion reports on a huge 30 per cent of projects, soon after they were finished.42 An improved system to manage this was recommended, as were revised procedures for project evaluation and for making use of evaluation findings. In connection with these aspects, a new scheme was proposed for ‘small-scale after-care aid’ to assist projects where large funds are not required to rectify problems, such as needs for spare parts, etc. Coordination between loans and technical aid was also seen as important, and examples were given of projects where the necessary technical training was delayed too long to be of help in ensuring the success of the loan project (e.g. training of bus drivers for the supply of buses).43 Problems in the four-ministry approval process for loans were identified as limiting consideration of technical cooperation requirements. In relation to the OECF itself, the recommendations were not particularly far-reaching. They focussed on expanding the use of already available outside expert skills, greater use of external commissions for feasibility studies and improved systems for project work in overseas offices. Finally, there were some proposals for more coordination in providing public information about loans policy. Ministry responses to this second Sōmuchō report were predictably non-committal. Despite the fact that this was certainly the most thoroughgoing report ever conducted into the mechanisms of the aid process, and that on the whole the recommendations were for improved procedures rather than wholesale alterations to the structure of the system, change will obviously take time. None the less, a number of matters were positively taken up (notably by the OECF itself), such as the adoption of OECF environmental guidelines, project assessment standards, project completion surveys, aid impact studies, more overseas staff and overseas offices, and publication of tender information.

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The Sōmuchō reports dealt with the operation of the aid system, not its overall structure. What they did show was a rather high level of operational effectiveness across the system at a micro-level, albeit with some serious deficiencies at important junctures in the aid process. These came down to some basic problems of coordination across the system, a lack of important information at critical points and the need for far more flexibility in response to difficulties faced by projects and/ or recipients. Problems thus highlighted include shortages of staff, cross-agency barriers, the large-scale project emphasis of the aid programme, diffuse responsibility between agencies and associated problems of getting a common approach (as in formal guidelines) to project approvals. The incongruity of a mainstream line bureau of the Foreign Ministry handling the complex financial procedures of grant implementation was also noted, as was the inbuilt inter-ministry rivalry within JICA. The difficult areas of administrative reform in foreign aid were not really touched on. It is certainly easier to assess the performance of a system that is in place rather than predict the potential of alternative administrative structures. The Sōmuchō addressed the minutiae of project management but did not extend to questions of development philosophy, although this was targeted indirectly in highlighting the absence of approval guidelines for loan requests. One of the lessons of earlier chapters was that Japan’s approach to economic development within its general rationale for aid, or aid philosophy, was a rather crude ‘self-help’ theory, where aid was considered as successful when it fostered recipient efforts to push along economic growth. It is difficult to impress such an indirect development objective upon the administrative mechanisms for foreign aid, but even at the points where development goals were most likely to be injected into the decision process, such guidelines were found to be absent.

ATTITUDES TO ADMINISTRATIVE REFORM Pressures are building in Japan for a firmer response to the problems of the aid administration. The Fourth Medium-Term Aid Expansion Plan (1988–92) expressed an intention to improve specific aspects of aid implementation. On 24 January 1989 Cabinet approved more

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discretionary powers for the OECF and JICA in assessments and greater scope for project development and management.44 Other reforms involving the implementing agencies have been noted above. The problems of the Japanese aid administration, however, still reflect the absence of a guiding policy that ties budgetary and political commitments to the realities of aid management and implementation for economic development. Persistent diversity of views about the purposes of aid within the government has undermined the acceptance at the operational level of a unified stance on aid objectives. While there is today a more widely accepted view of the ‘aid philosophy’ (as we saw in Chapter 1), the immediate effects on informing administrators are still minimal. Public pressure for reforms is strong, none the less, as we have seen in the previous chapter, and much critical comment has focused on how to restructure the main policymaking mechanisms for aid. Two main policy streams present opportunities for new approaches to changing the aid administration, although as of early 1992 there is no firm evidence that such change will be possible. One strand is the attempt to strengthen the Foreign Ministry and its role in national policy—a role seen as seriously weakened by lack of direction and purpose during the 1990–91 Gulf Crisis. A committee set up in September 199145 reported two months later, partly in response to proposals by the ‘Japan in the World’ sub-committee of the Special Advisory Council on Promoting Administrative Reform, which advocated appointing a second minister for external affairs, something which the Ministry of Foreign Affairs has always opposed. The thrust of the MFA committee’s report was for maintenance of the current system where the MFA is the lead agency in external affairs. While proposing a stronger system for managing ‘international cooperation’, the main recommendations dealt with the creation of new bureaux for policy coordination and international information, expanding staff establishment and improving their training and recruitment. There is little attention given to reforming the aid management functions of the Foreign Ministry.46 The second, more likely, source of pressure is the government-wide administrative reform process, now in the hands of the Administrative Reform Promotion Council. Reports suggest that ‘the government plans to draw up the next five-year ODA plan and also to work out an

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outline of Japan’s ideals for international aid programmes by studying a set of proposals devised by the Administrative Reform Promotion Council’.47 In June 1991 the council released its first report, which discussed aid in general terms and which was incorporated in the council’s full interim report in July 1991. Debate on aid policy was continued in October, and ministry opinions on desirable reforms were widely at odds, although there was some predictable agreement that a firmer statement of principles was preferable to administrative reorganisation. Further recommendations were presented in the second sub-committee report of December 1991.48 The approach involved a ‘fundamental rethink’ on aid, and was founded on ideas about expanding ODA, making the aid process more transparent, widening the ‘soft’ end of aid especially technical cooperation and strengthening environmental considerations. A need was identified for a much tighter policy basis to aid, involving consultation with recipients and adherence to Japan’s own policy on types and amounts of aid. The report urged giving a greater proportion of ODA in grants, further progress in untying especially of grants, stronger flow-through of evaluation results to new aid projects and greater encouragement of public support, notably through stronger backing of NGO activities.49 Specific council proposals for aid administration, although subject to a ministry vetting process and therefore rather bland in their wording, included the suggestion that an ‘aid charter’ be drawn up, incorporating aid principles and guidelines for implementation. In addition, more effective inter-ministry consultations were suggested, along with improved planning facilities in JICA, better links with overseas offices and indeed similar recommendations to those of the Sōmuchō on aspects of implementation. The council targeted many of the same problems, but its aid charter idea was the one concession to a more comprehensive view of the aid system in Japan. The aid charter is a concept that has been avidly taken up by the Liberal Democratic Party (LDP), which in late December 1991 called for a review of aid and the development of a charter and other reforms from the 1993 fiscal year.50 This enthusiastic response followed a Cabinet decision of 28 December 1991 which endorsed the recommendations of the Administrative Reform Promotion Council. In particular Cabinet agreed to ‘consider’ the possibility

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of achieving a charter, of examining the division of responsibilities between the MFA and JICA and of introducing new procedures for project evaluation, public relations, personnel training, etc. It did, however, commit the government to restructuring JICA, to bringing overseas offices of JICA and the OECF into closer coordination and to upgrading the personnel system in implementing agencies.51 These decisions were an important start to the process of reform, even though solutions to some of the main problems are not yet agreed on, and the biggest questions were not touched on at all by either the Promotion Council or Cabinet in their conclusions. As we noted above, intense debate about the place of an aid ministry did take place in the council, but it seems that the government has for the present settled on marginal improvements to the current system as the solution, rather than broader structural change. THE QUESTION OF AN AID MINISTRY As noted previously, domestic criticism of the aid system is more prevalent and forceful these days. The arguments for and against a more centralised aid system have been about for many years and the proponents of such a change are numerous. The Foreign Ministry rejects such a notion (see above), pointing to other major DAC members for examples of aid systems that (except for Germany) are subject to overriding unification within foreign policy concerns and which, in practice, were subject to policy development and coordination by the respective Foreign Ministry.52 This view exaggerated the situation in some cases, but for the Foreign Ministry the issue revolves mainly around the question of ensuring a unified process of specialist policy development and implementation. In the ten DAC countries cited, all except France and Sweden had a single specialised aid agency, even with overriding direction from the Foreign Minister. A number of commentators have urged the creation of an aid agency in recent years: Inoguchi Takashi, Nishikawa Jun, Nakatani Iwao, all well-known scholars. A senior government politician and former minister, Katō Mutsuki, has also proposed an agency as a step towards a responsible world contribution.53 To date there has been no concentrated debate in Japan about the benefits or otherwise of a centralised agency. It is too difficult a political issue, and has not been

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seriously addressed by internal assessments. The Foreign Minister’s report of December 1985 on streamlining aid implementation rejected the notion of a separate ministry, bowing to the political impossibility of reorganising the foreign aid system, especially given the intransigent attitude of the Foreign Ministry about foreign policy unity.54 A recent argument by an OECF official opposed the establishment of an aid agency on the basis that discussions within ministries would be necessary anyway, and the ‘four-ministry system’ would turn into a ‘five-ministry system’.55 As Inada argues, Japan’s aid system involves a complex series of checks and balances between ‘fairness’, ‘effectiveness’ and ‘diplomacy’.56 The trade-off at present is clearly between diplomacy and fairness over effectiveness. There are no participants in the system at present who advocate a wholesale administrative restructuring of the aid system —the principle of ‘fairness’ brings opportunities for bureaucratic actors (and, as a result, associated private-sector and political level involvement) to gain budget and programme expansion. But while the above writer complains of the possibility of a ‘five-ministry system’, the present Japanese structure involves far more ministries and agencies than this. As Rix noted in 1980: ‘in the past, political support for aid was sporadic and given only for specific ministry interests. It was therefore crucial in controlling administrative change and preventing comprehensive reform… debate centred instead on the vague notion of ‘unifying’ policy, so that bureaucratic inertia easily smothered piecemeal reform proposals.’57

Indeed, proponents of an aid ministry should examine the experience of setting up JICA—while originally intended as a new technical aid body to be managed by the MFA, the political muddle that accompanied its planning led to part-control by other ministries being built into the new agency’s legislation, influence that is still part of JICA operations. The opposition parties in Japan, however, have made some effort to stimulate public debate on the need for a more systematic approach to aid. The Diet has never been central to discussion of the aid programme, although it has provided opportunities over the years for exposure of problems in aid management. Iwaki shows that the

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government over the years has not allowed discussion of aid to move far from the budget context, and when asked about the need for an economic cooperation agency, has said bluntly that there was ‘no need’.58 The role of the Diet in aid is certainly a passive one, although a June 1989 report by the House of Representatives on foreign policy noted specifically the weaknesses in Japan’s aid system: no basic law setting a philosophy, no unity in decision-making, limited public information and a limited role for the legislature in the face of bureaucratic dominance.59 Efforts by individual members of the parliament continue none the less, even without success. Just as Den Hideo of the then Japan Socialist Party presented a bill in January 1975 for Diet approval of aid plans, a bill that was not debated and lapsed, another bill was put forward in 1987 and again in 1989 by the Kōmeitō and Kokumin kaigi opposition senator Nakanishi Tamako. The Socialist Party also tabled a bill in 1989. Neither had much chance of being debated, let alone passed, but they point to a more concerted interest on the part of the opposition in using the Diet to highlight aid matters. Both bills set out to establish principles for development aid, programme planning and administrative reforms. Both proposed the same basic principles, a process of regular planning for aid to be approved by the Diet and administrative changes including creation of an International Development Cooperation Agency (chō) within the then Prime Minister’s Office with a Cabinet minister in charge, and an International Development Cooperation Agency (jigyōdan) for implementation, which would take over the responsibilities of the OECF and JICA. Both opposition proposals were more or less the same, both were directed towards a more unified policy approach to aid and a more unified management structure, with a central role for the legislature in what has been, for all of aid’s history in Japan, a policy area almost exempt from Diet scrutiny. The Nakanishi proposal made the point in the explanatory document accompanying the bill that the Foreign Ministry was considered an appropriate location for the proposed agency, but that placing it there would prevent a separate responsible portfolio being established. House of Councillors resolutions on foreign aid were passed on 22 June 1989, brought forward from a sub-committee of its Committee on Foreign Affairs and Comprehensive Security. The

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resolutions called for the establishment of some basic principles for the philosophy and conduct of economic cooperation and for the improvement in ODA programmes and administration, and pointed to the need for appropriate legislation. These statements were couched in very general language, but did gain the status of formal parliamentary resolutions. They obviously gained no support from the government, as they broached principles which were seen as limiting government options: respect for recipient sovereignty, no interference in internal affairs, no military connections, the principle of open disclosure, consideration of the welfare, culture and environment of recipient peoples, and preservation of human rights and freedoms.60 The question of an economic cooperation basic law has also been pursued in recent years, although efforts in this regard go back to 1971, when it was raised by the government’s advisory council on aid, the Overseas Economic Cooperation Council. Den Hideo proposed such a law in 1975, but the government has continually rejected the need for such a formal procedure. Indeed, Den’s bill was defeated in 1975, and since then government spokesmen have dismissed the need for a Diet role in the aid debate, for legislative meddling in diplomacy or even for more accessible aid budget data for Diet members. ‘The current aid implementation system is working smoothly on the whole,’ declared Prime Minister Nakasone in September 1987.61 The Director-General of the Foreign Ministry’s Economic Cooperation Bureau stated his view of the Diet’s aid budget role in the following terms in 1989: The economic cooperation budget is debated and passed each year by the Diet as part of the overall budget. What we deal with in the framework of the ODA budget is the reality that within the limit of the foreign affairs power or administrative affairs power we are concluding very tight negotiations with other governments. Although I repeat myself, we have to deal in the end with the budget limits approved by the Diet. That is, we are dealing with the economic cooperation budget in the framework of one element of Cabinet’s administrative powers to ‘conduct foreign relations’, one of Cabinet’s duties under Article 73 of the Constitution. We would like to continue to deal with it in the same manner.62

The issue comes down to one of the bureaucrats versus the politicians. Already we are seeing in other policy areas a growth in the expertise

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and policy impact of political party ‘policy tribes’ (or groups of politicians experienced in and knowledgeable about particular policy areas). Economic cooperation has its own such tribe.63 There is greater wariness on the part of the bureaucracy about giving further control to politicians. The latter claim that budgetary transparency is necessary, with country-based budget figures presented to the Diet; the former oppose any budget preparation on the basis of country budgets to avoid politicisation of bilateral relations. Complaints are also heard that If we show our hand in the Diet, it’s likely that industry-linked politicians will increase their pressure. On that basis alone Japan’s aid is being criticised as just a business linked to exports, and more tied aid will bias our future ODA.64

As the International Development Journal commentary points out, the aid bill skirmish was only the start of the conflict between bureaucrats and legislators concerning aid. In relation to the aid bill, the Foreign Ministry at least put the same arguments about the impossibility of country-based budgets, and the fact that ‘aid is integral to foreign policy’ and should therefore be dealt with as a foreign affairs and not a legislative function.65 This is a consistent argument by the Foreign Ministry to avoid any encroachment on its foreign policy responsibilities. CAN THE AID SYSTEM BE REFORMED? Given the history of what can only be called an inconclusive debate, where should Japan turn if it is to streamline its aid administration? The urgency of this issue is underscored by the calls by former Foreign Minister Ōkita Saburō after the Gulf War for Japan to triple its ODA to raise Japan’s overall contribution to the international community.66 This would make Japan’s ODA commensurate with the aid plus military expenditures of other major donor countries, but an increase in Japan’s ODA to this degree would throw a severe burden on to an already over-stretched administrative system. What scope does the current debate provide for any realistic reform? We have seen in the past (when JICA was established) that a

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‘control tower’ for aid was seen as necessary in any reform process. The proponent of this concept was an LDP member, the late Minato Tetsurō, a key figure in aid affairs at the time. He put forward a proposal for an aid policy unit within the Prime Minister’s Office, an aid agency and a stronger aid advisory council. In the end, he had to yield to political pressure and accept that fundamental reforms were not possible, In December 1973 the government actually agreed to establish a ministerial post for economic cooperation— against the firm opposition of the Foreign Ministry and its minister, Ōhira Masayoshi. The bill to create the post, however, was shelved, as the concept had only been used to force the Foreign Ministry to accept the new technical cooperation agency.67 Almost twenty years on, conditions have changed but, as editorial comment in the International Development Journal has indicated, ‘basically nothing has changed in terms of integration of aid functions, overall coordination and improvement in quality’.68 There are several models that could provide the basis for reform of Japan’s aid administration. Before we consider those, we should discuss a number of factors relevant to whether change is possible in the Japanese aid administrative system. First, it is important to remember that the aid administration has been divided for its entire history since the mid-1950s. The aid lobby and large aid business networks have grown up around the traditional disaggregated ministerial power structures. As a result, there is increasing specialisation in individual aspects of aid policy and aid approaches based on them.69 The Foreign Ministry, for example, holds to an implacable view that ‘aid is foreign policy’ and no derogation is permissible from maintaining a single foreign policy window. The Ministry of Finance commands almost as much of the ODA budget as does the MFA, notably subvention to the OECF and grants to international financial institutions, and formal ‘coordinating’ functions tend to fall within the province of the Prime Minister’s Office. However, the units established to deal with such special functions have tended to be ‘colonised’ by ministry transferees, so that there is no guarantee that the Prime Minister’s Office will be able to effect any independent coordination; indeed, it does not do so. Furthermore, Japan’s political and party system does not allow significant scope for prime ministerial initiative, and aggressive premiership is not often seen from the official residence in Kasumigaseki, Tokyo’s government centre.

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Other issues are also important. Foreign policy and domestic policy are obviously linked. The MFA’s intransigence on the view of aid and foreign policy cannot be maintained as rigidly as it used to be, given the scope of domestic and foreign business interests engaged in the aid programme today. Pressure continues to mount on Japan for aid planning, as aid-giving increasingly incorporates active proposals from the donor side. Donor initiatives require greater professional specialisation and the need for high levels of integrated research and information analysis,70 demands which call into question the current dichotomy between ‘policy-makers’ and ‘policy implementers’ in the Japanese aid system. This is especially so given the ‘horizontal autonomy’ maintained between implementing agencies, and the lack of a consolidated or articulated government aid philosophy. In addition, there are growing and insistent demands for further improvements in the aid system: more integrated surveys, more staff, better responsiveness to global aid issues, closer cooperation within the system for drafting aid plans and more systematic application of economic and sector analysis. In the light of these conditions, most commentaries on the aid system suggest that some form of unified central authority is necessary—some (such as the Keizai Dōyūkai, the Japan Committee for Economic Development) have called for a minister, others (the MFA’s ODA Committee) a stronger MFA coordinating role, or a think tank (the Association for the Promotion of International Cooperation), a ‘command centre’ (Engineering Consulting Firms’ Association) or ‘control tower’ (Minato).71 Appeals for a minister or a ministry for aid have usually derived from an observed need for more integration in structure and formal responsibility. Proponents of centralisation have to take account of the practical realities of the bureaucratic and party-political systems in place. At the same time, effective administrative practices rely on clear guidance from the political level about the philosophy and objectives of the aid programme. The Japanese aid system therefore needs, as a first step, a government aid charter, endorsed at Cabinet level, that clearly establishes the nation’s objectives in development assistance. It must be sufficiently precise as to be unambiguous and to provide guidance on the criteria for assessing projects and programmes. As we have seen, this idea has had a positive reception in the Administrative Reform Promotion Council, which agreed on the need for a set of broad principles able to

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be revised according to circumstances every two years. In December 1991 Cabinet endorsed the need to assess this proposal, and approved a charter in June 1992. Centralisation of the aid system can involve three different types of models; an independent structure; a new structure linked to the MFA; or refinements to the existing system involving more consultative mechanisms. An independent structure would involve a new minister for economic cooperation and a new aid ministry within this minister’s portfolio. It would be separate from the MFA and placed organisationally within the Prime Minister’s Office. All current ODA budgets and functions would transfer to the portfolio and all ODArelated affairs would come within its control. The OECF would also transfer, along with JICA, both coming under the same authority and being absorbed within the new ministry. This system would have the advantages of tidiness, a senior responsible ministry with access to the Prime Minister and the combining of both policy formulation and implementation functions. It would give a unified front to the aid programme, and would bring Japan more into line with its DAC colleagues in establishing a more ‘transparent’ system. The major internal problem would be the organisation of the agency itself to ensure an effective balance between policy and implementation functions. While functional neatness is an attractive aspect of this proposal, the history of aid administration in Japan makes it a politically untidy option. It would require strong prime ministerial initiative and a degree of ministry consensus about the benefits of integration that is unlikely to be achieved. As in the case of the run-up to the creation of JICA, and when the Aid Advisory Council recommended a specialist ministry, MFA opposition was solid, on the basis of ‘duplication of foreign affairs functions’.72 Reaffirmation of this view has been recently seen in the report on a strengthened Foreign Ministry.73 Furthermore, powerful ministries (such as Construction or Agriculture) with small but active ODA programmes are unlikely to want to give up their activities. In particular, the MFA and EPA’s control over the implementing agencies will be hard to take from them. Watanabe and Kusano have identified a range of other disadvantages in the unification model, including the likelihood of ministries ensuring that their staff take key positions in the new agencies (just as happened when JICA began in 1974).74 .

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This all points towards the need for strong political direction to ensure this administrative reorganisation can take place. As the British and Australian cases show, political support and intervention were necessary if aid agencies were to survive as independent bodies and achieve their objectives. The Australian agency, ‘for much of its existence, lacked strong and continuing Ministerial backing’.75 The key question for the Japanese case is whether and to what extent sufficient political pressure can be brought to bear to effect radical administrative reorganisation. The creation of an economic cooperation agency from widespread existing portfolio responsibilities would undoubtedly be a most far-reaching and significant administrative reform—but there is no precedent for the effective exercise of such reformist authority by the Japanese Prime Minister in recent years. There are numerous constraints on prime ministerial action in such instances, especially the delicate factional balance within the LDP, the traditional juggling role of the Prime Minister in this situation rather than a more aggressive agenda-setting stance, and the policy dominance of the bureaucracy when it comes to issues which do not have a heavy electoral spin-off. The second model, a new structure concentrating aid policy and implementation in the Foreign Ministry, would involve the creation of an aid agency as a bureau or agency responsible to the Minister for Foreign Affairs, folding in the aid activities of the numerous ministries, to form a unified structure. Capital and technical aid functions, as in JICA and the OECF, could remain but would come under MFA jurisdiction in the manner of aid bureaux with Foreign Ministry control in other donor countries. The benefits of this arrangement are that it would bring Japan into line with other members of the DAC, where the foreign ministries have the major carriage of aid policy. It would prevent duplication of diplomacy and would put aid within a single portfolio. The difficulty with the model is again one of execution, particularly as a result of the MFA’s being a weak political and bureaucratic player in Tokyo. It is doubtful whether responsibility for aspects of aid policy could easily be wrested from such powerful ministries as MITI, Construction, MAFF or MOF, and transferred to the MFA, especially given the long-standing entrenchment of aid responsibilities in those ministries. It is unlikely that an easy dissolution of the four-ministry system would be possible without substantial political intervention.

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Part of the problem with this model, as with the previous one, is the fact of the Japanese aid system having such a lengthy postwar history, with a resulting consolidation of bureaucratic and political interests. A model is therefore required that is able to propose a realistic process of institutional change that can gain acceptance within the Japanese political system.

A ‘CONSULTATIVE’ MODEL The Japanese Cabinet’s decision in June 1992 to endorse an aid charter is a most significant step towards administrative reform for aid. It heralds the beginning of an (admittedly long) process of gradual change towards an accepted ‘consultative’ model for aid administration. It would be a system deriving from existing administrative arrangements, but requiring major divestment of responsibilities in most but not all ministries, and a relative concentration of programme functions. The ‘consultative’ model would be based on the existing four-ministry system, but with a number of differences. It aims to integrate the existing widespread aid administration into a more manageable, but still viable, aid system. There are several elements, including an aid charter endorsed by Cabinet (which will be the guiding set of principles and commitments), and a four-ministry policy system headed by the MFA and MOF, which would take advice from other ministries as appropriate. Joined to this policy-making system would be two new aid implementation bodies, one for loan aid and one for technical and grant aid. They would be responsible to the MOF and MFA respectively, and would take their operating guidelines from the four-ministry system, although there would be substantial movement of plans and proposals upward from the agencies. They would be more than just ‘implementing’ bodies because of their accumulation of technical expertise and experience. Agency policy activities would involve close coordination between the two. The aid programme budgets of all government ministries and agencies would need to be folded into these two agencies to limit the proliferation of disparate programmes and attempt to bring implementation into line with government aid policy as expressed in the charter.

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The agencies would, in effect, be an extension of the current OECF and JICA, but with all capital grants operated by the latter agency, and both taking on projects and programmes currently operated by separate central government bodies. In another context MITI has already proposed the pooling of ODA funds for emergency relief work and the creation of an aid budget framework separate from current department allocations, to provide additional support for special purposes such as environmental programmes. This type of thinking is only a start, but could be extended to accommodate existing aid budget allocations.76 This two-level system retains the essence of current practice —a core of controlling ministries and subsidiary implementing bodies— but removes the broad diversification of budgets and administrative organisation. It retains a consultative role for other ministries, but gives two central ministries the overriding administrative and political responsibility, Broad policy objectives and philosophy would be set by the national aid charter, which will shape the policy guidelines to be developed by the four-ministry group and put in practice by the agencies. This structure capitalises on the existing trends in aid administrative reform, and current thinking within the aid system. The political barriers to this reform are fewer, although they are still considerable. Anything less than this will be unable to achieve suitable integration of the broad spread of aid activities in government; there needs to be control over who is doing what in aid and with what budget, and there need to be clear lines of political responsibility for aid within the Japanese Government.77

CONCLUSION Japan’s aid system needs to be administratively integrated, directed towards clear policy objectives and anchored on political-level commitments. Pressures both inside and outside the aid system point to the urgency of broad structural change in the aid administration. Realistically, it is essential to tap the trends already evident, to streamline the system to achieve a smoother match of policy and practice. Because of the size and complexity of the aid programme,

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simplicity and concentration of responsibilities are necessary, as is the need for any change in structure to be politically feasible. To date, however, no real change has taken place because vested administrative and political interests prefer the (for them) comfortable status quo. There are glimmerings of some prospect for reform, as we have discussed, and some acceptance now at Cabinet level. The road to administrative reform in aid may now be open. On the policy front, too, reform is evident and it is to that subject that we now turn.

Chapter 4 Policy innovation in Japanese aid

Over the years, Japanese prime ministers have made only token gestures to aid policy. Fukuda packaged it into his Asian policy, Ohira wove it into his Pacific policy, for Nakasone it was simply an element in his Western alliance support. Takeshita highlighted it in his three-pronged proposal for Japan’s contribution to the world, but it was only the reputedly weakest and least-likely-to-succeed premier, Mr Kaifu, who made any real progress towards fundamental change in the way bilateral aid is conceptualised. He did this by proposing on 12 April 1991 new guidelines for giving Japanese aid. Under these, the government would need to consider four aspects of a recipient’s policies: whether it develops or manufactures weapons of mass destruction (including nuclear weapons); its attempts to promote democracy; its effort to move towards a market-oriented economy; and its human rights record.1 As discussed earlier in this book, Kaifu’s policy is a bold statement of principle, that may in time profoundly affect the way Japan conducts its aid business. Yet it is unlikely to impact on the routine administration of aid policy until the government is able to demonstrate the validity of these principles in particular bilateral circumstances, and we have already seen the Japanese Government declare that they do not apply in the case of Indonesia’s actions in East Timor. The problems with the new policy are old ones: not to adhere to these principles is both to undermine any gains in international kudos that might follow and reinforce the notion that change is 102 

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impossible, whereas to implement them is to threaten the established aid policy and the quantity targets in aid implementation that Japan has set itself. None the less, the Kaifu proposal highlights exactly the dilemma that Japanese aid now faces: does Japan’s aid policy indicate a commitment to improving and enhancing its aid programme? With the world’s largest disbursement of aid funds in 1991, what sort of programme does this involve, and how is Japan using this programme not only to fulfil the recipient’s needs for economic growth and development, but also to pursue its own aid-related objectives and politico-strategic agenda? Japan is well known within the aid community for its relatively poor aid quality, a feature that sits rather uneasily alongside the spectacular achievements in aid quantity that have marked the Japanese programme over recent years. The purpose of this chapter is not to give a detailed account of Japan’s aid programme; rather, it is to assess how that programme is changing and what evidence there is of Japan’s determination to counter the criticisms of its aid effort, or to improve the quality of its aid in terms of its effects on recipient problems. The success with which Japan might be amending its policies can tell us much about how Japan’s potential for international aid policy leadership is growing. Indeed, while the qualitative measurements largely indicate that Japan is not performing on a par with most of its fellow DAC members, assessment of policy changes shows incremental improvement in the way aid is delivered. Apart from aid targets, these reforms are mainly at the micro-policy level and are not in the way of striking political initiatives that have attracted public attention. Some of the more recent ones have flowed from the Sōmuchō reports on administrative procedures discussed in the previous chapter. It is these gradual improvements in the process of aid delivery, however, that will enable this massive aid programme to achieve its objectives, for both donor and recipient. Yet, concern for achieving quantity goals through setting aid targets still dominates the incremental process of quality enhancement. AID QUANTITY TARGETS In the earlier part of the 1980s the Japanese Government made much of its efforts to increase the amount of aid which it was disbursing.

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It was in May 1978 that Mr Fukuda proudly announced the first aid target to double the level of 1977 ODA within three years. This goal proved an easy challenge, as the rising value of the yen meant that aid figures (which are collated in US dollars by the DAC) grew as well. The second target, adopted in 1981, involved spending US$21,360 million in ODA over the five-year period 1981–85. This was double the outlay in the previous five-year period, but again the value of the yen (which by then was dipping) and disbursement problems affected the result, and the total plan was only about 85 per cent achieved. Yet another target was then introduced, to increase ODA over the period 1986–92 to more than US$40,000 million and also to double the 1985 annual disbursement in 1992. There had been strong demands from the United States for Japan to be doing more at a global level (given Japan’s limited defence role), and there were calls from within Japan itself for an enhanced effort to match aid flows with Japan’s economic strength. The target would have raised ODA to an unheardof 0.42 per cent of GNP in 1992, and required a 10.4 per cent annual increase in ODA. Yet the stronger yen made the actual target figures highly achievable and in May 1987 Japan advanced the target by two years to make 1990 disbursements more than US$7,600 million. As mentioned above, Mr Takeshita’s ‘International Cooperation Initiative’ announced in May 1988 included aid (together with cooperation for peace and cultural exchange) as one of the major elements. The Fourth Medium-Term Aid Target announced at that time planned to double the 1983–87 ODA volume during the period 1988–92, to more than US$50,000 million. But it also included a commitment to raise the ‘real’ national contribution of ODA—the share of ODA in GNP—to the DAC average within the period, and to make gains in a number of areas of aid quality.2 As it was, the 1988–89–90 disbursement put Japan behind the target schedule, due once again to a decline in the value of the yen against the dollar. The Japanese Government’s Aid Memorandum of 1990–91, its annual report to the DAC, suggested some urgency in the need to achieve the target: ‘a sustained increase is required in the remaining period of the five years’;3 in fact Japan needed to spend US$22,679 million in 1991 and 1992, nearly half as much again as was spent in the previous two years. This was a very difficult challenge without a major shift upwards in the yen and a rapid increase in aid disbursement by Japan.

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The fluctuations due to currency values indicate the fragility of such quantity undertakings. Of themselves, targets do not assist the quality of aid or its relevance to the development needs of the recipients. At the same time, however, targets have symbolised the wholesale government commitment to a specific aid policy objective, and the Fourth Aid Target did include specific quality improvement undertakings. While the aid quantity itself has grown (even though slightly under target recently), the share of ODA in GNP has not risen above 0.32 per cent (it stayed at 0.32 per cent in 1991), below the DAC average of 0.35 per cent. This prompted criticism of Japan in the DAC Review of June 1991, and a response from the Japanese Foreign Minister that Japan should consider raising the percentage to 1 per cent within five years, although how this could be achieved so quickly is something of a mystery.4 Of course, ODA/GNP figures are still quantity targets, but more closely aligned to the donor’s capacity to give. The quality targets in the Fourth Aid Expansion Plan relating to grants, technical and multilateral assistance and loans were couched in very general terms with no means of measuring achievement. In fact, the quality commitments were not targets at all, simply vague undertakings to make some changes, which themselves have already been evident. The politics of aid quantity targeting is ultimately a budgetary problem. The budget determines the success or otherwise of targeting, and in Japan it is budgeting and the key budget areas (including ODA) that receive priority attention from government and LDP leaders. In this atmosphere, aid targeting also involves close competition between the Finance Ministry and the Foreign Ministry, the latter intent on seeing achievement of targets to enhance Japan’s reputation as a responsible donor. It is significant, then, that the fiscal 1992 ODA budget increased by a factor of 2.2 over the 1982 level, whereas the budget’s general account expenditure grew by a factor of 1.2 over the same period, while areas such as public works decreased by 1 per cent until 1991, although it received a 22 per cent boost in 1992.5 ODA has indeed been the favoured public expenditure over the last decade (along with defence which increased by 97 per cent), due largely to the wholesale government commitment to increased aid disbursements.

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Whether Japan will again make specific quantity targets after 1992 is unclear. While targets have certainly helped in achieving aid budget growth, and in locking in a government-wide programme of specific performance objectives, reaching targets is a process subject as much as anything to currency movements and the human processes of spending money, and ever prey to the political public relations agenda. Achieving targets says little about achievements in improving aid policy itself, its quality or the benefits of the aid programme.

THE CHANGING AID PROFILE Increasing its overall ODA volume has undoubtedly been one of Japan’s major aid achievements in recent years, precisely because of the quantitative rather than the qualitative aid targets that have been set. Reaching the position of top world donor in 1989 was certainly a significant landmark for Japan in its postwar foreign relations. How long that kudos will last is another matter, once recipients and other donors again examine Japan’s record of innovation and policy leadership in the aid field, and the poor quality of this aid relative to other donors. Of course, the 1989 disbursement (although the best in the DAC) actually fell below Japan’s 1988 disbursement in US dollar terms, but only by 1.9 per cent. More significant was the fact that Japan’s share of total ODA flows from DAC members increased from 19 to 19.3 per cent in 1989 as the United States’ contribution fell sharply due to the timing of some its multilateral contributions. That of France and Germany continued to grow, but the US again took the largest share in 1990, and Japan’s dropped to 16.7 per cent.6 Within Japan’s total ODA in 1989, bilateral aid increased to 75.6 per cent (75.3 per cent in 1990) and multilateral aid decreased to 24.4 per cent. This continued the slide in multilateral aid’s share, which had generally been a feature of the Japanese programme that brought Japan on a par with the DAC average in its overall contribution to the multilateral agencies. However, it rose slightly in 1990 to 24.7 per cent. More seriously, bilateral loans have also risen as a proportion of the total programme, up from 38.5 per cent in 1988 to 41.7 per cent in 1989, and further up to 42.5 per cent in 1990 (as a percentage of bilateral aid it was 56.5 per cent). Although the government

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has recognised that a move away from grants towards loan aid is appropriate as developing countries experience economic growth, at the same time the government has committed itself to increasing its emphasis on grant aid, especially to the least developed countries or LLDCs. The current share of loans keeps Japan well within its ‘normal’ range for loans around 40–50 per cent, but certainly much higher than the DAC average of 14.8 per cent in 1989. On the basis of aid committed but not spent (rather than in terms of what was actually spent), Japan claims a ‘substantial decline’ in loans commitments and a grant element rating (the main DAC measure of how concessional the aid is) of Japan’s aid to the LLDCs in 1988 and 1989 of 92 per cent, which met the 1978 DAC Recommendation on Terms of Aid, designed to give guidance to member countries on the financial terms to apply to aid commitments.7 While figures revealed a fall of 23 per cent in loan commitments in 1989, this was reversed in 1990,8 and it must be remembered that Japan’s share of loans is still in the order of nearly three times greater than the DAC average, and Japan’s is by far the largest loans programme in the world. Because of the way in which Japan’s aid programme developed, the structure and operation of the Japanese aid programme are based primarily on loans and loan management. The difference between the type of programme Japan runs and the average programme structure of other DAC donors is massive. However, much as a change in the loans emphasis might be seen as desirable, the practical management problem for both observers and policy-makers is not whether Japan can substantially decrease its loans proportion to bring it into line with the DAC norm, since this is clearly impossible in other than the very long term, but whether the loans programme that Japan operates can be as flexible and concessional as possible, and aimed at the appropriate countries. The Asian emphasis in the Japanese aid programme will continue to reinforce the loans bias, as most Asian countries grow wealthier. We will examine these issues below. On the main quality measures there is general agreement that Japan does not compare well. The 1990 statistics show Japan as twelfth out of eighteen in terms of ODA as a share of GNP, tenth in terms of the aid burden per citizen and last and second last respectively in the DAC on both the main quality measures, share of grants in total aid

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and overall grant element (on a 1988–89 average).9 Commitment basis figures record a higher grant element, but the official DAC measurements are for disbursements only. To appreciate the quality of Japan’s aid relative to other donors, the problem therefore is not one of measuring marginal movements around the bottom of the DAC table, but in the scale of the variation between Japan and other members, and the scope for any major improvement. If we take share of grants in total ODA in 1990,10 Japan’s figure of 43.2 per cent was close to the next lowest, Austria at 48.8 per cent, but twenty-five points below the next, West Germany at 68.5. By comparison, Australia has always been at 100 per cent. For grant element the lowest score was Austria at 68.1 per cent with Japan at 77.6 per cent and the next highest, West Germany, another nine points up at 86.4. The DAC average was 91.6 per cent. On grant element, therefore, Japan was fourteen percentage points lower than the DAC average—an order of difference that seems difficult to close in the short term. Nor is there any indication from Japan that it is seriously trying to bridge this gap, other than making some improvements in the grant element of aid to the LLDCs. The problems of Japan’s aid profile, therefore, centre not on the fact that Japan’s aid terms are poorer than those of other DAC nations, but on the size of the difference. At this stage, given the structural commitment to loans within the Japanese aid system, a change in the Japanese performance cannot be expected. Yet one curious report11 has the Japanese Foreign Minister proposing that Japan’s current multilateral aid be switched to bilateral programmes, a move which would presumably involve further loan aid and another fall in overall aid quality.

UNTYING OF AID Since April 1978 Japan has pursued a policy of ‘general’ untying of official loans, that is providing loans without any ‘strings’ that require the recipient to use the aid to buy Japanese products or services. Tying aid is a time-honoured practice in aid donor circles. Although other donors still tie their aid tightly, Japan has had a notorious reputation in this area. The figures, however, now present a more favourable

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picture. According to Japanese statistics, from 1988 to 1990, no loans at all were made on a tied basis at the exchange of notes stage, when the ‘contract’ to commit aid is made between the Japanese and recipient governments. On a ‘commitment’ basis measured by the DAC, however, 18 per cent of Japan’s total bilateral ODA (mainly grants) remained tied. Although the policy of general untying remains an ‘in principle’ undertaking for Japan, the current Medium-Term Aid Target states that general untying is the target for all of its ODA. Japan’s record in untying aid (especially loan) commitments is certainly one of the highlights of its recent aid performance, and far outstrips other major donors in putting untying into practice. For example, in 1988, while 0.9 per cent of Japan’s loans were tied, a massive 80.7 per cent of US loans were tied, with 60 and 55 per cent respectively for France and West Germany. In fiscal year 1989, 85.6 per cent of Japanese loan commitments were fully untied, the remainder being LDC-untied. In fiscal 1990 general untied loans were 84.4 per cent of the total, with the remainder being LDC-untied.12 The situation is very different with grants, for, while goods can be procured in any country by a grantee, the contractor for grant projects needs to be a Japanese national. More specifically, consulting and travel services must be undertaken by Japanese (because of the stringencies of the Japanese budget arrangements according to the official version),13 but goods and construction related services can be untied (although if the contractor is Japanese they are likely to purchase Japanese products for the job). According to the 1991 Aid Memorandum to the DAC, 91.7 per cent of grants committed in 1989 were untied assistance, although this was measured by overall value rather than number of grants. There is not enough information available on the extent to which all types of capital grants and technical assistance are untied, and where the contracts for projects and parts of projects were let. Of course, over the years much has been made of Japanese business strategies that overcome the handicap to Japanese commercial operators of untied aid: the image is well known of aggressive Japanese companies cultivating project opportunities in the developing countries, and then taking projects through tied grant aid stages (such as feasibility studies) in order to be the favoured loan stage tenderer.14 It is useful therefore to examine the official figures on contracts awarded. The Foreign Ministry claims that ‘these statistics

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indicate that Japan’s ODA loan system is open both in structure and effect. They also show that there are no longer any grounds for claiming that Japanese aid is driven by the promotion of exports or commercialism.’15 This is an overly sanguine view, although the Foreign Ministry does acknowledge that the critics of Japanese aid being used as a means for ‘penetration by Japanese business’ are still vocal.16 Nevertheless, figures show that over the second half of the 1980s Japan’s share of loan contracts has fallen from 67 per cent in 1986 to a low 27 per cent in 1990, while the share going to LDCs has increased from 24 to 52 per cent in the same period, and to other OECD countries from 16 to 21 per cent US companies have increased their share from 7 to 16 per cent. While these figures are for both project and non-project aid, with the latter increasing rapidly in recent years, and obstacles to successful Japanese tendering increasing with non-project aid, the Japanese aid industry is looking for ways to overcome this trend. In 1990, in fact, Japan took only 16 per cent of non-project loan contracts (other developed countries took 40 per cent and LDCs 44 per cent), whereas for project loans Japan’s share was a much larger 34 per cent (other developed countries 10 per cent and LDCs 56 per cent).17 Looking more closely at the statistics, however, this trend to smaller Japanese participation is more evident with totally untied loans. The success rate of Japanese tenderers was 48 per cent in 1986 but fell to 25 per cent in 1989. LDCs took 52 per cent in 1989 and the US 20 per cent, with other developed countries winning 7 per cent. There is thus a considerable degree of sharing in the business spin-off from these loans. Given that Japanese loans alone make up a larger amount than the total ODA contribution of all but three other DAC donors, and nearly half as much again as the whole of the British ODA programme, it is only reasonable that companies from a range of countries, both developed and developing, can share in the lucrative contracts available for tender. LDC-untied loans (for which only Japanese and LDC tenderers can apply) show a similarly rapid fall in the Japanese share of contracts (from 95 per cent in 1986 to 68 per cent in the first three-quarters of fiscal 1990) and a corresponding rise in the LDC share.18 There is a much greater level of transparency today in the area of Japanese government loans; as we shall see later, there is also more

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openness to the use of overseas contractors in Japanese survey work, which has usually been restricted to Japanese firms. In the case of grant aid, for example, the Japanese requirement for an official feasibility study encourages the input of Japanese consultants from an early stage. Japan decided in 1988 to untie fully the goods and services (especially engineering services) component of ODA loans to upper middle income countries from 1988, and to Thailand, the Philippines and Papua New Guinea from 1990. This procurement untying also applies to loans to Egypt, and ODA loans to Malaysia are already made on a general untied basis. In 1990, all new ODA loans to China (including consulting services) were generally untied. These are important improvements but there is still concern in Japan for the reduction in the Japanese share of Japanese aid contracts. The OECF says that the trend undoubtedly assists world economic growth, but it is concerned that Japan’s contribution to technological transfer to the developing countries will be impeded if fewer contracts are awarded to Japanese. ‘It is necessary to continue to carefully watch this,’ it cautions.19 The consulting industry itself is rather more concerned, rightly pointing out the slow change in the tying status of ODA in other major DAC donors, compared with Japan’s good record, at the same time as these countries accuse Japan of commercialism and are rapidly increasing their share of Japanese aid contracts.20 Japanese industry is seeking more assistance, and urging greater efforts, in finding projects for which it can have a good chance of getting the contract, but it is discouraged by the increasing requests from LDCs for non-project aid. This undermines Japanese companies’ role in the aid cycle, and in projects in which the local currency component is high. What they refer to as the ‘flight from yen loans’ (enshakkan-banare) is of great concern, but their solution is one which might be difficult to fulfil in the current international climate surrounding Japanese aid that keeps urging greater fairness and openness in the aid system: For the various reasons stated above requests for loan projects are decreasing. More than anything it is necessary for Japan itself to bolster loan project finding so as to reverse this trend. Thus it is necessary to increase JICA development surveys and improve the capacity for surveys by our associations and groups. But what

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is needed above all is a policy that can turn back this increasing dissociation between Japanese firms and yen loans. With general untying of yen loans now up to 80 per cent, whatever effort Japanese firms put into project development means that the possibility of winning the contract is getting smaller. The attraction of yen loans as a business proposition is very low. With the balance of payments surplus falling, and the general thinking moving towards preserving the surplus, the time has come when we need to put the brakes on this policy of generally untying yen loans and return to the sort of loan conditions applied by America and Europe.21

LOANS POLICY Given the above comments, it is worth looking more closely at the type of loans policy that Japan is adopting in today’s more developmentoriented international aid climate. Loans are the focus of much of the criticism levelled at the Japanese aid programme, because of the heavy burden of repayment that they impose on recipients, and because of the effect they have in keeping Japan’s overall grant element at a low level. The terms under which loans are made are improving. Just as untying is now the norm, the interest rate on loans has been steadily reducing in recent years, and in 1990 fell by 0.03 per cent from 1989 to 2.61 per cent. With a repayment period of twenty-eight years, this makes the grant element on OECF loans 59 per cent. While these terms could be considered generous as far as ODA loans go, we must remember that only Japan among the major donors has loans as such a large part of its aid programme. Within France’s ODA 18.6 per cent is loans, Italy and Germany having about the same, but the US programme has only 0.5 per cent loans, while Australia makes no loans at all. This also means that Japan’s major recipients over the years have had loans as the major part of their aid, although it is fair to say that it is unlikely that they would have got as much aid without loans. This trend is most obvious in Asia, of course. Over the period 1986–88, South Korea, China and Indonesia received nearly threequarters of their ODA from all sources as loans, and for Thailand, Malaysia, the Philippines and India it was just over half. Brazil and

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Mexico were close to 50 per cent as well. For some countries like Indonesia, for example, the amounts involved are truly enormous. Similarly, those countries that now have the OECF as their main single source of aid income are eight in number (Indonesia, the Philippines, Thailand, South Korea, Myanmar, Sri Lanka, Syria and Nigeria); for Myanmar this has been the case since 1971 and for the Philippines since 1972.22 The dependency of many developing countries on loans from Japan is not in question. The interesting issue is whether and to what extent the nature of those loans is changing to make the aid more relevant to the economic conditions of the recipient. Certainly some loans are given for debt relief through rescheduling under the Paris Club agreement—these will be discussed in a later section. A look at the broad statistics on loans indicates some important shifts in the way loans are used for aid. Whereas straight project loans used to be the main form of loans, they now take up only about half of total loans, with non-project loans about 40 per cent.23 This is a major shift in emphasis and the comments of the consulting industry quoted above in regard to untying and non-project loans become more significant. Of non-project aid, structural adjustment loans (SALs) and twostep (or financial intermediary) loans make up the bulk, with some commodity loans. Structural adjustment lending is a new form of aid introduced by the World Bank in 1980 and by the OECF in 1986 through joint financing with the World Bank. To improve the recipient’s balance of payments, it provides funds to pay for imports on condition that the recipient undertake a programme of economic structural adjustment. In 1989 SALs formed 16.3 per cent of total OECF lending.24 The OECF has, in this and other ways, been changing the target areas for its lending within the recipient economy. Originally, OECF loans were intended specifically for basic economic infrastructure, but the percentage of loans now going for that purpose is down to 40–50 per cent of the total. The share going to agriculture and fisheries, as well as mining, is also greatly reduced, while loans for social infrastructure have increased. It has been the structural adjustment, commodity and two-step loans that have grown rapidly in recent years, and have certainly changed the nature of the OECF as a

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funding body, into an agency managing a highly complex package of loan ‘products’. Other new forms of lending activity include sector programme loans, for policy-based development in specific sectors. They are primarily commodity loans using counterpart funds. Rehabilitation loans, aimed at refurbishing existing projects, were initiated in 1986. Sixteen such loans were made in 1988. Also important are loans which include local-cost financing, and local-cost loans themselves were made in 1987 to Indonesia and Thailand, to assist with delayed projects, and high priority projects. From 1989 the OECF applied a new formula to expand the local-cost component of loans, a ‘prorated’ percentage of the total project cost. Also from 1988 loans were made to new sectors, education and forestry. The latter will increase in importance as more emphasis is placed on environmental aid as part of the Japanese programme. Another important aspect of OECF lending has been the increase in joint financing with other major donor organisations. Most has been with the World Bank, although the history of joint financing goes back to 1971. But in recent years the scope of joint activity has increased greatly. Indeed, jointly financed projects accounted for 18 per cent of OECF commitments in fiscal 1988 and 26.4 per cent in 1989 but fell back to 14.7 per cent in 1990. There is no doubt that Japan has greatly increased the flexibility of its loans programme, and is working actively to make the loans system more open, more attuned to recipient needs and more useful to the recipient. Given that there is a loans policy in the first place, and the difficulties that are causes for improvement in Japan’s aid performance, the improved terms and conditions and the complete untying of the loans (with the consequent effects on Japanese contracting) make Japanese loans highly concessional as far as that is possible in the circumstances of such a large loans programme. One significant problem with the OECF programme has always been that of matching commitments and disbursements to avoid a large aid ‘pipeline’ of committed but unspent funds. The OECF has been an important vehicle for moving a large volume of funds to achieve aid-doubling targets. Allocations to the OECF have increased to enable the OECF to do this, but the pipeline for official loans has increased, and in 1989 the difference between total loan approvals

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and disbursements stood at 30 per cent of total commitments, and four times the level of total 1989 disbursement. There is thus a substantial underspending problem. This was due partly to a massive level of commitments in 1988 and 1989, in 1988 the commitment level being nearly twice that of spending. This has been cut back somewhat, but commitments were still running in 1990 at about 25 per cent above disbursements.25 This suggests that, unless rapid moves can be made to increase the efficiency of OECF disbursement, the pipeline of unspent loans will only grow. Disbursement problems lie both at the recipient end, and in the fact that the OECF is a very small agency given the size of its financial operations. Many of the recommendations of an OECF 1986 management report have been acted upon, including more flexible loan structures and a stronger information base and planning process.26 Staff has also increased gradually, by 21 per cent since 1980. The Sōmuchō report discussed in Chapter 3 has also helped spur continuing improvement in agency management.

GRANT AID AND THE POOREST NATIONS Although Japan’s overall programme has a low grant element, and a small grant share, in overall quantity terms Japan’s grants are a substantial aid contribution. Japan is more aware today of the impact of its aid on individual countries, and is more careful in tailoring its aid to suit the needs of individual recipients. Sixty-one per cent of Japan’s total bilateral ODA in 1990 went to low income countries (including LLDCs) and 27 per cent to middle income countries (excluding the NIEs and OPEC members). This was a distinct change from 72 per cent to LICs and LLDCs in 1989, and only 16 per cent to MICs; that is, Japan increased its share of ODA to the ‘wealthier’ LDCs in 1990. In 1989, 36 per cent of capital grant assistance was directed to the LLDCs, and in that year Japan became the largest donor of ODA to the LLDC group. DAC commented on the fact that despite this, and despite increases in 1983–86 and 1988–89, Japan will need to make more effort to increase its share of ODA directed towards the LLDCs, although in 1990 the LLDC share of capital grants dropped back to 31.4 per cent. As we will discuss in Chapter 5, however,

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while the largest proportion of Japanese aid goes to Asia, there are few LLDCs there. In 1989, in fact, LLDCs received 9.6 per cent of Japanese bilateral loans, most of which involved loans to Bangladesh, including a commodity loan for disaster reconstruction.27 While Japan is aware of the expectations that it will increase aid to the poorest countries, certain inbuilt factors militate against a rapid change of direction towards more grants, and more grants to the LLDCs in particular. To begin with, Japan will not want to dilute the Asian bias in its ODA much further. There are only seven LLDCs in Asia: one of these is in the former Soviet sector, and only Bangladesh and Myanmar are regarded as of a size that can absorb a reasonable amount of aid. While grants are marginally increasing as a share of Japan’s ODA, there are too many other barriers in the way of massive expansion of grants, notably the Japanese philosophy of ‘self-help’, the staffing limits on the management of grants (although the use of JICA for some grant administration may assist that) and the tying restrictions on the implementation of grant projects. None the less, Africa receives 36.4 per cent of all grant aid, although Sudan, which received a substantial amount of grant aid as emergency assistance in 1989, is classified under the ‘Middle East’ in the Japanese Foreign Ministry statistics. Increasing the gross amount of grant aid is really the major issue for Japanese policymakers, to indicate their commitment to the ‘poor’, even though there have been a number of innovations in the types of grant aid given. For example, Japan is making grants available for economic infrastructure projects, even though ‘basic human needs’ (BHN) are the traditional target areas of grant aid. This helps specific projects, but it may not assist the primary BHN objectives of grant aid. Over the period 1987–90 Japan has been providing untied non-project grant aid for economic structural adjustment efforts in Africa, a form of commodity aid. An important aspect of the programme is Japan’s use of the UK’s Crown Agents and the United Nations Development Programme (UNDP) to implement the aid. A second round of this type of assistance is being undertaken between 1990–92, again mainly to African countries. This is one programme where the limitations of the Japanese aid implementation system have been able to be overcome in a constructive way.28

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Grants are also being used for debt relief, in particular grants for LLDCs to assist in repayments on loans incurred up to the end of FY 1987. This does not involve debt forgiveness, as Japan does not permit such an approach. Rather, Japan provides untied grants to pay for the debt owed to Japan, what is called ‘equivalent action’. For most seriously affected countries (MSACs), relief took the form of interest rate reduction through grants to pay for the difference in amounts owing under old and new rates. In 1990, over US$135 million was spent in this way. The most promising innovation in grant aid, in terms of making aid available quickly to areas where it is most needed, and in a way that puts little burden on the Japanese administration, is the small grants scheme begun in 1989 after a recommendation from the Sōmuchō report on grant administration. In fiscal 1990, 92 grants totalling approximately US$2 million were provided to 44 countries. The largest number of grants (32) went to Africa, with 28 to Asia and 20 to Latin America. Over half were handled by NGOs.29 This policy is representative of the trend in grant aid, as we see to some extent in loan aid, away from straight project assistance. For example, in the 1989 and 1990 grant budgets, there was a shift away from grant projects towards a greater emphasis on grants for debt relief, structural assistance and small grants. That continued in the 1991 budget, and the 1992 budget saw special emphasis on the grants budget to boost Japan’s ‘global contribution’.30 To some extent this is a reaction to criticism of Japanese grant aid for focussing too heavily on large, ‘monument’-type construction that imposes further burdens on recipients in trying to manage the maintenance of projects such as hospitals, cultural centres, etc. The MFA strongly opposes the provision of local costs for recurrent upkeep, as they see it endangering Japan’s strictly maintained principle of the need for recipient selfhelp.31 At the same time, there has also been concern expressed at the fact that the structural assistance grants implemented by the British Crown Agents are untied and that only 39 per cent of procurement for the grants was sourced in Japan in 1987.32 It may well be that we see a further growth of the non-project grants in the coming years, and the greater spread of types of grant aid beyond the traditional form of building projects in public health and welfare, education and culture, transport and agriculture.

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Above all else, it is clear that in the grants programme, just as in loans, there are substantial changes taking place in the structure of the programmes, and therefore in the implications for Japanese management of its aid in the coming years. While many of these changes are the result of pressure from recipients and other donors for a more flexible and concessional programme, some initiatives (such as the small grants scheme) arose from Japan’s own view of where improvements could be made. Ultimately, however, it is the extent to which they can impinge on the overall concessionality of ODA, and the flow of funds to the countries most in need, that will be of relevance in assessing how far Japan is able to lead by example in its grants programme. There is still a long way to go.

MULTILATERAL AID Japan’s multilateral aid fell in 1989 from its 1988 performance by almost 20 per cent, mainly due to the timing of its contributions to the World Bank, but it rose again by 4 per cent in 1990. Japan still has one of the highest shares of multilateral aid within DAC, at 24.7 per cent. The DAC average in 1990 was 16 per cent Japan is a major contributor to the main multilateral agencies and international financial institutions. It is the second largest subscriber to the World Bank and the International Development Association, and the largest donor (with the US) to the Asian Development Bank and its Special Fund. It is also a sizeable contributor (second largest) to the African Development Bank and Fund, and a range of United Nations agencies. Most of its UN contributions are directed towards the Development Programme (UNDP), the High Commissioner for Refugees (UNHCR, to which Japan has been the second largest contributor since 1979), the World Food Programme (WFP) and the Fund for Population Activities (UNFPA). It is also increasing its support for the UN Environment Programme (UNEP), and is its second largest donor, as it is to UNRWA, United Nations Relief and Works Agency for Palestine Refugees in the Near East. The 1990 aid report by the MFA pointed to three main global problem areas as the focus for Japan to work on actively in the coming decade. These were the environment,

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drugs and population, all of which require a sustained multilateral approach if solutions are to be found (although Japan indicates it wants to do more on population through the bilateral framework). Japan has been putting much emphasis in recent years on what is called ‘multi-bi’ cooperation, joint financing between multilateral agencies and Japanese bilateral aid. We have seen that it is a common practice for the OECF, but it occurs also in the area of technical assistance. The bigger question is how Japan will be approaching its multilateral role in the future as its strong position in the multilateral agencies is further recognised. The Japanese Foreign Minister has been reported as wanting to shift part of its multilateral aid into bilateral assistance,33 although this does not square with the current emphasis in the surplus recycling programme on funding the multilateral development banks (see above). It would be possible to justify such a move if the funds went into joint financing activities, but a shift out of multilateral aid would affect the grant element of Japan’s ODA, and would also pose more problems for the aid implementation system in Japan. One of the major objectives for Japan is to increase its role in joint financing and aid coordination, something which it has been involved with for many years in the IGGI and more recently in aid to the Philippines. Japan recognises not only that it can enhance Japan’s aid profile, but that other donors find it helpful ‘to enhance the effective usage of their aid budgets through joint projects with Japan, where the scale of aid is rapidly expanding’.34 Japan also recognises that its influence can be important in negotiations: ‘in some cases, its response can determine whether an entire conference will be successful or not’.35 The test of Japan’s ability to lead in this field will come as Japan becomes more involved in coordination programmes, particularly (as the Foreign Ministry indicates) in ‘Africa, Eastern Europe, Latin America and Indochina’. It will indeed be the Japanese response that will be central to any programme of economic recovery in Indochina, and as we point out in Chapter 5, Japan stands ready to take up this challenge. In Eastern Europe, Japan has been at the forefront of efforts to provide aid and other economic assistance for rebuilding— part of Japan’s ‘aid for democratisation’ discussed in Chapter 1. As part of the G24 coordination mechanism Japan has become the number two contributor to the European Bank for Reconstruction and Development.

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In fiscal 1991 it paid Y890 million into a Japan-Europe Cooperation Fund for these purposes. Its ODA so far has been restricted to Hungary and Poland, in technical cooperation, commodity loans and food aid, alongside Eximbank finance and export insurance. One of the benefits of multilateral aid for Japan has been that it has enabled substantial sums committed to be spent quickly, a key target of Japanese aid officials. One reason that the funds recycling scheme has been able to commit so heavily in a relatively short time is that 55 per cent of total commitments are to the multilateral development banks (MDBs). The issue of burden-sharing versus power-sharing and Japan’s role in international banks and other financial institutions is one of the keys to Japan’s future aid role.36 Participation in multilateral aid assists both the agencies and Japan. Japan reiterates that multilateral aid keeps the assistance politically neutral.37 Co-financing and similar cooperation with the MDBs also enables Japan to tap into the technical and other specialised knowledge of the agencies and, as the MFA says, gain ‘access to global aid networks’. Of course, the kudos from being seen as a major contributor to multilateral aid programmes is important to Japan also, but multilateralism must none the less be accountable. The 1985 MFA report on ODA pointed to the insufficient influence Japan had in many international organisations and recommended stronger links with, and the employment of more Japanese personnel in these bodies, particularly the placement of Japanese staff in the management and planning divisions.38 Ogata has discussed the question of Japan’s efforts to gain greater voting power in the World Bank and the IMF.39 In 1984 Japan succeeded in gaining a greater share in World Bank capital, at second place after the United States, although there was considerable reluctance on the part of the United States to have Japan in this position. As Ogata points out, however, power in these organisations is as much a matter of influence on policy as a matter of voting shares. It is still rather early for a verdict on the policy role Japan has effected in the World Bank. The same applies to the IMF, in which Japan gained number two position alongside West Germany in May 1990. Reaching this position took some time, to overcome European concerns about the growing influence of Japan.40

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Although Japan’s voice at the World Bank is not yet a loud one, in the Asian Development Bank Japan has had a high profile since its inception, and its involvement in ADB affairs has always been close. Dennis Yasutomo points out that Japan is now willing to take a more visible leadership role in the ADB and is less concerned to keep up a facade of equal partnership with the United States. It is prepared to be more vocal in asserting Japanese policy; this is made easier by the ADB’s now respectable reputation and Japan’s new status as a country with recognised financial and aid influence: Tokyo’s involvement is no longer as low-profile and passive. Japan has begun to define more clearly the ADB’s purpose and uses as a foreign policy tool, especially in the area of recycling Japanese surpluses to debtor countries. It has reaffirmed and intensified its commitment to fund the Bank and has demanded recognition for this through an increase in its vote share. It has sent to Manila a new breed of representatives who have been more articulate and assertive, and it has shown greater willingness to participate actively in shaping Bank policy.41

There are obviously some barriers to enhanced Japanese staffing in multilateral agencies, as Hirono has pointed out— limited Japanese intellectual participation, antagonism from other donors, lack of suitably qualified and internationally minded personnel in Japan, employment systems, pay scales and attractions of life in Japan and the lack of experience of Japan with ‘individualistic orientations’ in agency work practices. Hirono argues strongly for greater Japanese staff representation, but is realistic about the chances being not very strong.42

THE DEBT PROBLEM AND RECYCLING Japan is closely involved in efforts to resolve the international debt problem. As the world’s largest creditor nation, Japan cannot afford to ignore it, although it is also true that Japan sees itself as having no particular special mission in this field.43 As Barbara Stallings points out, Japan has begun to act independently in relation to Latin

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American debt44 but Japan regards it as essential that the debt crisis be solved not only through the contributions of donors and the international financial institutions (IFIs), but also by real efforts on the part of the affected countries to rectify their own problems—the ‘self-help’ argument prevalent in the Japanese aid philosophy. At the same time, Japan (through its then Finance Minister, Mr Miyazawa) was one of the intellectual authors of the Brady Plan of March 1989 to deal with global debt, and has been active in its commitments to solve wider global aspects, and the problems of individual debtor countries.45 Japan is approaching the debt problem through continued contributions to the IFIs, particularly in the context of the government’s funds recycling plan. This plan, the latest form announced at the 1989 Paris Summit, involves expenditure of US$65 billion through 1992. At the end of March 1991 (that is, the end of fiscal 1990), the plan was 70.3 per cent committed or spent.46 It is by all measures a massive and complex undertaking, involving the two main loans agencies, the OECF and the Eximbank, and an enhanced level of contributions to the IFIs. It is a model based on government-private-sector cooperation in funding, a model similar to that being adopted for Japan’s (largely non-ODA) assistance to Eastern Europe. At the end of fiscal 1990, the Eximbank and multilateral development bank contributions to the programme were all about 60–70 per cent committed or spent. The OECF target was 93 per cent achieved. Half to two-thirds of agency funding has been involved in joint financing with the MDBs, and most of the rest in bilateral funding. For the OECF this has involved structural adjustment loans with the World Bank, co-financing with the Asian Development Bank in the Philippines and else-where, emergency assistance loans to Bangladesh, Jamaica, etc. and two-step loans to Malaysia and China. It also included a loan to Poland. Grants to the IFIs have mainly gone to the International Monetary Fund, the International Development Association Eighth Replenishment and the Asian Development Fund Fourth Replenishment Private funds have totalled US$8,880 million out of a total of US$17,510 million, and these have been directed mainly at the World Bank with small amounts to the ADB, African

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Development Bank, Inter-American Development Bank and JapanAsian Investment Fund.47 The recycling scheme has therefore been successful in creating major disbursements of funds, from both public and private sectors, and involving Japan in a significant way in the global efforts on debt. Japan has also helped by earmarking US$10 billion of the total recycling package for heavily indebted countries under the Strengthened Debt Strategy. At the end of fiscal 1990 US$4 billion of this had been committed, and overall the OECF had provided 73 loans totalling US$8.7 billion to 29 developing countries. Japan has also been extending grant aid for debt relief to the LLDCs (discussed further below), and is continuing its loans for debt relief, coordinated through the Paris Club. Since 1978 the OECF has concluded 60 rescheduling agreements with 24 countries, although half of the total has gone just to the Philippines in loans in 1986 and 1988.48 Japan is likely to continue its policy of support for cooperative international policies on debt relief. It may gain the opportunity for longer-term scope for economic and political leverage from its central debt role in a number of recipient nations, but it is unlikely to lead from the front, and will be a major team player, along with the IFIs. It prefers to work with, or alongside, the IFIs to avoid the risk of exaggerated expectations on the part of recipients, or derogation of its bilateral policy emphasising self-help as crucial to debt restructuring. The public enthusiasm over a Japanese role in relieving the debt problem has subsided, and only a few pages were given to the problem in the Foreign Ministry’s 1991 aid report, and no mention of it was made in Japan’s 1991 Aid Memorandum to the DAC. As discussed above, with Japan now having an enhanced status in the IMF we may begin to see a growing Japanese leadership stance in the IFIs. Japan’s ADB experience referred to earlier was a markedly different situation and does not help a great deal in predicting whether or not Japan will become an active policy leader in the IMF and the World Bank,49 but the Miyazawa Plan and its impact on the Brady Plan were a sign of a serious Japanese contribution to the international debate on debt. Of course, a Japanese role requires not just initiative and energy from Japan, but acceptance by other participants in the IFIs that Japan has a legitimate contribution to make. Again, the initial negative reactions to the Miyazawa proposals in 1988, especially the

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efforts of the US to suppress Tokyo’s efforts to push the Miyazawa Plan, were not helpful.50

ENVIRONMENTAL AID One area of significant new commitments by the Japanese Government is that of environmental aid. This issue is high-lighted as a global problem to which Japan needs to address itself—an example of one of the planks of Japan’s aid philosophy, interdependence, says the MFA’s aid report.51 The major statement of Japan’s commitment to environmental aid came at the 1989 Paris Summit, when it announced an expenditure target of approximately US$2.25 billion over a three-year period beginning in FY 1989. The priority areas identified were the protection of forests, and assisting the LDCs to deal with environmental problems. In 1992 Japan made massive new commitments to global environmental aid, and identified the environment as a central consideration in aid policy guidelines. It is a sensitive but also prudent area for Japan to be targeting, given the strong criticism Japan receives internationally for its contribution to global environmental degradation, especially its exploitation of tropical forests.52 Japan is now the largest contributor to the International Tropical Timber Organisation (ITTO), and the second largest donor to the UNEP, although the US$7.2 million given to the latter in 1990 was by no means a significant amount relative to the size of Japan’s aid.53 The ITTO received US$59.4 million from Japan in 1990. Furthermore, in 1989, 24.2 per cent of bilateral grant aid went to environmental programmes, as did 12.4 per cent of bilateral loan aid. In technical cooperation the share was much smaller, at 5.6 per cent. The environment is indeed a popular, and politically attractive, target for aid funds. It is an aspect of aid that can attract widespread favourable public attention, at home and overseas, especially since popular consciousness in Japan of the global environment is strengthening. Japan is therefore gearing up for a massive increase in its environmental aid programme. The aid budget for the Environment Agency rose by 36 per cent in fiscal 1991 over fiscal 1990. The agency’s budget for fiscal 1992 likewise included massive increases

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for international contributions—allocations for the UNEP up 11.3 per cent, and to the ITTO up 18.8 per cent. This continues the rapid increases in this budget item over recent years.54 Other agencies, such as the OECF and JICA, are also expanding their environmental programmes. JICA set up a new Environment Section in its Planning Department in 1989, while OECF now has an environment adviser, an Environment Committee and a senior manager in charge of environmental problems. The OECF also now has guidelines for environmental consideration in its project implementation. A firm policy on environmental issues in the aid programme is therefore under development. Likewise, a broad debate is under way in Japan about Japan’s role and responsibilities. The OECD discussions on aid and the environment are well known, and, following OECD recommendations of 1986 on environmental assessment measures, a report in August 1987 by Japan’s Environmental Protection Agency recommended the implementation of environmental impact statements as part of project assessment procedures.55 The OECF Environmental Guidelines are a first step in including such concerns in loan approvals. They consist of environmental items which should be considered by the borrower at the project planning stages, and cover sixteen major sectors. The guidelines, according to the OECF, enable it ‘to check comprehensively the environmental protection measures adopted by the borrower’.56 The OECF’s Operational Guidance for its loans, however, only states that ‘borrowers are recommended to use the Guidelines as a useful reference material to ensure that the environmental aspects of the project are fully covered’. The environment is just one aspect of OECF appraisal of projects, and no strict impact statement is required.57 The MFA recognises the dangers of ignoring environmental concerns, but argues for a harmonising of development needs and environmental protection. It recognises the need for appropriate environmental impact assessment, but it is notable that the approach taken in the 1990 and 1991 MFA ODA reports is far less cautious about the importance of the environment, especially those problems with global reach, than it was in the 1989 report. Nevertheless, despite this variation in emphases, the environment is an issue that cannot be ignored and international pressure forces Japan to act.

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While the government has been keen to demonstrate its new found global environmental consciousness, Japan is not immune from criticism of its environmental aid programme. A US group in 1990 claimed that since the Japanese programme was highly diverse, not subject to overriding goals and lacking expertise, it could do more harm than good in solving environmental problems.58 Conservationists have also claimed that ODA projects have led to illegal and excessive logging in Papua New Guinea, and other public criticisms about the environmental impact of aid projects are frequently made.59 Yet these and similar arguments have been stoutly rebutted by official statements.60 Business has also been active in claiming its ‘green’ credentials, the Keidanren releasing its Global Environmental Charter in April 1991, requiring all member company activities to be ‘scientifically evaluated for their impact on the environment’.61 The OECF Environmental Guidelines themselves are designed to strengthen the environmental consideration that takes place in the developing country when considering a project application, and to provide the assessment of the application by the OECF with a basis for checking that the appropriate environmental measures have been taken. One of the six main assessment items for the OECF for any applications now includes the question ‘is there sufficient environmental consideration in the project plan?’, a particularly tame means of trying to achieve greater environmental ‘friendliness’ from aid projects. Officials will therefore return to the guidelines to make this particular assessment. The guidelines, or a borrower response to them, do not constitute a model for an environmental impact statement. One outspoken critic of Japan’s record on the environment in ODA, Sumi Kazuo, regards the OECF guidelines as ‘back-room environmental consideration’, where the assessment of whether a project measures up to standards takes place internally, without independent outside scrutiny.62 Sumi argues that there should be much tougher guidelines across the whole of the aid programme concerning the environmental and social impact of development programmes on the recipient country. This should be coupled with strict national standards on environmental assessment in Japan that can be a reference point for assessment of ODA projects.63

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There are therefore four major elements to the environmental relevance of Japan’s ODA: first, the environmental destruction caused by Japanese aid projects; second, contributions that Japan is making to enhance environmental protection; third, the standards Japan has introduced to ensure that Japanese aid is environmentally responsible; fourth, the international precedent Japan could set in this area, It is fair to say that Japan has at this stage gone further in making financial commitments than in policy initiatives, and this trend is likely to continue. Japan is committed to large-scale spending on environmental assistance (such as recent major promises to Mexico for loans to assist with controlling air pollution in Mexico City), and has flagged its concern to concentrate environmental aid on middle income countries where environmental degradation is more serious. How far Japan is able to take its commitment to sharpening its environmental criteria in the aid decision-making process is still to be seen. There are reports of likely increases in environmental aid, but Japanese Government officials criticise this solution as too piecemeal and linked to bureaucratic infighting in Tokyo, where the Environment Agency is one of the weak players in the aid administration.64 There has been little serious study to date of the environmental impact of Japan’s aid, although Japan’s involvement in controversial projects such as the Narmada Dam in India have highlighted some of the problems inherent in an aid programme that concentrates primarily on quantity over quality, on the size of the aid rather than its broader, often devastating, impact.65 Some progress has been made with the introduction of the OECF guidelines, but much work has yet to be done to ensure that environmental impact becomes a major consideration in assessing aid requests across the whole Japanese programme, and in ensuring that Japan’s environmental aid actually has an impact in alleviating global environmental problems.

COUNTRY PROGRAMMING Traditional trends in the geographical distribution of aid do not inform desk officers about priorities in project or technical assistance for particular recipients. The Foreign Ministry’s desire to maximise Japan’s bilateral interests is also not something that can be easily

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communicated across the diversified aid system. Donor interests usually require a clear articulation of bilateral strategic requirements, but the Japanese system is currently unable to provide that in a comprehensive way accessible to decision-makers across the Tokyo aid system. This system is still organised along administrative lines that emphasise types of aid rather than types of recipients or types of development problems. While the OECF has loan departments that are geographically organised, these do not match with similar sections in JICA, or in the ministries. There is effectively no broadly based country, region or sector planning currently able to embrace the whole scope of the Japanese aid system, or to embrace all the major aspects of policy. Likewise, Japan’s aid philosophy that requires recipients first to request aid makes Japanese aid planning passive in its basic approach. This has drawn comment from the DAC in its annual Aid Review,66 but while we see a proliferation of country studies and regional policy planning across the aid system, this is not coordinated or consolidated. The OECF and JICA both want to see a greater country planning component in the aid programme, and have stepped up country studies. At the same time, the Japanese Government is increasing its policy dialogue with some recipient countries as a means of developing a more coordinated approach to aid-giving (see Chapter 1). The 1991 MFA aid report’s sketchy discussion of country programming is testament to the problems that remain in this aspect of policy development,67 even though the government is more active in specific programmes to encourage project formation in recipient countries. AID EVALUATION The 1991 DAC Review of the Japanese aid programme pointed out that while efforts to further aid planning and coherence and to strengthen management capacity are under way, inter alia, with regard to evaluation, country analysis, environmental impact analysis, reinforced staff training and an increase in staff resources, more needs to be done to improve the overall aid programming system.68

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Most observers of the Japanese aid system would not disagree with this conclusion, and Japan has in recent years placed a heavy emphasis on expanding and improving its aid evaluation system. It has participated in the DAC Expert Group on Aid Evaluation since its inception in 1983, and has taken part in joint evaluation of Japanese projects with other donors, notably Canada and Australia. Until the early 1980s, little effort had been put into aid evaluation by Japan. The Foreign Ministry established an ‘appraisal committee’ in January 1981, and since then other ministries have established their own evaluation mechanisms. The need for a greater understanding of the results of the aid programme is accepted by the Japanese Government, and it is putting in place a more intensive evaluation effort including the use of third party evaluation. An Evaluation Division was established in the MFA’s Economic Cooperation Bureau in fiscal 1990. There is an obvious need for more evaluation in the programme, given the size and diversity of the Japanese aid system, and the fact that policy planning at the pre-disbursement stages is relatively limited. As noted in earlier chapters, assessments of the outcome of some projects by the Audit Bureau, the Administrative Management Bureau and the press have been highly critical of the management of aid. Aid evaluation is now an integral part of the Japanese aid system. Evaluations of both projects and country/sector programmes are carried out, although the former are more prevalent. But the diverse mix of Japan’s aid administration has meant a variety of aid evaluation procedures as well, from a macro-level evaluation model used by the Economic Planning Agency since 1983, through to small teams from the MFA assessing individual projects in a rather ill-coordinated way. From FY 1981 through to FY 1989, 1,223 projects had been assessed under the Japanese evaluation programme, of which 720 or 59 per cent were conducted by MFA/JICA survey missions or by Japanese embassies.69 The Foreign Ministry has gone to great lengths to establish an effective evaluation process and to follow DAC guidelines for project appraisal. But there are still many problems in the appraisal system, and the Foreign Ministry recognises the need to use more third party evaluation, to achieve a more macro-level scale of evaluation and better follow-up systems and to undertake joint assessment with recipient countries. Self-evaluation is not likely to be

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entirely impartial, and this is the reason for involving third countries, including other donors, in evaluation teams. Joint evaluation has taken place with both Canadian and Australian teams to date. The Japan-Canada evaluation of a children’s hospital in Islamabad was the first such activity by the Japanese Foreign Ministry, and a report of the work indicates that ‘actual “joint participation” in the two different projects was not truly realised’.70 The Japanese none the less accepted that they had learned much from observing the Canadian approach to evaluation methods and procedures, and realised that greater preparation was required for joint evaluations. The joint evaluation with Australia, examining projects in Indonesia, was more successful, and it was agreed that important lessons were learned in how evaluations could be carried out. One of the recommendations was that Japan should use more consultants (including overseas consultants) in its evaluations.71 This joint process is still lowlevel and marginal to the central issues of assessing the impact of Japanese aid. The Sōmuchō study of grants and technical cooperation had recommended appraisals of a wider range of countries and types of projects, better training for the evaluators and full consideration of evaluation results in planning for future aid. The second report on loan aid noted that insufficient use had been made of past evaluation results and that non-project aid was not being carefully enough assessed.72 Other critics point to an over-emphasis in evaluation on economic aspects, to the exclusion of social and environmental issues, particularly on a macro-scale. Another problem is that evaluation reports have not been made available to recipient governments, nor made public in an accessible manner. A summary of selected project evaluations is published annually in Japanese by the MFA.73 The evaluation reports that have been made publicly available reveal mixed results. Newspaper treatment of project assessments has been rather sensationalist, and the MFA evaluation survey reports give a clearer indication of the type of outcomes from assessments. The former Director-General of the MFA’s Economic Cooperation Bureau, Matsuura Kōichirō, has stated: All in all, I believe our projects have been successful; only 10 per cent to 15 per cent have required serious rethinking. We’ve made

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some big mistakes, certainly, but they’ve been very few. I’d say our track record is better than those of most other donor nations.74

Matsuura makes no judgement about how success has been measured or about the developmental impact of aid. Japan’s 1989 Memorandum to the DAC lists some specific problems with evaluations, although later Memoranda have not taken up the issue. These problems included poor progress on projects caused by shortage of skilled personnel, postings too short, weak local cost financing and insufficient appraisal at the prefeasibility and feasibility stages. The 1990 report on aid projects by the Audit Bureau identifies 5 of the 76 projects studied as having little effect and sees the problems as lying substantially at the recipient end, especially in planning and budgeting.75 The evaluation reports published by the MFA also point to a generally successful range of projects (in terms of completion and operation) over a large number of countries and sectors. Most projects had problems of one sort or another, and most reviews indicated areas where action was required. Local project-specific problems were common such as inclement weather, lack of local infrastructure, no spare parts, non-arrival of equipment, weak local management, local cost overruns, construction delays, customs hold-ups and the like. Usually these difficulties did not lead to project failure, but more often led to expensive delays or lowered expectations or results. They were problems that were also repeated frequently in successive reports. More important, however, is the view that these reports give of the broader systemic difficulties evident in the aid delivery process. The dominant issue is that of how best to send, use and support technical experts from Japan, for many projects were hampered by problems in the supply of experts. Other major issues concerned poor initial planning, budgeting and project design, leading to cost escalation and delays. A related and persistent problem has been that of local cost financing and the need for project ‘after-care’ (a follow-up responsibility now partly accepted by Japan). More fundamentally, cases of weak links between local society and project technology have been documented. The MFA lists five broad ‘lessons’ for aid practice arising from its evaluations: matching projects to in-country conditions; smooth project management by the recipient; appropriate technology choices; supply of spare parts; availability of suitable counterpart technical specialists.76

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Project post-evaluation and monitoring services are now an important part of the OECF’s work. This includes project monitoring and evaluation (thirty-two projects thus assessed in fiscal 1989), follow-up surveys three and seven years after completion (although these cannot reach to all projects) and special assistance for project sustainability to assess any obstacles for project success. Aid evaluation tells us that Japanese aid projects can be highly successful in donor terms, but that the problems experienced exhibit some of the well-known limitations of the aid programme, ones that vitally affect whether the project can assist those at the receiving end of the aid pipeline. Other assessments also tell us that some projects have failed, sometimes spectacularly. Many of the constraints have been addressed by Japan, but there remains still a fundamental difficulty in effectively delivering Japanese technical assistance as part of Japanese financed projects. The emphasis being placed on boosting evaluation activities is certainly appropriate as a means of improving aid delivery over the longer term, although it can only reveal the basic problems, not solve them.

CONCLUSION: TRENDS IN AID POLICY Policy change is a vital feature of the Japanese aid programme. It has developed over recent years under pressure from domestic interests and argument, and international expectations of enhanced performance and activity. Japan’s aid programme is far from the unwieldy, insensitive, inflexible and static monolith that it has been portrayed as in the past. Although serious examples of poor aid delivery and impact are often cited, there is none the less real innovation and there are genuine attempts by some parts of the system to overcome problems of image, delivery and impact. In particular, changes in the loans programme suggest that much is being done to make loans more digestible for recipients, given that Japan has to live with a large loans programme for the long term. Much of the initiative to improve the programme, however, can only come from within ministries themselves, and as such has little effect outside that ministry. Continuing difficulties with aspects such as bottlenecks in delivery, project evaluation, country or region programming, etc. indicate the

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fundamental weaknesses of administrative decentralisation in the Japanese aid system. These problems also suggest the mammoth task involved in administering an aid programme of this scale. It is still difficult to reconcile maximum quality of aid with maximum quantity delivered. There must inevitably be trade-offs and, in Japan’s case, concern for size has usually dominated concern for content. Although we have seen some examples of policy innovation in recent years, by no means are these signs that Japan is stepping out front in a selfassured way to provide direction to other donors. Innovation in the aid programme retains its steady, onward pace, without massive leaps of initiative. But change and reform there undoubtedly are, despite the administrative impediments.

Chapter 5 Ties that bind: Japanese aid and Asia

Change and innovation in Japan’s aid policy necessarily involve Asia. It is to Asia that the bulk of Japan’s aid has flowed historically, and in Asia that the main recipients of Japanese aid are still situated. Although the statistics show that today Asia receives a smaller proportion of Japanese bilateral ODA than it did even ten years ago, the focus of aid policy remains on Asia, the region seen in the 1950s and still in the 1990s as the ‘natural’ partner in Japanese efforts to assist economic development. It is unlikely that Asia will be replaced as the main target of aid flows, despite the tendency to look more to other regions with desperate development needs, and to those countries with lower per capita incomes than many Asian recipients. The theme of this chapter is how Asia dominates Japan’s aid policy, and will continue to do so. We will begin to assess what aid is doing to support Japan’s leadership role, and whether Japanese policies in Asia provide a basis for a new, positive Japanese contribution to regional affairs. Here we will focus primarily on what happens in the delivery of Japan’s aid to Asia; Chapter 6 will take up the broader problem of how Asia is a factor in Japan’s leadership in aid.

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ASIA AND THE GROWTH OF JAPANESE AID It was in Asia that Japan began its postwar programme of economic assistance, initially in the form of reparations, then as official development assistance through yen loans and later the highly diversified aid programme which we know today. Asia was the first and obvious target because of the region’s prewar trade and economic connections with Japan, the experience of the Japanese occupation of much of Asia and Japan’s appreciation of the wealth of natural resources in the region and its proximity, not to mention the burgeoning markets. Japan saw its sphere of influence to be Asia, and its role there not unlike that of Britain and France in postcolonial Africa, or the United States in Latin America. Japan usually denies a colonial heritage for its aid programme, but the experience was there, albeit short-lived by comparison to the European empires. Apart from being geographically proximate, there were strong racial and cultural affinities with Asia and, as a consequence of Japanese occupation, close ties with leaders in several countries. In addition, Asia was a region where Japanese aid would be visible, since (apart from the United States’ early anti-communist campaigns) the Western powers were not showing a great deal of interest in the Asian region’s development needs. Japan’s political and economic objectives in Asia were also paramount. Japan had fences to mend and a severe historical legacy to overcome. It needed new friends in Asia, new trade ties, new market opportunities and new security arrangements. Japan’s trade promotion linked up with its economic cooperation; the early history of Japan’s aid programme was part of a return-to-Asia strategy that succeeded brilliantly.1 A combination of aggressive exporting, selective importing, large reparations agreements, technical assistance through the Colombo Plan (which Japan joined in 1954) and the United Nations, and eventually yen loans gave Japan the access it needed to a role in postwar Asian development. The efforts of prime ministers Kishi and Ikeda in the late 1950s and early 1960s to build ties with the leaders of Asia paid dividends, and, although the perceived menace of Communist China was a political concern, trade was able to be carried on with that country for much of the period.

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It is easy to see, therefore, why Asia became dominant in Japan’s aid profile. Accepting the broad reasons of economic and political strategy, there are other specific reasons that had to do with economic development in individual countries, and the way in which Japan’s Asian diplomacy was managed. Long-term aid relationships did not emerge immediately; for example, the now-dominant aid ties with Indonesia did not begin to coagulate until the late 1960s. The reparations agreements did not themselves cement aid links; they were more important in Japan’s export drive, since the reparations were tied grants. They also facilitated important connections between governments and business, particularly Japan’s capital equipment makers, the heavy engineering industry and the consulting engineers. Major aid payments did not begin until the yen loan programme of 1957, and the emphasis was initially on South Asia, with its huge, accessible population base and potential markets. Between 1957 and 1964, sixteen of the twenty-one loan agreements were for India or Pakistan, all from the Export-Import Bank of Japan at not-too-low an interest rate (5.75–6.0 per cent) and all firmly tied to purchases from Japan.2 India has been one of the top recipients of bilateral aid ever since, and Japan’s South Asian policy has relied on aid to give it substance and continuity. Similarly, Japan’s aid to Bangladesh has brought about a close relationship of dependency, as is also the case with Sri Lanka. Burma is a rather unusual case, but is one of the best examples of the dominant position Japan has attained vis-à-vis the economies of some of the Asian nations. While Burma has shunned extensive contacts with the outside world over most of the postwar period, Japan has developed close contacts. The promise of oil has been paramount, while there has perhaps been something of a sentimental attachment to Burma stemming from the war.3 Japanese occupation of Burma during the war had been instrumental in bringing about the successful anti-colonial movement, and there was some sense of responsibility deriving from this history. Burma has been, in the popular mind, a symbol of anti-war feeling following the very popular novel (and later film) The Harp of Burma by Takeyama Michio, first published in 1946. Today, as Myanmar, enmeshed in a bitter domestic struggle between the military and a populist movement, the nation is highly dependent on Japan for economic support, with Japan providing 78 per cent of bilateral ODA and nearly 60 per cent of all aid receipts.

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Japan was thus in a position to refuse from late 1986 to extend any new bilateral aid packages to the country and encourage the leaders to make changes in economic policy. Myanmar was Japan’s seventh largest recipient of bilateral aid in 1988, but, as a result of what were officially termed difficult political conditions in the country, Japan suspended aid in September 1988, as a message of dissatisfaction with the actions of the military dictatorship. Japan recommended some projects after recognising the new Rangoon government in February 1989 and restarting aid. It also made available some emergency food aid via UNICEF in late 1988 and a grant of emergency medical equipment in March 1989.4 Ongoing projects have meant that grant and loan aid continued in 1989 to a total of US$71.4 million. Some observers point to misdirected projects as evidence of strong political ties between Japanese and Burmese leaders, and historical links overlain by excessive caution shown by Japan in seeing its aid put to good use.5 Myanmar, Laos, Bangladesh, the Maldives, Nepal, Bhutan and Afghanistan are the only LLDCs in the Asian region. Japan gives aid to all but Afghanistan and is the largest donor to all of the others except Laos and Nepal, to which it is the second largest donor. Assistance to South Korea did not begin until a reparations agreement was concluded in 1965. That country was a major recipient until the late 1970s, as was Taiwan, but more important than ODA in assisting those countries were trade credits, direct investment, technology transfer and the ‘Japanese model’ of development, as well as strong political support in Japan for the Korean approach to political and economic growth. The Korean link is a good example of the importance of the political dimension to the aid programme: although the LDP has not played a central role in the planning and implementation of the aid programme, the political parameters of Japanese policy have been set by broader government objectives in the region.6 South Korea has been critical in this context: US and Japanese support for a strong South Korean regime (despite unavoidable Japan—Korea tensions arising from the colonial period) meant that Japanese economic support for the regime’s growth policies was essential. The South Korean case is a good example of how Japan has managed its aid policy without any significant moral component to decision-making: Japan has responded to aid requests

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on the basis of the economic aspects alone, provided of course that broad government support for the relationship was there. Taiwan is another case in point where economic development has been subject to overriding political concerns, and where there has been strong government party support in Japan for a relationship with Taiwan to counterbalance China. Taiwan was the first recipient of a yen loan from the OECF in 1965, and loans continued until 1972 when the rapprochement with China prevented official dealings with Taiwan. The aid relationship with Indonesia, which has dominated Japan’s aid programme for twenty-five years, did not begin in earnest until after the post-Sukarno reconstruction of the Indonesian economy and the arrangements under the Inter-Governmental Group on Indonesia (IGGI) to support that programme.7 The OECF became the important channel for Indonesian aid, and that country has been at, or near, the top of the recipient list ever since. Around relations with Indonesia have developed close and complex political and business ties, and a diplomatic relationship that stresses stability and security, and the centrality of Indonesia to Southeast Asian relations. The political-stability—prosperity—security nexus is of paramount concern to Japan, and is the political economy model that has driven Japanese policy towards Indonesia and the rest of non-communist Asia since the 1950s. Aid relations with Thailand, Malaysia, the Philippines and Singapore were all initiated in the late 1960s, as a result of the formation of ASEAN and the clearer identification of its members’ economic priorities singly and jointly, and with the winding down of the British and American aid presence in the region. Aid to each of these countries (except Singapore, with its higher level of per capita income) has constituted a major part of Japan’s bilateral aid programme irrespective of Japan’s ASEAN policy, which has complemented rather than replaced bilateral aid programmes. Collectively, these countries have been at the centre of the Japanese aid programme for the last twenty-five years.8 Aid to China is a recent addition to Japan’s Asian aid map, and China has quickly become the top or near top recipient. There are many reasons for this—the need to make reparation for war guilt in the form of aid, the tremendous Japanese enthusiasm for China’s economic potential after the resolution of political differences

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following the Peace Treaty in 1978, strong Chinese demands for aid to build domestic economic infrastructure, the Japanese intention to expand its aid programme and China’s capacity to ‘soak up’ large volumes of this aid, and the political imperative of building close and friendly relations with China to give Japan a counterweight to stillstrained ties with the Soviet Union, unpredictability in North Korea and seemingly irresolvable conflicts in Indochina. The aid relationship with China has not been easy, and official aid programmes only began in 1980. This followed an uncertain period after normalisation of diplomatic relations in 1972 through the Peace and Friendship Treaty and Trade Agreement of 1978 and adjustments within China’s economy leading to the cancellation in early 1979 of private contracts for the supply of plant and equipment from Japan. Not every-one in Japan was happy about the extension of large aid commitments to China, given that country’s unreliability in the preceding few years as a partner in economic cooperation. There was also concern expressed about the weight of Japanese impact on China, a concern that is now all too real, with Japan providing threequarters of China’s total bilateral aid and about half of all its ODA receipts. The effects of this aid on aid to ASEAN were also a worry, as will be discussed below. Ultimately, the Japanese saw the potential of China’s resources and markets as too great an opportunity to forgo, and aid was seen as a means of keeping China to its obligations by underwriting project viability.9 Japan’s aid role in Indochina has been important, although capital aid to Vietnam has been suspended since January 1979 following the Vietnamese invasion of Kampuchea the month before. Vietnam had been one of the largest recipients of Japan’s grant aid in the 1960s; Japan’s contribution to social welfare projects in that country were substantial, and an indicator of Japanese support for American policy in Vietnam. There are prospects of a resumption of full-scale aid to Vietnam, as peace returns fitfully to Cambodia. This is discussed later in this chapter. Aid to Cambodia resumed on a very small scale in 1988, in addition to humanitarian assistance mainly through the United Nations. Over the period 1967–73 a small amount of aid flowed to Cambodia from Japan, but recent Japanese attention has been more on the political issues of resolving the conflicts within the country, rather

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than resuming aid on a larger scale when the outlook there is still so uncertain. Japan’s Cambodian initiatives are also taken up again below. By contrast, Japanese aid to Laos has continued, Japan being that country’s largest donor in 1987 and its second largest in 1988 and 1989. In the 1970s the Nam Ngum Dam was the focus of loan aid but grant aid has continued largely uninterrupted, not only on projects but for food, refugee relief, medical assistance and debt relief. New agreements were signed in August 1990.10 The latest recipient in Asia is now Mongolia, confirmed during Prime Minister Kaifu’s visit in August 1991 and by Japan’s commitments to an international donors’ meeting in September 1991. Japan will provide about one-third of overall initial commitments of US$155 million.11 Japanese aid to Asia therefore presents a complex picture with no simple explanations for its pattern of growth or its structures, despite an apparent emphasis on resources and markets. Although the region is a composite in official statistics, Japan’s policy towards each country is governed by different priorities, and the problems and prospects vary across the region. Japan’s approach to Myanmar, for example, is very different from that to neighbouring Bangladesh. Whether there is any real benefit in considering Japan’s aid to Asia as a single entity is a key issue; it may be more appropriate to look at Japan’s aid to the Asia Pacific region more generally, or to particular parts of Asia, such as ASEAN or South Asia, or to categories of recipients such as the LLDCs, the NIEs, etc. ‘Asia’ is perhaps a useful category with which to begin, although the limits of the concept need to be borne in mind. What is important, however, is to recognise the strength that the concept retains in Japanese thinking about not only its international aid role, but its international activity more generally. The geographical, racial and cultural entity of Asia is a powerful image for the Japanese mind, and at home Japan’s role in Asia is widely accepted, even encouraged.

JAPANESE AID FLOWS TO ASIA While Japan has become an aid donor with global interests, statistically Asia remains the region with the greatest concentration of Japanese aid. It has certainly changed, however, since the 1970s, when at the

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beginning of that decade just about all bilateral ODA went to Asian countries. In 1990 the figure was 59.3 per cent and falling slowly. None the less, over three-quarters of all Japanese loans are still directed towards Asia, and half of Japan’s capital grant assistance. Within ‘Asia’, Southeast Asia takes a little over half, followed well back by Southwest Asia and Northeast Asia. However, Southwest Asia takes more grants than the other sub-regions, whereas China’s aid is mainly in the form of loans. At the same time, loans are the dominant element that keeps the Asian aid total so high, with 70.7 per cent of all loans in 1990 going to Asia. If we look at general project grants in 1990, the Asian total was down to 46.4 per cent, with Africa taking 30.8 per cent, which reflects the large proportion of low income countries and LLDCs in that region. The Asia total for technical assistance was even lower at 43.0 per cent, although Africa received only 7.6 per cent, Latin America 12.1 per cent and the Middle East 5.7 per cent.12 These figures are unsurprising, although the way in which aid to Southeast Asia is holding up despite the major development needs of other regions, and the growing economic maturity of a number of Southeast Asian countries, says much about the political support for aid to Southeast Asia. At the same time, there are changes, as evidenced by Japan’s announcement that ODA to Malaysia would eventually be stopped, as that country’s per capita GNP rises to a level that marks the limit of ‘developing country’ status.13 Of the total aid flows to individual regions, aid to Asia is most heavily geared towards loans (since many Asian nations have a good propensity to repay), while Africa has the highest proportion of grants in its total aid from Japan. Of the ten main recipients of Japanese aid in 1989, eight were Asian nations, although the figure is usually nine of the ten. Again, it is aid to China, ASEAN countries and South Asia that forms the backbone of the Japanese aid programme. This reflects what the Japanese Government terms the ‘interdependence factor’ in Japanese aid-giving (see also Chapter 1). At the same time, it points out that the ‘humanitarian factor’ in the aid programme can be seen by the rapid increase in aid to sub-Saharan Africa in recent years, from a level of 5.4 per cent of total ODA in 1975–76 to 10.0 per cent in 1980–81 and 14.6 per cent in 1988/ 89.14

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Comparisons with other major donors are of interest. The top five recipients in 1989 for the US, France, Britain and Canada included only China, India, the Philippines, Bangladesh and Pakistan in Asia. France had no Asian countries in its top five, which included only former colonies outside Asia. Germany, however, included India, Singapore and China amongst its main recipients, while Australia, a smaller but geographically closer donor, placed Indonesia, Thailand, Bangladesh and China in its top five.15 Analysis of the sectoral spread of grant aid to Asia and Africa shows that the top priority in each region for Japan in 1989 was public welfare and the environment. Indeed it was the rather more important priority in Africa. Surprisingly, medical and health aid was a lower proportion of grant aid to Africa, with a concentration on public welfare, the environment, transport and communications.16 It is likely that assistance for environmental improvement will grow as a category in Japanese aid to all regions over the coming years (see Chapter 4). As Koppel and Plummer point out, however, we cannot divorce aid flows from those of private investment and trade. They rightly show that ‘taking both ODA and total private flows together, there is growing dependence on Japan for development financing in Asia’.17 The dependence of Asian recipients on ODA from Japan is shown in Table 3. This table indicates that in terms of bilateral aid India, Cambodia, Nepal, Pakistan, Singapore and Vietnam are not highly dependent on Japanese ODA. When we look at total aid receipts (which include aid from multilateral sources as well as bilateral), however, several countries stand out as very reliant on Japan: China, Indonesia, Malaysia, Myanmar, the Philippines, Sri Lanka and Thailand. These patterns emphasise the fact that not only is Japan dependent on the ASEAN countries and China to take large volumes of Japanese aid, but the relationship is one of complementary dependence. Although Japan remains the largest or near largest donor for countries like India, Pakistan, Bangladesh, Nepal and Sri Lanka, it is less important when considered in the light of additional revenue from multilateral donors. In this way we see a pattern of extreme dependence by ASEAN countries, China and Myanmar on Japan, and strong but less extreme

Ties That Bind: Japanese aid and Asia  143 Table 3 Asian dependence on Japanese ODA, 1989 (%)

dependence on Japan by the countries of South Asia. This suits Japan since (apart from Myanmar) it has tended to avoid heavy responsibility for massive humanitarian problems such as in South Asia and can rely on the relatively good prospects for economic growth in Southeast

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Asia as a means of justifying its heavy and long-standing aid presence in that region. It is certainly more comfortable with dependence from Southeast Asian countries, and with the capacity it has shown over the years for being able to influence economic development policies in those countries. The major uncertainty for Japan is the Philippines, with its tendency towards political instability and the threat to economic recovery therein.

OFFICIAL VIEWS OF CHANGING NEEDS The position of Indonesia as the central focus of Japan’s bilateral aid was confirmed by the attention given to aid to Indonesia in Japan’s Memorandum to the DAC of March 1991, as part of the 1991 Aid Review of Japan.18 The outcome of the high level Japanese economic development mission of February 1990 was that several priority areas were identified: infrastructure, human resources development and education, basic human needs, rural and agricultural development, the environment, and export promotion for non-oil and non-gas products. This is an important statement of the strategic position of Indonesia in the Japanese programme, particularly when the government’s analysis of the geographical distribution of aid stresses both the historical emphasis on Asia of Japan’s aid, and the gradual diversification away from Asia. It is also a reflection of the more active role of ‘policy dialogue’ with recipients in the aid process, which includes annual consultations and high level policy dialogue missions. Since 1987, Japan has sent seven such missions, all to key Southeast and South Asian recipient countries.19 Development needs policies have been more important at the DAC level than in determining regional distribution domestically. Japan has certainly accepted that it should channel more assistance to the LLDCs, but this is occurring slowly and wavering ominously, as we discussed in the previous chapter. Japan’s total ODA to the LLDCs was 15 per cent in 1989 and 19.6 per cent averaged over 1988–89, below the DAC average figure of 24.7 per cent. Japan’s 1990 contribution to the LLDCs dropped further to 12.7 per cent.20 The important global problem areas for Japan’s ODA in the 1990s, as outlined in the

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DAC Memorandum, all have a clear relevance to Southeast Asia, and that region is mentioned as the target area in action taken this far. These problems include environmental destruction, drugs and population growth.21 None the less, despite the Foreign Ministry’s preference for stressing the diversification of Japan’s aid away from Asia, the region is still acknowledged as the key to growth and change in the Japanese aid programme. The former Director-General of the MFA’s Economic Cooperation Bureau, Kibata Akishichi, has stressed the importance of Japan’s ‘self-help’ approach to aid-giving and the central role of Asia in Japan’s aid: The important target region for Japan’s ODA is Asia—this will not change. We are in Asia, and we must give priority assistance to the developing countries of Asia that are tied to us historically, geographically, culturally and in other ways. The Japanese people agree on this aspect, I believe. Our ODA took its first steps in Asia, our aid history there is now extensive, and there are many examples of our success.22

This statement is unequivocal. Likewise, in an important statement of policy, the MFA has now set out its views on regional distribution in a direct and unambiguous way that places Asia as the top priority, but identifies ASEAN, China and Southwest Asia as separate components. Asia is distinguished from other regions as being more familiar and, apart from the economic security aspects of Middle East relations, as of more direct economic and political significance to Japan.23 The President of the Japan International Cooperation Agency, Yanagiya Kensuke, sees the expectations from ‘traditional aid recipients’ in Africa as a major policy challenge for Japan, given the decline in other donor activities there and the demands that will flow to Japan from the poor countries of that region.24 The Ministry of International Trade and Industry, however, very clearly has Asia as its major policy focus. This is seen in its New Asian Industries Development (AID) Plan, launched in 1987 and now the centrepiece of its integrated programme of official and private-sector assistance to the region. MITI has always been far more effective at rationalising the development aspects of its ODA. Its 1989 economic cooperation report expresses an aid philosophy that aims at achieving DAC objectives

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through, on the one hand, assistance for economic development achieved by industrial growth and, on the other, direct assistance for poverty and starvation. MITI sees the New AID Plan as the basis for the industrial development aspects of this approach. Furthermore, it still regards Asia as the important target for aid: Until now Japan has directed a great deal of its aid to the countries of Asia with close geographical and historical relations, and has emphasised economic cooperation with oil-producing countries of the Middle East for reasons of resource security. Recently aid distribution has spread to areas outside Asia such as Africa, in particular the sub-Saharan countries. Our economic cooperation is contributing in a range of fields, and is now spread globally. However, henceforth economic cooperation to the oil producing countries of the Middle East will continue to be important, and the role of Japanese economic cooperation in the Asian countries will continue to be high, because of the traditional regional aid distribution of other DAC donors, the per capita income and aid receptivity of the Asian peoples, and the growth in Asian Pacific regional cooperation. For Japan, it is necessary to continue the emphasis on Asia.25

MITI adopts this approach for its strong support for economic cooperation with Asia based on ‘soft resources’, the recipient’s needs for technical, management and policy know-how for development. MITI regards the focus on the Asian NIEs and ASEAN as entirely appropriate, and devotes a major section of its 1989 economic cooperation white paper to explaining this policy. Asia is the key to this policy, because of its role as the ‘engine’ (keninryoku) of the world economy, MITI puts up a strong defence of the need to maintain strong flows of aid to Asia despite the emergence of assistance to Eastern Europe as a factor in Japanese ODA. MITI argues that Asia still has low per capita GNP, other donors are unlikely to take over Japan’s Asian aid role, and the Asian Pacific region will become the engine of world economic growth and therefore needs continued support.26 ‘Soft resource transfers’ are important in this context, and are particularly relevant to the developing countries of the Asian region where there are already high levels of ‘hard resource’ transfers in the form of funds, equipment and project-based assistance. It is through technical

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assistance that these soft resources can be transferred to the countries of Asia. The MFA report on ODA states clearly that East Asia should remain the ‘highest priority region’ for aid, that Southwest Asia will remain ‘a priority area’ and that aid will continue to the Middle East, Africa and Latin America in a balanced way.27 For East Asia, emphasis is placed on fostering a broad-based, flexible approach to future aid flows, including an expanded NGO role, and greater policy dialogue with the region to ensure appropriate types of aid.

JAPANESE AID AND ASEAN The Japanese emphasis in its aid programme on Asia, notably Southeast Asia, is best typified by the relationship with ASEAN. The reasons for ASEAN’s high profile in the Japanese aid programme are to be found in Japan’s concerns about its long-term interests being endangered by events in the ASEAN region. Japan’s aid is, at its crudest, an expensive insurance policy. The primary influence shaping Japan’s aid policy towards ASEAN has been Japan’s postwar approach to the Southeast Asian region based on a policy of risk management. A second element comprises the various bilateral relationships that have evolved with each of the ASEAN member countries, while a third element has been the Japanese political and administrative structures managing aid to ASEAN. Notable here is the heavy reliance on ministerial diplomacy in dealing with ASEAN. Japan’s Southeast Asian diplomacy began before World War II, as policies of nanshin (southward advance) and the economic benefits to Japan of trade with the region became fully realised. In the postwar period there were several major factors at work. First was an emphasis on trade and later investment relations. Second were resources. Relations with all the countries of ASEAN have incorporated a ‘resources diplomacy’ aspect involving energy, mineral and timber raw materials and food. ASEAN resource suppliers have also welcomed the market that Japan provides, and Japan still regards ASEAN as a key supplier of vital raw materials and other resources.

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Third is the broader issue of Japan’s national security, both economic and military. A special relationship with ASEAN was Japan’s major priority after the end of the Vietnam War, and it was linked to a wider notion of Japanese security interests in the region. These revolved around protection for the Straits of Malacca and the Lombok Strait, maintenance of stable political systems in the region (not necessarily democratic, but not communist), the fostering of close relations with the political elites of the region and support for the economic bases of those regimes. Economic development was regarded as the mainstay of political stability.28 ASEAN was a new element in Japan’s Southeast Asian policy after the mid-1970s, and has remained so because of continuing instability in Indochina, difficulties in the relationship with Burma, strong economic growth in ASEAN and the recognition of mutual benefits in the relationship. The Fukuda Doctrine of 1977 (rejection of a Japanese military role, close and friendly ties, and assurance of an equal partnership) shaped the way policy was developed thereafter, and later prime ministers have continually reiterated the primacy of ASEAN in Japan’s aid programme.29 Bilateral relationships between Japan and individual ASEAN members are also important. Each of the separate relationships with ASEAN countries has its special features and own dynamics. Most of Japan’s dealings with the region are at the bilateral level, but there are undoubtedly ‘ASEAN’ features that are increasingly setting the broad parameters for bilateral aid ties with Japan, and into which some aspects of bilateral programmes are fitted. There are a range of forums for leaders to meet, and a range of joint Japan-ASEAN programmes. After 1976 there is no doubt that ASEAN has enjoyed a special status in Japanese foreign policy. The regularity of prime ministerial visits has helped maintain this favoured status, but the wider aid system in Japan reflects mainly the entrenched bilateral aid machinery. There is no simple process of decision-making for ASEAN. It moves between bilateral, regional and special decision-making processes, but the political input is naturally high. Japan has had strong consistency of purpose over a long period in its approach to aid for South-east Asia—a desire to push economic growth, support regional priorities, maintain friendly ties, extract resources and promote trade and investment. Familiarity and habit have been paramount in that

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policy, and once Japan began to take ASEAN seriously in the later 1970s, bilateral aid programmes were couched in a vague regional philosophy. But the persistence and strength of regularised bilateral decision-making processes meant that regional agenda-setting only took place at levels where the political sensitivities could be resolved. The continuities of bilateral project aid to ASEAN countries are overlaid with a plethora of innovative programmes designed to suit a variety of political interests. The late 1980s have seen the emergence of a number of new issues in Japan’s aid ties with ASEAN. Foremost among these is the new push for industrial development in ASEAN (referred to above), and the problems of debt relief for some ASEAN countries. On his visit in May 1989, Mr Takeshita promised new softer loans to assist Malaysia’s yen debt, while Japan pledged new funds to Indonesia at the meeting of the Inter-Governmental Group on Indonesia (IGGI) in June 1989. Efforts to resolve the debt problems of the Philippines are also important to Japan, given the strategic location of the Philippines, the decline in US involvement and the need to ensure its political stability. Debt relief schemes remain, however, basically bilateral assistance programmes. A wider cooperative mechanism is industrial development, into which Japan has been directing effort since the early 1980s. The ASEAN joint projects begun with a fanfare in 1977 under Mr Fukuda were not successful; the problems of reaching intra-ASEAN agreement in industrial priorities were too great. Only urea plants in Indonesia and Malaysia received funding. The New AID Plan aims to respond to demands for industrial development in ASEAN through enhancement of investment activities in the private sector by Japan, stimulation of small and medium industry using OECF two-step loans, and enhancement of technology transfer. This was seen to be part of a more effective international division of labour and industrial coordination, and is a prime example of Japan’s ability to shape the pattern of Asian development. Opposition to the New AID Plan is reported from the United States and Europe, fearful of industrial development hastening a new export drive on the part of the target countries, just as the NIEs have been able to pressure the industrial countries for market access.30

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An ASEAN—Japan Development Fund was another major initiative of the Japanese Government, launched in 1988. It is a specific mechanism for assisting private-sector development in the ASEAN countries, using OECF and Eximbank funds, through twostep loans. Projects are supposed to involve intraregional cooperative activities. Loans have been made to Malaysia and Indonesia under this scheme.31 MITI has been prominent in establishing these new programmes and has been able to lift its Asian aid to a regional level rather than just a country or project level. The Ministry of Foreign Affairs accepts the MITI approach as a basis for Japan’s aid policy towards ASEAN, although MITI is not able to exert control over the ASEAN aid process to any great extent. Japan’s emphasis on ASEAN aid is an outgrowth of a number of mutually reinforcing factors. First, Japan’s policy since the 1950s has been to emphasise its ‘natural’ role in assisting Southeast Asia. Second, with that basic policy, the accumulation of aid projects, experts, interests and networks represented a ‘cycle of predictable (and in any case safe) commitments’.32 Third, structural factors have been important. Indonesian aid has been locked into the IGGI framework since 1967, Philippines aid was tied initially to commitments to the Marcos regime and, more recently, to resolution of the Philippines debt problem. In Malaysia’s case, that government’s attempts to emulate Japan’s economic performance (the Look East Policy) brought a favourable response in aid commitments. Thailand’s important political position vis-à-vis Indochina was also a special reason for aid relations. Fourth were the domestic Japanese politics of aid. In the case of ASEAN, prime ministerial politics have been paramount since 1977. The involvement of Japanese leaders in the ASEAN heads of government summits since the second meeting in 1977 has located ASEAN aid initiatives at the top of the political agenda in Japan. The ASEAN trip is the only major prime ministerial visit to a developing region that is now obligatory for a Japanese leader. It has placed the broad parameters of aid to ASEAN in the omiyage gaikō (gift-giving diplomacy) category, removed from the strictly bureaucratic arena. There are few other aspects of Japanese aid where this is possible. Although the major decisions about setting the ASEAN aid agenda fall largely to the political level, it is the bureaucratic commitment to

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maintaining aid to ASEAN that underlies the political process, and it is the ability of the Japanese aid system to implement the ASEAN aid programme that ultimately determines its effectiveness. ASEAN aid is the mainstay of the day-to-day operation of the Japanese aid system, and prime ministerial pronouncements have tended to follow administrative judgements in terms of content and size. Conversely, bureaucratic management of the ASEAN relationship is immeasurably strengthened by the political sensitivity of Japan’s ASEAN policies. Prime ministerial diplomacy and bureaucratic management are mutually supportive. Japan’s ASEAN aid policy is concerned with practical out-comes as well as symbolic achievements. Its dominance of the development priorities of the ASEAN member nations is a strong object lesson in the power of historical and cultural ties, and the importance of economic and security considerations for Japan. Japan’s claims for the contribution of its loans to the economic development of the ASEAN countries are worth examining. These are expressed mainly in terms of the major target of Japanese aid to those countries, that is, economic infrastructure: Indonesia 31% of all electric power facilities; 14% of railways; 19% of toll roads; 50% of microwave communications; 76% of Jakarta electric power lines; 6% of irrigation; 46% of Jakarta water supply Philippines 6% of electric power; 8% of national highways; 13% of Manila buses; 10% of phone systems outside Manila; wells and water supply to 8.2% of rural population; 70% of Manila flood control pumping Thailand 18% of national electric power facilities; 7 of Bangkok’s 11 major bridges; all of Bangkok’s freeways; new Bangkok airport; 10% of Bangkok telephone services; loans to 1.9% of rural households; provision of small-scale irrigation to 25% of rural households Malaysia 38% of electric power facilities in the Malayan peninsula.33 These are impressive achievements and emphasise the concentration of loan aid in the ASEAN region on basic economic infrastructure.

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Although aid to ASEAN is the core of Japan’s aid programme, management style for this aid is neither representative of, nor common elsewhere in, Japan’s aid programme. Aid to ASEAN is singular in terms of priority and difficulty. No other recipient, even China, has the same status. No other donor is expected to show such generosity or initiative. No other donor is the object of so much caution on the part of the beneficiaries, but no other set of aid relationships has so vividly vindicated to Japan its particular brand of aid policy.

AID, ASIA AND THE FUTURE Just as Asia is central to the Japanese aid effort, so aid is central to the development of Japan’s role in Asia. How do recent trends in aid policy affect Japan’s position in Asia, and the Asian nations themselves? The economic cooperation scene in the Asian Pacific region is likely to undergo major changes in the near future, as new recipients re-emerge in Indochina and other Asian countries graduate from developing country status. Yet the fundamental structure of Japan’s Asian aid programme will stay intact, as the major recipients continue to call for growing support for development projects. Japanese aid to China is now back on a regular schedule after a brief suspension following the Beijing massacre of June 1989. The 4 June incident in Tienanmen Square and its aftermath delayed agreement on new loans to China. In late May 1989 contracts were signed on 97.1 billion yen worth of bilateral loans, and existing aid activities were not interrupted except briefly by Japan’s stern reaction to the incident. However, the Third Round of loans for the 1990–95 period, worth Y810 billion and concluded with a great fanfare during Prime Minister Takeshita’s visit to Beijing in August 1988, was postponed beyond the scheduled start in September 1989. In the early days after 4 June, JICA teams were also put on hold, but this tough position did not last long. The Japanese Foreign Minister, Mr Mitsuzuka, was quoted as calling for the resumption of aid, saying that ‘he wanted to promote Japan’s official development assistance to China as planned, providing calm returned. Japanese aid would help improve China’s infrastructure

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and stabilise living conditions, he told a Diet Budget Committee meeting.’34 By August, continuing aid projects and cultural relations were back on track. A new grant aid package for Shanghai hospital equipment, the Beijing television station and a nursing school was announced in December 1989. Aid in transport was also resumed in December. Resumption of negotiations on the new loan agreements was delayed until early in 1990, when firmer international views on economic relations were in place. The visit to China of President Bush’s adviser, Brent Scowcroft, in December, the end of martial law in Beijing on 11 January 1990 and agreement by the World Bank to resume aid to China gave Japan the opportunity to reconsider its options openly. Prime Minister Kaifu had already hinted in December at aid resumption, and bilateral talks were set down for late January to discuss the extension of the new loans packages.35 These talks produced agreement to begin preparations for loan resumption, including some official surveys. Kaifu urged the G7 Summit in August 1990 to relax economic sanctions against China, and at the end of July 1990 official talks took place and a Japanese Government survey mission visited China. The third loans package was subsequently unfrozen, and a high-profile visit to China by Kaifu in August 1991 confirmed that this assistance would proceed.36 Future ODA to China may be complicated by the new moves in Japan to link aid to a country’s arms exports; China’s arms exports are a continuing topic of discussion between the two countries, and both Japan and the DAC are firm about linking aid allocations to progressive reductions in arms expenditure by recipients.37 Mr Kaifu’s visit to Southeast Asia in May 1991 pointed to the continued high priority Japan places on that region, and on the expectations of a political role that Japan might play. Kaifu spoke of Japan’s political responsibility ‘as a nation of peace’,38 which will involve Japanese participation in UN peacekeeping activities. The first message to his Cabinet after returning from the visit was that Japan should increase its economic assistance to ASEAN from fiscal 1992. Given the emphasis on continuing aid to Asia outlined in comments quoted above, this is unlikely to be a problem for Japan, despite demands for assistance from other regions and countries.

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There are several factors that will influence the direction of Japan’s aid to Asia, the persistence of a high Japanese aid profile and the further development of a strong and active Japanese presence in the region. Some of these relate to the priorities of the aid programme itself (environmental aid, grass-roots aid, enhanced policy dialogue with recipients and more flexible aid mechanisms). Other factors have to do with individual country situations and the continuing demands on Japan for support. In particular, Japan’s capacity to balance new aid demands from Eastern Europe, Indochina and the traditional recipients will be a determining factor in any ongoing commitment to Asia. Finally, Japan’s own desire to make a mark in the international arena in non-threatening ways will lead it towards a more positive presence in Asia. Aid priorities are one of Japan’s main aid concerns (see Chapter 4) and the Japanese Government makes clear that the major priorities for Japan in the coming years are more attention to aid for the environment, revitalisation of existing projects, aid at the grass-roots level and expansion of policy dialogue. At the same time, greater diversification and flexibility in loans aid by the OECF are a feature of the Japanese aid programme. Aid to the grass-roots level through the small-scale grant aid programme has been spread widely across different recipient regions, and in 1990 Asia received 28 of the 92 projects (30 per cent), with most going to Africa (32). Given the increasing emphasis in the grants programme on humanitarian assistance, Asia is unlikely to be the major recipient of this type of aid. However, in the environmental area Asia is a prime recipient target, given the history of Japanese resource exploitation there, the need for an improved Japanese image in the region and the environmental needs of the countries. No consolidated or detailed figures on country destination of environmental aid are available, except OECF exchanges of notes during fiscal 1990. A total of Y125,159 million was pledged for twelve projects, all but one of which were in Asia. Of these seven were in Indonesia. However, the programme to counter air pollution in Mexico City took 55 per cent of the total budget. The MFA aid report points out that in the field of protecting and rehabilitating tropical rainforest, Asia has been the natural starting

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point for Japanese aid, because of Japan’s lack of experience of the situation in other regions.39 Policy dialogue (as discussed in earlier chapters) has already mainly involved Asian recipients, although it will extend to other countries as the process gains momentum. The rehabilitation loan scheme for projects is one example of greater flexibility being introduced to loans, away from straight project loans towards more non-project loans and sector loans. While OECF project loans were 64 per cent of loan operations in 1987, they were only 46.2 per cent in 1989.40 Indonesia, for example, has gained an increased amount of commodity loans and loans for local currency cost financing (54.7 per cent of total commitments 1987–89). Whether these will continue depends somewhat on Indonesia’s domestic economic situation, but commodity loans to the Asian region generally (except India and Malaysia) have been well above the overall share of such loans in OECF commitments worldwide. In-country circumstances and the pressures for enhanced aid demands on Japan are critical to Japan’s future Asian aid profile. This will concern not only total levels of aid but the ways in which aid is used to enhance Japanese interests. Of course, given the historical emphasis of loans on Asia, the continuing role for Asia in a more diversified loans policy is not surprising. The situation in individual Asian countries, however, will involve Japan in an ongoing high level of commitment to the region. Indonesia is a good example, given the structuring of aid to the country through the IGGI until early 1992. The non-IGGI loans share of total Japanese loans to Indonesia stood at 14.9 per cent at the end of March 1990, although the only new item in this category is that of rehabilitation loans.41 This type of loan will increase, even though its share of the total is very small at this stage. Also to increase will be co-financing with other major donor organisations: so far this been mainly with the World Bank and the ADB, and 64 per cent of co-financing in fiscal 1990 was to Asian countries through those two banks, Britain and the United States.42 The situation throughout the rest of recipient Asia remains attractive to Japan for donor purposes. Future aid will continue to be absorbed. In China, there is strong demand for domestic development and the new third loans package has begun. The heavy emphasis on basic infrastructure will mean continued reliance on large Japanese loans

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for the bulk of the aid. Growth prospects in Thailand and Malaysia are strong, and infrastructure aid in Thailand at least will also remain the focus of Japanese assistance, particularly in the industrial aspects. Problems of debt and political stability in the Philippines are a concern for Japan, and support will continue for those reasons. In India, likewise, the demand for industrial sector assistance is strong, as well as continued support for agriculture and poverty alleviation. The critical situation in Bangladesh means that dependence on Japan will remain for humanitarian assistance in particular, while, in Myanmar, Japan is the main hope for some economic support during the difficult few years ahead. As explained above, Japan is Myanmar’s major donor. Japanese aid flows remain in place, but continued human rights violations in the country, and detention of Nobel Peace Prize-winning opposition leader, Aung San Suu Kyi, have prompted Japan to intensify pressure on the Rangoon government to improve the internal political situation. Japan’s role as Myanmar’s main source of external economic support (for several historical and economic reasons) gives it a strategic position in effecting political change. While extending new grants for debt relief as part of Japan’s global programme of cancelling debts on pre-March 1988 loans,43 Japan also began publicly to remind Myanmar about human rights problems. In October 1991 the Japanese Foreign Minister discussed these issues with his Myanmar counterpart, and a senior Japanese official visited Rangoon in December 1991, the first visit by an industrialised country government since late 1988. In December 1991, Prime Minister Miyazawa indicated that Japan might link its aid to Indonesia and Myanmar to human rights, as the government’s aid policy explicitly states, although he said only that ‘Japan will take these problems into consideration when it extends its economic aid.’44 The case of Vietnam poses different, but still complex, challenges for Japanese aid officials. The Japanese Government is already quite firm in its view that Vietnam has substantial potential for economic development and that Japan is in a good position to be the key donor. Prior to 1992 Japan gave a very small amount of official aid in the form of technical assistance (equipment and experts), emergency relief and medical and cultural assistance (US$4.8 million in 1988 and

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US$1.6 million in 1989), and Japanese organisations were involved in a range of non-official aid activities.45 Speaking in Jakarta in May 1989 the Japanese Prime Minister, Mr Takeshita, pledged that there would be ‘positive consideration to extend financial cooperation, despatch personnel and provide necessary non-military materials to assist the introduction of an effective control mechanism to facilitate the peace process’ in Indochina.46 In addition, Takeshita said that ‘it is our intention, after a political settlement has been reached, to cooperate in the reconstruction and development of Indochina’. More Japanese businesses are preparing for renewed economic ties with Vietnam, and even the Director-General of the MFA’s Asian Affairs Bureau was quoted in an official journal as saying that ‘with aid to Vietnam frozen, various forms of exchange cannot proceed. Trade is carried out very timidly. I’d like to return this situation to a more natural one in due course.’47 Japan is adopting a strongly supportive bilateral stance vis-àvis Vietnam, although as of February 1992 it had not adopted any unilateral stance on the full resumption of aid. Former Foreign Minister Nakayama pledged further cultural and humanitarian assistance, and acknowledged Vietnam’s importance in regional peace and prosperity.48 Japan was not prepared to move ahead of ASEAN opinion on the Indochina question but, with a settlement in Cambodia now under international guidance, events are moving quickly to restore ties, and a full aid programme, with Vietnam. Investors are keen to shift into Vietnam and, although there is some wariness on the part of Japanese companies, to avoid criticism of moving too quickly, Japanese trading houses are well established there and are urging the Japanese Government to restart aid.49 The Japanese oil company, Idemitsu, in gaining a concession to explore for oil and gas, is the first Japanese company to become involved in a major development project with Vietnam.50 Clearly, the stage is ready for a resumption of Japanese aid, and Foreign Minister Watanabe was reported as saying that Japan would ‘eventually’ restart its aid and lift economic sanctions.51 Reports from Hanoi suggested a Japanese package of Y4 billion, but Japan will initially be concerned to make arrangement for the repayment of Vietnam’s outstanding debt to Japan, a legacy of the aid to the former Saigon regime and to Hanoi prior to 1979. These debts will probably be rescheduled by Japan as

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part of any aid package. A Japanese delegation to Vietnam in January 1992 began discussions, and in November 1992 Japan agreed to extend commodity loan aid.52 Japanese companies are naturally keen to see this relationship operating again: said one trader, ‘the major part of our business [in Vietnam] will be ODA-related. We’re preparing for many projects utilising soft loans as well as grants.’53 Japanese aid to Vietnam is additionally significant in view of the constructive role Japan is playing in the Cambodian peace settlement. Japan has strongly supported the United Nations process to bring the warring parties in Cambodia together, and it took an active part in the 1989 Cambodian Peace Conference in Paris, and later negotiations. As with the Vietnam question, part of the difficulty that Japan faced in its Indochina policy was the constraint imposed by Japan’s close ties with ASEAN. Indeed, Shiraishi argues, Japan’s scope for initiative in seeking a resolution of the Cambodian problem was determined largely by the attitude of ASEAN.54 The historical agreement in October 1991 in Cambodia has opened the way for a positive Japanese role in assisting Cambodian reconstruction. Japan is now taking a minor part in the peacekeeping force in Cambodia, following legislative approval in June 1992.55 Both the Chairman of the Cambodian National Assembly and Prince Sihanouk were reported as requesting the participation of the Japanese Self-Defense Forces in the UN peacekeeping activities.56 Japan has opted officially for sponsorship of a Conference on Cambodian Reconstruction held in Tokyo in mid-1992. This would go with renewed Japanese ODA to Cambodia, stopped after January 1974 except for some minor humanitarian relief. As a first step, Prime Minister Miyazawa promised a study mission that visited in early 1992, saying that ‘we must make an appropriate contribution’.57 Undoubtedly, the main expectation from the region is that Japan will put up the greater part of the funds for reconstruction. Initial Cambodian estimates were for US$900 million for reconstruction. Japan has already promised substantial humanitarian aid. The other significant role for Japan is through the appointment of a Japanese UN official, Akashi Yasushi, to head the UN peacekeeping mission in Cambodia. This appears to be linked to expectations that Japan would pay a significant part of the cost of the UN peacekeeping operation;

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it has actually pledged US$25 million towards the costs of the United Nations Transitional Authority for Cambodia.58

CONCLUSION Finally, let us look at Japan in Asia. Japan’s own desire for a political role in Asia consistent with non-military activity also means that aid will continue to be the major means for Japan to exert its influence regionally. In the postwar period Japan has had few useful tools in its diplomatic baggage. It cannot use force, and until 1991 had sent no defence forces on service outside Japanese territory. It has not played a high-profile role in the diplomacy of the region except through its economic assistance. It has, however, been able to affect the economic future of most of the countries of Asia, and come to be the greatest single influence in the economic decision-making of many governments within the region. Prime Minister Kaifu signalled in 1991 a Japanese desire to play a greater ‘political’ role in the region. This will involve, for example, some contribution to the resolution of the Cambodian problem, but this will still be small-scale, except in terms of financial contribution. Japan has been trying for a long time to be seen as a mediator (beginning with the Indonesia-Malaysia confrontation of 1963), but with little opportunity or success. Japan’s foreign policy decision-making process does not allow much scope for the more individualistic approaches that are necessary for mediators. Aid speaks loudly of Japan’s importance to the region. Nevertheless, controversy is never far away in debates on Japan’s regional future. Despite a growing (but by no means complete) consensus in Japan itself about the legitimacy of a UN peacekeeping function for Japan, and willingness by some outside, notably in Washington, to endorse such initiatives, Asia itself may not easily accept Japan’s new-found urge to contribute. Controversy about Japan’s military past is still a major factor in present regional politics: concern about the possibility of Japanese rearmament is still strongly expressed, notably by Singapore’s former Prime Minister, Lee Kwan Yew.59 Whether or not Japan has yet escaped from the tangle of its past behaviour has

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not seemed to trouble Asian leaders in their search for aid funds over thirty-five years, and it is unlikely to delay them greatly in the future. Asia will remain firmly attached to the lure of Japanese aid (indeed, more of Asia is becoming attached), and Japan will continue to use aid to suit its regional politico-strategic and economic objectives, although there is a sense in which Japan is locked into aid to Asia in both psychological and administrative terms. How this affects Japan’s role as an aid leader is something we will now address.

Chapter 6 Japan and foreign aid leadership

Given Japan’s status as the world’s top aid donor, attention is now focusing on how Japan will play its part in international management of foreign aid. The ‘leadership’ tag is bandied about frequently, and there is considerable debate within Japan itself about what its aid contribution should be and where it is going. This chapter takes up these questions, exploring the potential for a viable Japanese role in global aid leadership and the contribution foreign aid might make, if any, to Japanese participation in global leadership. We begin with some general considerations of the concept of leadership and then move to discuss, in turn, five policy areas that are central to the future of Japan’s foreign aid leadership.

LEADERSHIP As discussed in the Introduction, the concept of leadership is a slippery one. Our use of the concept of ‘entrepreneurship’ as exemplifying Japanese leadership styles, particularly in Asia, is important when we look closely at Japanese aid policy and practice. We need to examine processes and objectives, not the raw figures of aid flows. Japan certainly took a lead quantitatively as a donor in 1989, but   161

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works closely with the United States in several areas of aid policy.1 The major issue as far as we are concerned here is whether aid can tell us anything about Japanese international leadership style, and what role Japan can carve out for itself as an aid power. Of major concern for US and official Japanese commentators today are the issues of ‘burden-sharing’ and global partnership. One recent American analysis put it thus: While Japan has embraced the rhetoric of global partnership, it has yet to conduct its foreign policy on this basis. It must do so, however, to help free US foreign policy from the relic of burdensharing and move it toward the vision of global partnership. Global partnership is, by definition, a nonunilateralist concept: no nation can practice it alone. And Japan, because of its military-monetary deficit, has a comparative advantage in catalyzing the US transition from a frustrated superpower resentful of the allies’ unfair share of the burden to a confident senior partner of ‘The World Inc.’ To play this role, Japan needs a ‘Heisei Reformation’: It has to undergo a revolutionary restructuring of its attitudes and behavior.2

Other commentators have also pointed to the potential for Japan to play a more creative part in world development,3 and through all these arguments are several recurring themes. These include the need for Japan to portray its aid programme more precisely (better explanation of its programmes, clearer articulation of its philosophy and interests), to revise its aid management framework and to work more closely with other donors, especially the need for a better USJapan modus vivendi in aid cooperation. Julia Chang Bloch suggests an ‘aid alliance’, but Yanagihara and Emig point out the fundamental difficulty in widely diversified approaches: Tokyo’s traditional approach to economic development and assistance, based on lessons drawn from Japan’s own development experience, has focused almost exclusively on ‘real economic ingredients’ of development. Japanese aid’s lopsided emphasis on production-oriented projects reflects this orientation. In contrast, the US orientation in development and aid is primarily toward ‘framework’; emphasis is on abstract principles, such as sound economic management, deregulation, and privatization.4

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In Japan, too, there are doubts expressed about Japan’s current capacity to adopt a more assertive aid role or, as Asanuma asserts, ‘a more proactive aid policy for the resolution of global economic problems’.5 The International Development Journal suggests that real leadership consists of using aid effectively for a new world, and that serious problems stand in the way of Japan not only increasing its share of the burden, but breaking out of the ‘persecution complex of the nouveau riche’.6 Japanese Government spokesmen speak not in terms of burdensharing or US-Japan partnership, but in terms of increasing Japan’s ‘international contribution’ (kokusai kōken), a concept couched almost entirely in terms of a material contribution to the flows of aid, and to new forms of assistance to meet specific development needs. More recently, this has also included consideration of aid packages to Eastern Europe and the Soviet Union, and assistance in the Gulf Crisis, although financial support to these two regions does not on the whole currently count as ODA. Since the Gulf War of early 1991, Japan has strengthened the emphasis in its foreign policy to one of ‘international contribution’, seeking to show its developed country partners that it is carrying an appropriate burden of responsibility in world affairs. Such contributions are accepted by Japan as having important long-term instrumental benefits to the contributing nation. They can lay the groundwork for future cooperation through new economic structures, new norms and perceptions of Japan. Prime Minister Kaifu attempted to initiate legislation approving Japanese participation in peacekeeping forces, but failed in the attempt. Prime Minister Miyazawa, in his policy address to Parliament in January 1992, tried to confront the expectations held of Japan by others and outlined his agenda for Japan’s role. While it was a predictable and lacklustre performance, the speech itself concentrated on global and regional issues rather than bilateral ones.7 As we have seen in other chapters, a heavy emphasis in aid policy now is on assisting with relief of global problems; Miyazawa reaffirmed these concerns, as did his fiscal 1992 budget announced in January 1992. The headlines ran ‘Emphasis on the economy and international contribution’; even in tough times, commentary pointed out, the biggest increases were in ODA, ‘as a way of replying to expectations of Japan’s international contribution’.8

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Japan’s potential leadership in aid, therefore, is inextricably an element of Japan’s rise as a world power, notably in the global economy. With that status have come changes in Japan’s own estimations of its international role, and expectations that global influence can bring leadership in specific policy areas. This is not necessarily an automatic transition, as we shall explain.9 Whatever the formal stance taken by the government on its aid initiatives, there is no doubt that Japan is in a position to heighten its profile, and its influence, within the international aid community. Japan also regards this as a step towards a more constructive international posture, and one acceptable to its industrial country partners and its domestic polity. The question remains, therefore, as to how this might be effected, and whether it can be done successfully. Japanese aid ‘leadership’, therefore, involves the use of its aid programme to achieve a series of goals linked both to the notion of ‘international contribution’ and to Japan’s own objectives of gaining greater kudos, international acceptability and easier management of its international affairs. Five policy areas suggest themselves as possible foundations for future Japanese aid leadership; • Japanese aid as the prime vehicle for LDC economic development • Japanese aid as a bolster to Western attempts to manage the Third World • Japanese aid as the basis of a global Japanese power shift • Japanese aid as a new agenda for Western donors • Japanese aid as a resource for individual political initiative by Japanese leaders JAPANESE AID AND WORLD DEVELOPMENT With aid disbursements at such a high level, Japan’s impact on economic affairs in the economically less developed countries is undoubtedly significant. According to DAC figures, in 1989 Japan was the largest donor to thirty developing countries, including such nations as Brazil, Nigeria, China, Indonesia and the Philippines.10 For half of those thirty nations, Japan provided over half of all aid

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received and in the case of five (Myanmar, Paraguay, Qatar, Bahrain and Brunei) over three-quarters. In the same year, Japan was second largest donor to twenty-seven countries. Therefore, of the 144 nations to which Japan gave aid in 1989, it was the leading or next-to-leading donor for 40 per cent of them. This gives Japan significant potential leverage over the economic decision-making of those recipients, and on the economic growth potential of regions such as Southeast Asia, East Asia, South Asia and the South Pacific. Yet, is this potential one that is being used, at all or effectively? The consequences of such intensive aid relations are of paramount significance for Japan’s international influence—its scope for impact on recipient nations’ economic welfare and for inducing recipients to follow Japanese economic development strategies as expressed through its aid policies. Aid dominance has important moral spinoffs in changing international regimes. No full-scale study of the development impact of Japan’s aid has been undertaken. We therefore have no reliable assessment of what Japanese aid has been able to achieve in terms of Japan-recipient relations. Evaluation by Japan of its aid projects tells us that they can be highly successful in donor terms, but problems are numerous in ensuring efficient implementation, and the Foreign Ministry evaluation reports highlight numerous recurring project difficulties. It is easy to isolate aid projects and highlight their deficiencies, especially some of the negative impacts on local society (and a lot of newspaper articles and recent books have done just that, as we explained in Chapter 2). Many critics have condemned the Japanese aid programme on the basis of individual project failures and distortion of local development needs through the imposition of inappropriate aid. These findings should not be surprising. Evidence on the effects of foreign aid as a form of resource transfer shows that aid ‘did achieve a modest but palpable redistribution of income between countries… it appears to redistribute from the reasonably well-off in the West to most income groups in the Third World, except the very poorest’. Mosley also found that as an instrument of political leverage, aid was ‘conspicuously unsuccessful’, and likewise as an instrument of export promotion (although Japanese aid was not specifically assessed on this last point). For fostering economic growth itself, aid proved neutral at the global level. Mosley’s blunt conclusion is that ‘the case for

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development aid is that it increases growth rates in some developing countries, improves the living standards of some poor people, and offers the prospect of doing better in future on both counts. That is all.’11 Riddell also sees no ‘automatic…link between aid and development… The evidence of aid in practice remains at present inadequate to provide a certain guide to the relationship.’12 This tenuousness has a number of causes, such as lack of data, problems in relating Western views of development to LDC experience, the limited ability of donors to understand or affect conditions incountry and a fundamentally poor information base available to donor decision-makers. The last is a serious problem in the Japanese case, given the complexity of aid decision-making and the variability of the information about recipients. Cassen, on the other hand, gives a limited endorsement to aid. ‘The majority of aid’, he found, ‘is successful in terms of its own objectives.’ That is, at a very general level it works, but a major proportion does not, and ‘aid has not necessarily gone where it is most effective’.13 Japanese evaluation reports tend to put this sort of message—but in the absence of comprehensive country planning, a higher level of impact from individual projects may be optimistic, if the conclusions of these global studies can be accepted as applying also to Japanese aid. None of them focus in any way on Japanese aid, so we are no wiser about where Japan’s aid fits precisely in the wider global assessment of aid impact. In its official statements, the Japanese Government itself now accepts that the solution to poverty does not lie in trickledown growth, and advocates using aid to attack the problem of poverty directly.14 The MFA states that the elimination of poverty is its primary objective in the aid programme, and says that aid for ‘basic human needs’ comprised 69 per cent of grant aid and 66 per cent of technical aid in 1990.15 However, despite this rhetoric, the bulk of Japan’s bilateral ODA remains loan aid aimed at growth through economic infrastructure and, as the ministry claims, ‘to enhance the recipient’s “self-help” efforts, which are essential for sustainable development’.16 We have seen in the previous chapter that the ‘yen loan contribution’ identified by the OECF consists mainly of the share of infrastructure developments financed by Japan. The assumption persists that

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economic development effects continue to ‘trickle down’ to the poor, and as with the problem of Japan’s aid effects, evidence is thin. One broad semi-official study of Japan’s aid and its development impact has been conducted by the Institute of Developing Economies, although it is indicative rather than conclusive.17 Firm findings on the long-term results of Japanese aid may have to wait until a sufficient body of evaluations and project assessments is available, and the results of the massive aid spending of recent years can themselves be judged. Before we consider the above report, it is worth examining further the findings of the Foreign Ministry’s annual evaluations of 1988, published the following year. The first broad conclusion drawn by the Foreign Ministry is that, despite problems, Japanese aid has made a contribution to ‘economic and social development in, and an increase in living standards of, the recipient countries’.18 This was seen as largely the result of close implementation of the project plans, careful pre-feasibility assessment, aid that was carefully tailored to the conditions being targeted for assistance and the correct mix of types of aid. The evaluations are mainly of individual projects, and thus success or otherwise can be evaluated within a fairly limited set of parameters. Linking results of earlier aid work to assessment of other projects or aid programmes is not a regular feature of the MFA evaluation programme. Broader studies are carried out, however, and in 1988 one comprehensive aid impact study was done of India, examining the agriculture, fertiliser, electric power, oil development, communications, fishing and social environment sectors, from assessments over previous years. The study points out that, because a lot of the aid was targeted at economic infrastructure, and suited the needs of the Indian economy, the ripple effects have been substantial. The report states that ‘It can be concluded that the effects of Japanese economic cooperation were considerable through these ripple effects, and a strong contribution has been made to the Indian economy.’19 This view about the widespread impact of aid accords with the findings of another paper on the macro-economic effects of aid. Hasegawa finds, on the basis of analyses by the International Development Center of Japan of Japanese aid to Bangladesh, Thailand and South Korea, that ‘the most we can conclude from the IDC study is that Japanese aid had at least a positive effect on the recipients’

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macroeconomy’.20 When examining particular projects, Hasegawa argues that Japan’s aid is highly effective in economic terms. One reason for this is Japan’s preference for economically profitable projects as opposed to projects undertaken to promote welfare goals. In addition, relative to aid recipients, Japan has a strong bargaining position which enables it to select highly productive projects.21

This suggests that Japan is less interested in the economic welfare effects at the recipient end than in choosing projects which meet Tokyo administrative criteria, such as projects which take large volumes of funds, can advertise Japan’s presence or can achieve easily measured targets. The above-mentioned report of the Institute of Developing Economies traverses a range of sectors and recipient countries in assessing Japanese aid. Its findings are as follows: • Middle East: difficulties exist in inter-cultural understanding, but Japan’s growing aid profile and the strategic importance of countries like Egypt to Japan have given the infrastructure assistance from Japan great significance. However, there are serious concerns in Egypt about the rigidity of Japanese conditions for its aid. • Africa: Japan is not well known or experienced in the region, and its aid has tended to concentrate on only a few of the more economically significant African nations. Its impact has therefore not been widespread within the continent. • Central and South America: the Japanese aid presence in Central America and the Caribbean has been limited. The economic effects have also been small and it is hoped that the growth in Japanese aid to the region will involve an increase not just in the amount of aid, but also in the variety of aid, especially of projects with broader regional significance and greater cooperation with other donors like the US. For the region more generally, Japan has been a key source of debt relief, apart from the economic development projects, but US-Japan trade difficulties make Japan reluctant to be too forthcoming in trying to solve problems of South American debt which it regards as largely due to US

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banking activities. However, Japanese immigration links to several South American countries make these relationships rather unusual. • China: it is a little early to assess the outcome of Japan’s aid to China, which is fundamentally geared to economic infrastructure programmes. It is more important to look to assisting the areas where China needs most development: export zones, economic infrastructure, steel production, Japanese market liberalisation for Chinese agricultural products. • Thailand: although Japan has been closely involved in the Thai economy for many years, it is extremely difficult to assess the economic impact of Japanese aid on the Thai economy. There are numerous restraints on the ability of the Thais to extract maximum returns from the input of Japanese aid. For example, there are insufficient plans incorporating the real needs of the economy, and limited planning for properly using economic and technical assistance. What is required is greater independence of the Thai economy from reliance on the Japanese economy. • Bangladesh: while aid is given according to local priorities as determined by regular consultations, there is an overemphasis on loans and on the industrial and service sectors. This means that aid is premised mainly on commercial grounds. There are several ways in which this aid can be improved: mediumterm aid planning, concentration on designated sectors, aid to agricultural infrastructure, support for the chemical fertiliser industry, support for local costs, more technical assistance, cooperation in project-finding and regular aid assessment. Japan can also take a lead in assisting in natural disaster relief in Bangladesh. We therefore have a general assessment of the economic impact of Japanese aid, but it is certainly far from complete or conclusive. Indeed, this sort of evidence is anecdotal. It is also significant that after so many years of aid to Thailand, for example, no definitive statement can be made about the economic or welfare effects of Japanese aid to that country. Similarly the data produced by the OECF on the ‘contribution’ (kōkendo) of Japanese loans (cited in Chapter 5) is impressive but does not explain effects. It only recites

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the quantitative outcomes of aid programmes, substantial though they be: for example, the statistic that Japanese loans created 9.3 per cent of Karachi’s electricity supply capacity, and 3.4 per cent of Pakistan’s total capacity, says nothing about the wider macro-economic or other ramifications of that achievement. More critical assessments of the impact of Japanese aid programmes are scathing in their comments on the development effects of aid and the lack of consideration by Japan of recipient needs.22 Recent analysis, however, argues that Japan’s aid has been unquestionably successful in assisting economic development, especially in Asia, because of the growth of the Asian economies resulting from Japanese aid support. ‘On balance’, writes Islam, ‘Japanese aid has been effective in fostering development, as Tokyo has consistently applied this model of development aid’,23 that is the model of aid as a support to self-help on the part of the developing country recipients. No evidence is adduced by Islam to support his conclusion, other than a dubious argument that since Japan’s aid is predicated on self-help by recipients, it has not created aid dependence like US aid and is therefore working in its goal of helping growth. This highlights the question of Japanese development concepts. Can Japan bring a new philosophy of aid and development to the international aid debate? Islam argues, perhaps too boldly, that the Japanese model is the most appropriate and effective approach. Indeed, with Japan’s growing international role, Islam bemoans the fact that the ‘purity of its development assistance’ will be lost: Japan will need to be outspoken in its leadership, and learn how to communicate its philosophy and its ideals. The latter point is certainly valid, but many would disagree about Japan’s aid being ‘pure’. As discussed in Chapter 1, Japan has largely avoided the moral debate on the issue of development impact. Japan has thus had little to offer in the way of an integrated philosophy of aid and development, except the principle that aid can only be forthcoming and effective when it is based on complementary efforts by recipients to improve their economic position. While the place of ‘alleviating poverty’ in the programme has heightened, there has for a long time been only lip-service paid to the traditional canons of the donor approach. Poverty, it has been felt until recently, will necessarily reduce as fundamental economic growth takes place. This model has

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not been tested consistently throughout the Third World, however, and Japan now accepts that problems of growth and poverty need to be tackled simultaneously. Unsupported rhetoric about the economic development benefits of Japanese aid is premature. It is not yet possible for Japan to be a new development vehicle for the Third World because, despite Japan’s large aid flows, just on one-third of bilateral aid went to only three countries in 1990 (Indonesia, China and the Philippines) and just under one-half went to only five countries (the above three plus Thailand and Bangladesh). One-third of all Japanese ODA was spent on these five countries. Given the inflexibilities of the Japanese aid system, the slow adoption of sector and country aid programming and the limited number of staff in the Japanese aid bureaucracy, the prospects for a rapid diversification of types and direction of aid are poor. Japan certainly intends to pay more attention to reducing poverty in the poorest countries, but it will take time before we see a major shift of Japanese aid resources towards that goal. Dismissing criticisms of Japanese aid, as Islam does, on the grounds that aid seeks to achieve economic development, ignores the basic issue of whether such growth and development were achieved, and whether different forms of Japanese aid could have done the job better. For both sides of the debate, there is a need for more evidence. Because Japan may apply more rigidly than the United States the model of aid as a means to support self-help, this does not mean that the model is either correct or always appropriate. It would help to have the Japanese model more seriously tested in the context of recipient growth and development experience. Even an analysis that Japanese and American aid have greatly assisted the Philippines economy points out that the contribution could have been much greater, with improvements to the aid delivery and mechanisms. As pointed out, the effectiveness of a donor’s aid for achieving economic growth and improved economic welfare for the recipient nation depends ultimately on how the recipient uses the aid.24

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JAPANESE AID, THE WESTERN POWERS AND THE THIRD WORLD A further means for Japan to begin to exert some influence in the area of aid policy concerns the broader strategic use to which Japan puts its aid, in managing its international relations, particularly with the Third World. Japan’s use of aid as a foreign policy tool—its ‘strategic aid’—is well documented.25 There is no doubt that Japan sees this as an important and necessary part of its aid mission, but we cannot expect a major change in the alliance profile of Japan. The 1991 Gulf War revealed serious limitations in Japan’s capacity to contribute to the alliance system, and sharp divisions between government and opposition as well as within the government party itself. Such decision-making paralysis indicates that it will be some time yet before a national consensus on Japan’s power profile can be achieved. There has been some strengthening of the political uses of aid. Assistance to Eastern Europe is termed minshuka shien, or assistance for democratisation, which is clearly aimed at rewarding those nations that ‘adopt freedom and democracy as a fundamental value’.26 This does not yet mean, however, that aid is withheld from countries not holding to these principles, although the Japanese Prime Minister has proposed that aid be limited towards countries exporting or spending excessively on arms. This suggestion was opposed by government officials on the grounds that it would lead to a reduction in aid expenditure, but it reveals that at least there is a debate about the direct political effects of aid. Hints have been dropped about applying the principles to Indonesia and Myanmar although, as we have seen in earlier chapters, they are unlikely to be used rigorously if at all. Reaching its aid targets and ensuring continued delivery of bilateral commitments remain more important for Japan. While there is now a publicly acknowledged basis for applying political principles to aid-giving, there is no agreed formula as yet for how this might be put into practice more widely. Japan has tended to follow the lead of the United States in giving strategic aid, except in so far as Japan itself has used comprehensive security as a rationale for aid priorities. If there is a political rationale for aid, this is it; but it

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is not one that advances Japan’s status amongst its Western partners per se. Dennis Yasutomo has identified four primary politico-strategic uses of Japan’s ODA: burden-sharing, preventive assistance, positive sanction and negative sanction.27 When applied to issues of leadership, we need to ask whether they can involve Japan as ‘Third World manager’ on behalf of the Western nations. Yasutomo has specified where these uses have been applied, notably in shoring up governments such as the Philippines as a preventive measure, and more recently supporting the concerted approach to aid to Eastern Europe reconstruction. Positive sanctions have been more widely applied, such as aid to the South Pacific to balance the region’s growing Soviet contacts, aid to the Middle East in the 1970s and support for the ‘democratisation’ of Eastern Europe. Negative sanctions are best known towards Myanmar and later China after the Tienanmen incident (although there is a question about how serious these latter sanctions on China were). Inada Jūichi has analysed Japan’s aid to the Philippines, and concludes that Japan is taking over from the United States the role of supporting that country’s economic and political stability, using its assistance (albeit in a different way from the US) to ensure ongoing security in the Southeast Asian region, Security for the Japanese in this sense involves both a military dimension (and the question of political instability in the Philippines), and economic security, to avoid serious economic breakdown in that economy. Japan, according to Inada, has the power in its aid policy to influence the direction of the Philippines political economy; he suggests that ‘Japan’s giving ODA to the developing countries has the effect of creating in the Third World political and economic systems that Japan finds easy to operate.’28 What determines how Japan uses aid to manage Third World affairs? There are several factors at work here. First, and most often discussed, is the issue of pressure from the United States for Japan to act on behalf of other Western countries, particularly as US involvement reduces in some countries (such as the Philippines). Robert Orr has analysed this issue most thoroughly and has shown how, under some US urging, Japan has come to use ODA spending as a means of contributing to the wider Western burden-sharing on

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security.29 Yet Japan has not been without its own agenda in this regard, as Yasutomo and Inada point out. It has its own desire to be seen to play a constructive role globally, partly because of the complex political ramifications of its trade success. Irrespective of this domestic priority, however, American pressure has been a major factor in Japan’s involvement in Third World diplomacy. A second factor relates to the structure of the aid relationship, or the ‘aid interdependence’ that Japan maintains with the particular developing countries. Here we need to examine the aid profile of the relationship, the way in which the country depends on Japan for its aid, and the place that the country holds within Japan’s overall aid programme. The potential for Japanese influence will clearly be greater where there is heavy dependence on its aid, such as in the case of Myanmar, or the Philippines. This factor is likely to be the most telling in a Japanese decision to use its aid in bilateral or multilateral management. At the same time, as Cassen and others suggest, a close and even dependent aid relationship does not necessarily mean an easy or close political relationship.30 The example of both Myanmar and the Philippines again applies here, as cases where application of pressures for reform do not easily translate into action. The political principles for determining aid, detailed in the Foreign Ministry’s 1991 aid report, now provide a firm policy base for management of aid for political purposes. While it is too early to judge whether or not they will play a part in Japan’s Third World diplomacy, a clearly articulated basis is there. Third, related to aid interdependence, are the broader economic relations between Japan and the developing country, including trade and-investment, the country’s ability to supply Japan with needed resources and the level of general Japanese business infrastructure and interests in the recipient economy. Some countries like the Philippines have extensive Japanese business networks and a Japanese community which can be a potent influence on the question of what aid is supposed to achieve. Indeed, part of the reason for the cumulative concentration of Japanese aid in Asia is linked to the closeness of Japan’s economic ties (both private and official) with the region. Asanuma Shinji, for example, has argued that Japan’s aid policy is ‘passive and reactive’, that it has followed business, and has not been commercial in its primary objective:

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this course of development explains the geographic pattern of Japan’s foreign aid activities. The key is the nature and level of preexisting trading and investment activities between the recipient country and Japan. It is thus not surprising that initially East Asian countries and subsequently South Asian countries were major recipients of Japan’s foreign aid, while South American countries became significant recipients only later, and African countries were left out until fairly recently. One might postulate that the magnitude of Japan’s aid is a rather simple function of composite volume of exports, imports and investments. The picture is one of a series of concentric waves of trading, investment and aid activities spreading through the Third World as Japan’s economic power in the world economy has grown.31

Such arguments are themselves in danger of becoming oversimplified. As we have seen in this book, the political and administrative context of aid is a complex one. Aid decisions are not made in a political vacuum and arguably have never been. Fourth are historical and cultural ties and the extent to which a country features in the Japanese view of its international responsibilities. For Peru, a significant proportion of second and third generation descendants of Japanese immigrants in the population, and the election of a President with Japanese ancestry, did not lead immediately to large-scale Japanese support for Peruvian requests for aid.32 Nevertheless, long-standing ties with several Southeast and East Asian countries have allowed close Japanese relations with the leaders of those countries for over thirty years, aided undoubtedly by geographical proximity. We are talking about political linkages, not just trade and investment ties. Indonesia is one of the best examples in this regard. Fifth, kudos ranks as important for Japan in the way it deals with the Third World. Japan’s ‘friends with all’ approach to its postwar international relations has involved a strong priority on maintaining its good name and reputation worldwide. This has been, indeed, one of the major reasons for the rapid growth of the aid programme, and the heavy emphasis given now to Third World relations within Japanese diplomacy. Japan regards kudos as coming more from the aid profile itself, and from the importance of Japan as a donor to the country in question, rather than from Japan’s overt manipulation of

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aid for strategic purposes; not (with apologies to Yasutomo) from the manner of giving, but from the giving itself. This approach has reinforced the tendency to focus on quantity over quality. Sixth is the question of the overall power balance (or imbalance) between Japan and the recipient country. Put bluntly, Japan regards some countries as easier to influence than others, for a variety of reasons. Japan’s role in the South Pacific, for example, shows a capacity to achieve dominance not just in aid flows but in the totality of relations. Japan’s objective of building on its cultural, historical and geographical ties to the Pacific is clearly stated. As in Southeast Asia, Japan’s presence looms as a central feature of economic development strategies, and of economic policy generally. This will create even greater expectations of Japan’s capacity and willingness to involve itself in regional issues and, as an aid donor of enormous reach in the South Pacific region, Japan will find it impossible to isolate its aid impact from wider economic and political problems. But this is part of its Third World management task. All of the above factors are clearly important in Japanese decisions about the management of aid relations and the imposition of Japanese policies on recipients. In the case of policy towards ASEAN, external pressure from the United States has clearly been less important than a combination of bilateral historical, economic and security factors. With China, history, kudos and resources have all been vital, while the South Pacific linkage has derived from some US pressure initially, but also from a Japanese desire for status and resources and a clear opening for Japan to exert some of its own influence in a region in which other major donors had little, or declining, interest.33 The Japanese role as an economic influence over much of the Third World has a long history, although for most of that period it has had a purely bilateral significance. Its role in this area as a major power with global interests seeking to manage affairs at regional or sub-regional level is both relatively recent and relatively undeveloped. Some at home urge Japan to move rapidly to take up a ‘peace offensive’, but even the aid aspects of this sort of proposal rely on government aid for infrastructure development as a basis for long-term, stable economic growth. Domestic pressures to reform the Foreign Ministry’s capacity to deal with fast-moving international issues are not going smoothly. Others see a Japanese management role coming by default, especially close to home:

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Japan is quite active now on the Asian scene, particularly with regard to the Cambodian peace settlement and initiating talks with North Korea. Mr Kaifu also visited Mongolia earlier this year to demonstrate Japan’s concern for its regional neighbours. This will happen more as the United States adopts a lower profile in Asia. Washington probably will continue to go out front on international trade and international financial issues, and Japan may find it easier to fill US shoes in Asia.34

For these reasons, therefore, we are only beginning to see Japanese activity in Third World management for purposes of global system maintenance. It is as yet unsophisticated, springing more from a desire to manage its own aid programmes and bilateral or regional ties, than from a strategic view of its global responsibilities or a measured philosophy of a preferred world order of which developing countries are an integral part. There are signs that this ideology is forming, but it is yet to be shown to be broadly supported or acceptable to the wider public in Japan.

AID AND JAPAN’S GLOBAL POLITICAL ROLE: A GLOBAL POWER SHIFT? Japan does recognise the link between its aid-giving and its foreign policy role worldwide. Its 1990 aid report stated quite bluntly that aid is a key factor in Japan’s bilateral relationships, an important influence in international relations and central to changes in the international economic power structure.35 It is at the bilateral and regional level that Japan has used aid to carve out a distinctive place in world affairs. Japan’s aid has been an important foreign policy tool for over thirty years, although the perception of aid as a ‘tool’ is a recent phenomenon resulting from Japan’s more active world role in economic cooperation. Statistics on the regional distribution of aid show conclusively that aid has been used to develop close economic and political relationships with South and Southeast Asia, particularly the latter, and especially the states that formed ASEAN in the late 1960s. A similar process is now being repeated with China, although

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it has not been as easy for Japan to establish a dominant position in that bilateral context. The benefits to Japan relate to one of the prime motives for Japanese aid-giving—enhancement of Japanese security, especially its economic aspects. At the same time, close aid relations with Southeast Asian countries have helped build a climate of cooperative diplomacy, conducive to smoother business relations. Japan has always regarded peace and prosperity in Southeast Asia as fundamental to a stable Japanese foreign policy, and as a pre-requisite for Japanese security. Some argue that aid is a helpful alternative to a Japanese military presence in the region. But it does not replace the military option, since the latter has never been a real consideration for Japan, not even now (despite a passive military presence as part of Gulf minesweeping operations and Japanese Government approval of a restricted Japanese role in UN peacekeeping operations). A Japanese military role in the Asian Pacific region, for example, could never have provided the benefits to Japan that have flowed from its aid. The relationship with China could have burgeoned only through aid, trade and investment. The relationship with the Commonwealth of Independent States, especially Russia, may yet flourish through economic cooperation, even though Japan remains wedded to a firm stance on the Northern Islands (one of Japan’s very few nonnegotiable diplomatic positions). More than just supporting bilateral ties, aid underpins Japan’s ‘peaceful’ diplomacy. It gives power and prestige in the major international forums and financial institutions, casts Japan in the role of the beneficent power and helps alleviate suspicion and mistrust in international trade. It also has important domestic advantages: it appeals, as Yasutomo points out,36 to those two main themes of the Japanese mass media—internationalisation and the new nationalism. It shows the Japanese people that their country is indeed a major player on the world scene fulfilling its international responsibilities, and doing well as a result: ‘Japan as top donor’ is a common headline. As an arm of national policy, aid is therefore successful and extremely flexible. It has helped Japan to a position of economic dominance and political eminence in Southeast Asia (and it is heading that way in the South Pacific and perhaps South Asia). It has helped

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smooth some of the tensions in relations with the United States, provided Japan with a next-to-leading place in multilateral banks and financial institutions and given Japan some purchase in dealing with Middle Eastern, Latin American and African nations. However, because aid has not yet been used widely by Japan as a means of political bargaining or diplomatic coercion (except in the broadest sense), we cannot yet say that it has made Japan a major player in global politics. An interesting phenomenon in this context is the issue of rising expectations amongst the Japanese public and denoting of ‘leader by acclaim’, the demands in the domestic press and public forums on Japan for ‘leadership’ because of its ‘top donor’ status. The power shift in the aid table (although in fact it is a very minor shift which in 1990 reverted to the earlier pattern of Japan as ‘number two donor’) prompts calls at home and overseas for Japan to assume its rightful and expected level of responsibility as a leading nation. One of the most articulate expressions of this new place for Japanese diplomacy is by Saitō Shirō, although there is an air of scepticism and resignation about his statement of the problem: there is a growing demand for Japan, as the world’s largest creditor nation, with a huge balance of payments surplus, to play a more prominent role in international affairs. Some Japanese now argue that the relative decline of US hegemony offers Japan new opportunities in the management of global issues. Yet, for Japan, which has gained a pre-eminent status within a relatively short period, it is still hard to conceive of exerting real international political leadership. Even so, Japan has reached the summit and must behave accordingly.37

Saitō sees the way forward for Japan being the establishment of ‘a new world power centre based upon rapid economic growth in the countries of the western rim of the Pacific’.38 While this is appropriate in relation to some aspects of Japan’s aid programme, it would reinforce trends in aid disbursement and programming which the Japanese have been trying to lessen in recent years (see Chapters 4 and 5), notably the heavy concentration of aid flows on Southeast Asia and on loans for economic infrastructure. More appropriate would be a power centre based on programmes and policies of aid, rather than on a limited

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geographical area. Expectations of Japanese aid in Africa, the Middle East and the Americas are also high; the scope for Japanese diplomatic initiative through its aid and economic cooperation is considerable, and does not rely on a Japanese-dominated system in the Western Pacific. It relies rather on a Japanese capacity for making its policies both relevant and creative in solving the problems of development in a global context. Despite legislative approval in June 1992 for Japan to assist United Nations peacekeeping operations, and the despatch of Japanese troops to Cambodia in September, the Japanese Government was still wavering about what its best options for a broader international contribution should be, and how aid might fit in. For example, as an alternative to Japanese peace-keeping forces, political leaders proposed in December 1991 that a new tax could raise massive funds for international activities, including relief operations, emergencies and aid. It had the potential to provide a major source of revenue for Japanese initiatives and international collaboration. Again, however, the proposal was hastily thought out, hitched on to the kokusai kōken banner for political persuasiveness, and failed to get approval. Opposition from business and some government leaders led to its being dropped only a few days after being proposed. Criticised as more money diplomacy, and a cynical way of gaining extra tax revenue,39 it was no answer to the dilemma of how Japan should contribute. It did not resolve the matter of a viable leadership role for Japan—that is still unresolved, although perhaps the lack of public consensus about Japan’s best course of action may lead by default to a continuing emphasis, fuelled by burgeoning aid budgets and growing demands for aid funds, on yen diplomacy.

JAPAN AND A NEW INTERNATIONAL AID AGENDA Japan’s having become the top aid donor in the OECD has important potential implications for the international aid debate. Traditionally, the United States and European donors have dominated the Development Assistance Committee, the aid donor group within the OECD. There is, as yet, no evidence that this has changed, but we have seen strong and successful Japanese demands for greater

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influence in the World Bank and the IMF, and some examples of a confident performance by Japanese representatives in discussing global aid cooperation.40 A firmer Japanese leadership position in the DAC would require demonstration of a Japanese commitment to the dominant ‘Eurocentric’ notions of the purposes of foreign aid, and the broad ‘development first’ philosophy that has traditionally emanated from the DAC, plus some effective persuasion of other DAC members about the merits of the Japanese philosophy of aid. There are signs that Japan may be moving towards incorporating in its aid programme more emphasis on ‘development issues’, including social development and poverty, alongside the economic aspects. There is, however, no strong evidence that the Japanese are negotiating new international positions on these problems. A major emphasis in Japan’s 1990 and 1991 aid reports is on new policy directions of the 1990s, and here Japan shows it is trying to grapple with the global aid agenda—poverty, global problems and recipient infrastructure. The reports explain that the new approach to poverty will focus on basic education and technical and work training. It is planning to cooperate closely with Japanese NGOs in this strategy in order to reach a more ‘grass-roots’ level. Allied with this will be greater efforts in health and welfare aid, emergency disaster relief and assistance to refugees (although Japan has not shown a particularly committed approach to refugees in the past, compared to some other countries).41 Japan’s attack on global issues includes aid to alleviate environmental, drug and population problems. Japan already has a substantial programme for environmental aid, discussed in Chapter 4. This will continue to grow and, in volume terms at least, will come to represent one of the main contributions amongst DAC members in this area. Japan has begun programmes to support women in development (WID) policies, and has also been active with massive commitments to international debt relief measures. These initiatives do not, however, add up to anything like a leadership status in defining a new international aid agenda. Japan will need to reveal a stronger commitment to improved aid quality, although that seems an unlikely prospect in the near future given the ongoing emphasis on loans in the bilateral aid programme. With its highly instrumentalist philosophy of aid, Japan is not regarded as able to change quickly or easily to an approach oriented towards

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broad conceptions of development. While a party to the DAC’s 1989 statement on development cooperation in the 1990s, Japan’s aid philosophy and practical approach are still a long way from the prevailing mood within the DAC. There may be some convergence in this respect, however, as Japan’s programme reflects more internationalist objectives and the DAC lays greater emphasis on recipient ‘self-reliance’. The 1991 Aid Review of Japan undertaken by the Development Assistance Committee was generally favourable and supportive of Japan’s growing disbursement of ODA, but it focused on the quality aspects of Japanese aid as needing improvement (specifically the ratio of ODA/GNP, and the poor performance on grant element and share of grants in ODA). It also highlighted the need for Japan to do more with its aid in the areas of population control, women in development issues and further untying and in building up its administrative capacity to manage the aid programme.42 This was generally a rather mild assessment of the Japanese aid programme. A significant problem, however, is the role of Japan within the DAC itself, and Japan’s part in the development of DAC policy. Unlike Japan’s role in some other international organisations, such as the ADB, Japan is less prominent in the DAC and tends not to take a high profile in policy discussions. As in other forums, tensions remain between European representatives (who have a strong presence in the DAC and its Paris headquarters) and those of Japan.43 The Japanese Memorandum for the 1991 DAC Review was itself a spare and uninformative document in comparison to past papers, although the Aid Review process now includes visits to donor capitals and some recipient countries as part of the investigations. However, it is possible that Japan will be able to affect donor’s thinking about the type of return they might expect from aid-giving. This will not take the form of lower aid quality from the DAC, since the European nations take pride in their high grant element as contrasted with Japan. But Japan’s view about the need for donor ‘self-help’ and policy responsibility is strongly held, and the translation of this into a stricter regime of project assessment and sectoral targeting may result. As discussed above, recent thinking in the United States supports this approach, and there are indications of wider acceptance of

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Japanese-style aid objectives. Japanese-led debate at the World Bank about the value of donor intervention in economic development also exemplifies heightened Japanese policy profiles in such agencies.44 The December 1991 DAC High Level Meeting emphasised the need for more resources, both public and private, to be mobilised for development. The press release stated that ‘developing countries should create a favourable environment in order to attract private investment as a growing contribution to their external resources. They will also have to strengthen their own efforts at mobilising their national resources and using them more effectively.’45 This statement was taken up in Japan as support for a Japanese style of aid-giving, interpreting the DAC call for ‘consistency’ in aid policy as a rejection of the view that only ODA can bring about development, and that aid, trade and investment are linked. The editorial in the International Development Journal goes on: This [important role of private resources] has had one obvious success, symbolised in the NIEs through the past concentration of our ODA on the Southeast Asian region. Europe has experienced stagnation and confusion in Africa, and has thus turned to look at Japanese-style aid in the distant Far East, hoping to shake off their setbacks (perhaps they are trying to increase their dependence on Japan by a type of ‘escape’ from aiding Africa). Europe has criticised the emphasis on ‘lending’ and ‘self-help’ in Japan’s yen loans as ‘an excuse for commercial aid’, but they now seem to want to hear more about Japan’s self-help theories.46

Japan also prides itself on its good performance in untying aid, and may be able to encourage other donors to do likewise. This may be resisted by them as a commercial ploy to give Japanese companies greater access to other donors’ aid contracts, and because tying aid to purchases from the donor is one of the few ways in which donors can reduce the economic cost of aid-giving to their economy, an important consideration during global recession. However, it is not clear what percentage of the value of Japanese ODA is untied (as opposed to the percentage of the number of loans or grants), and

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what percentage of the value of ODA is successfully tendered for by Japanese companies.

JAPANESE AID AND POLITICAL INITIATIVE While generally we are concerned here with Japan’s capacity for leadership through its aid policy, aid has always been used by Japanese political leaders as a means to project themselves, and by extension Japan itself, as examples of vision, initiative and compassion. The history of Japanese aid is in many ways a history of prime ministerial announcements on aid, of gift-giving diplomacy, the official tour and grand speeches, the trappings of power, success and munificence. Japan’s postwar diplomacy, notably but not only in Asia, has been expressed through individual initiative at prime ministerial level, with leaders identifying themselves closely with bilateral and sometimes regional proposals for cooperation. More recently this has been articulated through Japan’s global initiatives on aid, but these have still been identified with individual prime ministers. The first postwar Japanese Prime Minister, Yoshida Shigeru, gave more attention to the US connection, but did recognise the importance of the aid issue. He initiated the reparations agreements, set up the Export-Import Bank, took Japan into the Colombo Plan and thereby began the return to Asia. It was Kishi Nobusuke in the late 1950s who began to stamp the prime ministerial seal on aid proposals, with his tours of Southeast Asia, his Southeast Asia Development Fund idea, the inauguration of the yen loan programme, and his close personal involvement with the reparations agreement with Indonesia.47 Prime Minister Ikeda gave ‘relatively less attention’ to relations with Asia than to those with the US and Europe.48 None the less, during his period in office Japan joined the OECD’s Development Assistance Committee and established the Overseas Economic Cooperation Fund and the Overseas Technical Cooperation Agency. However, Ikeda was astute enough to recognise the potential for Japan to be vulnerable in its relations with the developing countries, and was decisive in forcing a switch in the Japanese approach to

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UNCTAD I in 1964, after Japan’s initial presentation received strong criticism from the LDCs. He persuaded reluctant colleagues to be more ‘forward looking’ and to accept the need for better trade access to Japan for LDC exports, and a commitment to aim for giving one per cent of GNP as aid.49 Although Japan’s aid programme grew rapidly in the latter half of the 1960s, Prime Minister Satō was largely preoccupied with other matters, notably the United States, China and the Vietnam problem. But these issues still had Asian implications and Satō saw economic cooperation as vital to the security of Western interests. Thus Satō oversaw the establishment of the Asian Development Bank, the settlement of relations with South Korea and the establishment of a major aid programme to that country. Similarly, Japan was active in the international moves to stabilise the Indonesian economy, and was a major part of the IGGI process, using the OECF as the main conduit for aid funds to that country. Aid to South Vietnam was also important. The identification of Japanese political leaders with economic cooperation initiatives came to the fore after the Tanaka visit to Southeast Asia in 1974, and the strong reaction from Thailand and Indonesia over the Japanese economic presence in their countries. Tanaka had come bearing gifts, but neither he nor his gifts were welcome. We see from that point onwards, as Japanese aid becomes more focussed as a central element of Japanese foreign policy, a closer identification of initiatives with individual leaders. During his visit to ASEAN in August 1977, Mr Fukuda launched his policy of ‘heart-to-heart diplomacy’, promising a total of Y407,804 million to ASEAN projects and the member countries themselves.50 The Fukuda Doctrine, as it became known, was Japan’s most significant statement on regional relations until then, and marked a high point in prime ministerial aid diplomacy.51 Other leaders followed with slogans and promises, but Fukuda was again a pioneer here, by announcing Japan’s first aid expansion plan in May 1977, promising to double ODA within five years. Fukuda had earlier made an impression when he had been Finance Minister in April 1969 when he forecast a doubling of Japan’s aid to Asia within five years. The 1977 commitment was reiterated at the US-Japan Summit in July 1978, becoming the First Medium-Term

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Aid Expansion Plan, with a shortening of the achievement period from the five years promised in 1977 to three years. The aid expansion plans have been important focuses for Japanese leaders in their attempts to allay world concerns about the level of Japan’s commitment to its international contribution. Prime Ministers Suzuki, Nakasone, Takeshita and Kaifu have all benefited from their renewal of the aid doubling pledge. Ōhira gave more attention to the specific regional manifestation of Japanese economic cooperation, the Pacific cooperation initiative, which received widespread support at the time. His successor, Suzuki, promoted a ‘Suzuki Doctrine’ for ASEAN, but with little success, although ASEAN remained the focus of aid policy for both him and Nakasone, who followed in the premiership.52 Under Nakasone, we see a stronger commitment to the use of aid as a means for Japan to support Western alliance objectives, particularly in strategic terms. However, Takeshita took a stronger line that emphasised Japanese goals specifically, in announcing his ‘International Cooperation Initiative’ in May 1988. This included the expansion of ODA, alongside promotion of peace and cultural exchange, and gave the Prime Minister a useful policy platform for highlighting Japan’s global role. Coupled with promises to expand its aid disbursement, including a major programme for funds recycling, aid has recently become the major item for specific and identifiable Japanese commitments to international cooperation. Prime Ministers Kaifu and Miyazawa are rather less blessed, for they took up the position as expectations rose that Japan could and would be able to define a clear-cut role for itself. Kaifu laid down the political principles referred to earlier, and Miyazawa sought a meaningful ‘international contribution’. Kaifu used aid as an effective means of national and self-promotion and of building a political profile, notably in his resumption of aid to China. Miyazawa has promoted aid energetically, particularly as part of Japan’s global environmental policy. As a political resource, aid has been a domestic political bonus for Japanese leaders, not a vote-winner (nor a vote-loser) but good for an internationalist profile and (at least until the late 1980s) a sympathetic press. It has made Japanese prime ministers popular overseas, for Japan has been able to promise far more aid than any other countries. This has recently been a useful offset to the disappointing Japanese

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announcements on its physical contribution to the Gulf coalition, and its promises to assist Eastern European reconstruction, which have been made as part of a concerted Western effort. It is in global aid commitments that Japan has been able to stand out from the rest of its industrialised peers, and these have given Japanese prime ministers the platform for international respect and prestige that they have always sought, their trademark of statesmanship and, therefore, Japan’s enhanced reputation.

AN AID LEADERSHIP ROLE? Japan is not leaping into leadership, at least on the aid-related criteria discussed above, although it has settled into a comfortable place at or near the top of the aid table. To begin with, there is no solid evidence of a new Japanese approach or agenda for attacking global poverty and development, but Japan is none the less active in the international aid debate. If one takes a cynical view, Japan can be seen to have merely benefited from a favourable exchange rate to achieve the status of top (or next-to-top) aid donor. The effect of this has been a marked increase in Japanese efforts to explain or redefine Japan’s aid philosophy, but this has come alongside greatly enlarged disbursements, not a new approach to the problems of development. Japan could again reach the status of ‘top donor’ through a strong push to expand its aid quantity (especially in aiming for its Fourth Aid Target), rather than through a push for greater aid quality or through a demonstrated contribution to economic welfare at the recipient level. In terms of using aid as a means for managing the Third World, Japan has only begun to take on this role, although it has long recognised its economic impact on many Asian nations. It can be expected that significant changes will occur in Japan’s capacity and willingness to exert its influence over developing countries in the near future. The signs are there for a more creative Japanese contribution to international debate on global issues, as in Japanese expressions of support for Indochina’s rehabilitation. It is this aspect of the use of aid that is the most likely to give Japan the scope for leadership that other countries (notably the United States) seem to expect of it.

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Japanese policy over aid to Indochina, Myanmar the Philippines and the South Pacific will be an important litmus test of Japan’s capacity to direct the course of economic development, and social and political change, in the developing world over the coming decade. Such policy action in the use of its aid will also indicate Japan’s willingness to use its aid more creatively as a diplomatic tool. While Japan is not yet in a position, either pragmatically or morally, to be negotiating a new international aid agenda through the DAC (it still lacks firm legitimacy as an agenda-setter in that forum), it can take a higher profile in the international debate on aid and can be more active in improving its own standing within the Third World. It is certainly beginning to argue more firmly the benefits of the Japanese aid and development models. This may mean that Japanese leaders continue to use the aid card as a major form of individual projection as leaders, but real Japanese leadership in aid requires some consistency across aid policy, an ongoing ‘entrepreneurial’ role for Japan in influencing international aid policy and acceptance of Japanese initiatives by other donors and recipients alike. It is thus too early for Japan to have created for itself an identifiable global aid leadership role, although Japan’s eventual leading donor status has been forecast for several years. Japan’s approach will simply be to maintain its current directions—a central place for aid in managing bilateral relationships, as a cornerstone of its negotiating a greater say in international financial institutions, and as a response to the attack on global problems with a steadily increasing emphasis on poverty in the developing countries. As a supporter of Western global objectives, Japan’s incipient leadership in foreign aid can be seen to be complementary to that of the United States. The extent to which Japan’s strategic aid decisions grow in international importance can be a measure of Japan’s acceptance of global political responsibilities. There is still a major contribution for Japan to make regionally; indeed, it will be expected to make it. Its Asian Pacific economic impact will not diminish—rather, it is likely to grow and extend into new areas such as Indochina, and perhaps the Soviet Far East in time. The burdens of leadership in supporting regional development will also involve greater political tasks—seen already in Myanmar and the Philippines.

Japan and Foreign aid Leadership  189

Japan’s quest for leadership in foreign aid is neither high-profile nor aggressive. We are yet to see a coordinated push at a global level for a new Japanese approach to aid. Regional economic dominance and global hesitancy are likely to continue, as are the problems at home in clarifying a consistent and unified approach to aid policy. The aid management system is a constant reminder that one of the greatest obstacles to more effective Japanese aid leadership is a domestic political and administrative labyrinth that can only be reformed by the Japanese themselves.

Conclusion

This book began with questions about how Japan is coping with the challenge of changing demands on its aid programme. The central theme developed through the book has been that, despite widespread reform at the policy level, it has been difficult for Japan to provide a consistent, national response to international pressures on its aid, because of administrative complexities, lack of political commitments and existing policy rigidities. More than that, Japan’s aid policy remains largely reactive to those external pressures because of disaggregated administrative structures and lack of political focus. Thus a concerted Japanese push for leadership in global aid is not yet evident, although Japan is working intensively to improve its aid, to strengthen its position in multilateral aid forums and in the Asian region and to gain wider acceptance of its aid philosophy and policies. The aid challenge at home is being confronted, but the challenge of Japan’s aid leadership remains. Thus, Japan’s initiatives of mid-1992 include pledges of US$800 million in assistance for Cambodian reconstruction and of 900–1,000 billion yen over the next five years for environmental aid. In addition, provisional figures for 1991 aid disbursement make Japan again the top donor, with expenditure of US$10.95 billion in ODA. The Japanese Government has also announced a new ‘aid charter’, a set of aid-giving principles that make the environment a primary criterion in future aid decisions.

190 

Conclusion  191

The evidence about Japan’s aid policy and programmes points directly to, on the one hand, steady but incremental adjustments to the content and delivery of aid in line with domestic and overseas comment and criticism, and to Japan’s own changing aid objectives and aid thinking. On the other hand, we also see a hardening of attitudes within official circles about the appropriateness for other donors of the ‘Japanese model’ of ODA policy and practice. Thus the hearty defence of the Japanese aid philosophy and the aggressive promotion of the ‘self-help’ approach to development represent a distinctive assertion of Japan’s own special donor circumstances, demonstrating the importance of security considerations in aid programmes, and the acceptance of a more targeted, interventionist style of aid management. It is too early to point to a ‘convergence’ of Western and Japanese ideas about the meaning and purposes of aid, even though some Japanese are keen to detect Western support for Japanese approaches. As Japan’s role in the international financial institutions and multilateral agencies (including the DAC) grows, the possibility for some convergence grows as well. The much more forthright, even tough, articulation of the ‘Japanese’ aid philosophy is partly a response to constant criticism of the Japanese aid programme both at home and abroad. The initial Japanese reaction, that of increasing the amount of their aid to record levels, was also attacked, since major improvements to the quality of ODA were difficult given the loans emphasis of the aid programme, and the ideology of reciprocity built into the aid system from its early years. As we have seen, the aid programme has been an easy target for criticism, and has been given little room to build a solid defensive position, other than a renewed attempt to lay down clearer principles for the management of aid. The Kaifu statement on political criteria for aid, however, has created a longer-term problem for Japan; the more transparent the standard, the easier to judge its implementation, and the new human rights standards of aid-giving have already been determined by the Japanese Government not to apply to its aid to Indonesia. These factors all reinforce the conclusion that, while Japan has been far more activist, even aggressive, in justifying its approach to aid, and in spending much more aid money, this has not yet dispelled doubts about Japanese motives or its aid practices. Reform and innovation in policy have not moved as fast as changes to the public presentation of

192  Conclusion

its policies, or the pace of growing domestic criticism of Japan’s aid. Reforms in policy are certainly evident, despite some difficult areas such as grant aid or Japan’s multilateral aid. Change is slow, but is taking place none the less; the direction of change, however, is still not uniform. The future role of NGOs in Japanese aid, for example, represents an interesting problem of how to manage greater public participation in the aid process—how to integrate into aid delivery an ever-increasing number of small, disparate and inexperienced aid groups, representing concerned popular attitudes to the problems of world poverty and development, but largely cut off from the ethic of charity that originally drove Western NGOs along a path largely independent of governments. In Japan, the government seems more intent on moulding the NGO system into an arm of the official aid system, itself already complex enough. The steady but still slow pace of policy change highlights problems of administrative organisation in the Japanese aid system. Administrative reform in the aid area faces substantial barriers at both bureaucratic and political levels, and inertia is a major factor in whether reform is possible. Our proposal for a consultative system for managing aid policy builds on the strengths of the existing system (notably the strong concentration of budgetary resources in a few central ministries). The proposal accepts the need to have more welldefined paths of political responsibility, and to focus more sharply the over-diverse programmes currently being operated by many ministries and agencies. Until this occurs, the government’s exhortations about improved policies and better quality aid will be heavily sifted and filtered before they get to the point of implementation. The Japanese Cabinet has already given attention to some matters of administrative reform in aid, opening a window of possibility for real system change, but without confronting the major issue of overall political responsibility and administrative coordination. Even the annual report on ODA by the Foreign Ministry remains, in the end, only a Foreign Ministry document with the policy directions presented therein an influential statement of one aspect of government policy, but by no means an agreed position. The Foreign Ministry is neither the sole arbiter of, nor the sole authority in, Japanese foreign aid policy, and is unlikely ever to be. Despite the complex, even confusing, network of aid administration, we have seen that innovation at the working level of policy is under

Conclusion  193

way. The most notable features of this process are the attempts by the implementing agencies to come to terms with the demands from recipients, adjusting programmes to suit individual development needs. The professional aid agencies, JICA and the OECF, are all too aware of the inadequacies of some of their programmes in coping with the needs of recipients. From the political level have come grander visions of attaching political conditions to the approval of aid requests, but these will be observed rarely, if ever. From the working level have come far more relevant reforms such as the emphasis on new types of grants and loans, better linking of grant and technical aid, giving JICA more of the routine tasks of implementing grants, working more closely with recipients in planning aid and evaluating past programmes. The overall thrust of these incremental improvements is towards a more interventionist approach to Japanese aid, where the traditional ‘request first’ principle is being overtaken by more careful consultation between donor and recipient, more official Japanese involvement in setting aid programmes for specific recipient conditions, to ensure the delivery of appropriate assistance. The bevy of examples of wasted aid, poorly delivered projects and mismanaged programmes given to us in the many critical accounts of Japanese foreign aid have undoubtedly inspired the Japanese aid system to reassess some of its fundamental methods and practices. Yet, without effective administrative reform in aid, more effective internal, inter-agency improvements may not be possible. In the end, it requires political commitments to higher-quality aid programmes (such as in the December 1991 Cabinet decisions on administrative reform in aid), but also effective follow-through at ministerial level to ensure that such reforms are completed. It is in this area that the Japanese system remains weak, because of the instability of ministerial tenure and the short life of Japanese Cabinets. The consequences of failing to achieve reform of the Japanese aid system are serious. One result is likely to be the existence of a huge but ill-directed aid programme with no effective political guidance and an agenda set by competing ministries. Japan would be likely to dominate the economic policy of a large number of LDCs, again without ongoing oversight from Japanese ministers, and with the danger of damaging competition from the ministries and agencies. Another consequence could be a huge aid programme that is uncoordinated and ultimately unable to deliver efficiently, because of a morass of

194  Conclusion

competing programmes without consistent political responsibility for programme priorities. This would not only impact seriously on recipient growth programmes, but would call into question Japan’s capacity or intention for leadership in aid. Our view of these scenarios may depend on the attitudes that we have towards the Japanese political economy, and the balance of influence of bureaucrats and politicians. Aid has usually been seen as the preserve of specialist bureaucrats, a no-go area for politicians except around the fringes of bilateral relationships. But Japan’s new emphases in aid policy bring political decisions directly into the heartland of aid decision-making, and makes it imperative for Japanese ministers to take more initiative in influencing the directions of Japanese aid policies at both the bilateral and multilateral levels. If nothing else, Japan can always fall back on the well-worn path of aid to Asia. The types and amounts of aid to Asia are well known and understood, and change there is predictable and manageable, despite ongoing rivalry between the MFA and MITI over appropriate aid strategies for ASEAN. The challenge of aid to Indochina is to come, and will reinforce trends to supporting the less developed parts of Asia as aid to some Southeast Asian recipients winds back. The political decisions about Japan’s involvement in Indochina have been made, including eventually the question of Japanese involvement in peacekeeping forces, At the same time the dominance of Japan on the Asian aid scene is marked, and the Japanese model of economic development is often cited as the most appropriate. It needs to be asked, however, whether the Japanese model is appropriate for all Asian circumstances, let alone LDCs in general. The emphasis on economic infrastructure is a major theme of the Japanese aid programme, and is pursued consistently, especially because of the heavy emphasis on loans in Japanese aid. The paucity of effective country and regional aid planning makes alternative development models harder to locate within the Japanese programme and, although we are likely to see greater variation in the future in the types and mix of aid to different types of LDCs, the system is not yet properly in place to enable this to be implemented. So how far has Japan gone with reform of its aid programme? Where does Japan stand in the international arena in terms of its aid leadership? Reform is unquestionably slow and piecemeal, despite the bold statements of principle emanating from the political level.

Conclusion  195

Yet the pressures on the aid philosophy and the aid administration from the public arena and from aid recipients are working to make the Japanese aid system far more responsive to the demands of development and effective delivery of aid than has been the case in the past. The efforts at the working level to make aid reflect these new pressures are bearing fruit in the more innovative and creative programmes in delivering different types of aid. There is still a long way to go in policy reform, and even further to go in political and administrative reform of aid, but the basis is now being laid. These changes do not, however, make Japan an international leader in the foreign aid field. They give Japan scope for enormous influence over LDC economic policies, and for potential effect on the direction of the policies of multilateral agencies. Japan is creating the conditions for a long-term impact on a wider range of Asian and other economies than has been so in the past, while ASEAN has remained the focus of aid policy. This relationship has certainly been important to the growth and the future of ASEAN and its members, and Japan has supported the conditions for such success, to its own benefit. The potential is there now for a much wider Japanese leadership role in encouraging and supporting economic development in China, Indochina and South Asia. Such Japanese initiative may not alleviate poverty to any great degree, but it will create economic growth, a situation amenable to Japan’s interests in remaining on strong and friendly terms with the region, and it is regarded as likely to enhance regional stability. It is potentially a means for Japan to be seen as an ‘entrepreneurial’ leader in aid, negotiating a new international profile for Japan as a pacesetter in aid policy, and engendering the legitimacy that a leader requires. Although some way off yet, in aid at least we have a policy area where Japan’s performance and status provide the foundation for a future leadership role, a task for which Japan already has substantial structural resources and towards which it is working. The study of aid systems is increasingly a key issue in international political economy. As has been shown, Japan’s performance as a global actor and contributor to the debate on major global aid problems is linked inextricably to domestic aid processes. Administrative reform in Japan’s foreign aid is a necessary step in enhancing Japan’s international aid performance and setting a basis for its aid leadership. This book has highlighted the critical link that exists. Likewise, it has demonstrated the continuing need to monitor the domestic context

196  Conclusion

of Japan’s international performance, in this case a vital point of vulnerability in Japan’s aid policies and its potential for international aid leadership. Japan’s aid challenge involves the future of the regional economy as well as international development strategies. First and foremost, foreign aid is fundamental to Japan’s achieving its foreign policy objectives—regional prosperity and security, global peace and an open international economic system. Aid remains one of Japan’s prime supports for negotiating a basis for Japanese influence in Third World development and in supporting its global contribution. Japan’s place in the future international order is closely tied to how successful it can be in its contribution to crafting international approaches to problems of global poverty and development. This challenge still lies before it, while the challenge of the domestic aid system and its performance is being seriously addressed. The question of Japanese aid leadership, therefore, is tied to its capacity to entrepreneur new objectives, new strategies and new programmes for international development assistance. Such entrepreneurial leadership has a solid foundation in Japan’s long-term structural impact on regional development, the broad acceptance (at least regionally) of Japan’s influence and its engagement of so many of the world’s economies in an inescapable economic interchange. The challenge for Japan is, through negotiation and entrepreneurial leadership, to turn its strength (in terms of aid quantity) within the structure of the international aid system into a new agenda that reflects Japan’s interests at a policy level across that system. It is a challenge with which Japan is only beginning to come to grips.

Notes

Introduction 1 The DAC was formed in 1961 from the Development Assistance Group (DAG), itself inaugurated in 1960. 2 For the debate on this issue, see Japanese newspapers of December 1989. The Japanese Government is now considering whether five of the new Russian republics can be classed as ‘developing countries’ and receive ODA (Yomiuri shimbun, 8 March 1992) Also see Gaimushō (1990), p. 49; Gaimushō (1991), volume 2, p. 823; and OECD (1990), p. 11. The Foreign Ministry annual aid report, Wagakuni no seifu kaihatsu enjo (1989–91 volumes listed in the Notes and References and bibliography as Gaimushō (1989b, 1990 and 1991)), is in fact edited by the Foreign Ministry’s Economic Cooperation Bureau (Gaimushō keizai kyōryokukyoku), but for case of citing it is listed instead simply under ‘Gaimushō’. 3 OECD (1987), p. 11. 4 OECD (1989), p. 2. 5 The Japanese literature will be discussed in following chapters. In English, the Japanese aid programme has been analysed in several books: White (1964), Olson (1970), Hasegawa (1975), Rix (1980), Yasutomo (1986), Rix (1987), Orr (1990), Rix (1990), Koppel and Orr (1992). Also see articles by Rix (1979), Brooks and Orr (1985), Koppel and Plummer (1989), Orr (1989–90), Rix (1989–90), Yasutomo (1989–90). 6 Selim (1983). 7 White (1974), Cassen and Associates (1986), Mosley (1987), Riddell (1987). 8 Rix (1980), Yasutomo (1986). 9 Mosley (1985), p. 377. 10 Gotō (1991b).   197

198  Notes 11 Esman (1980), p. 428. 12 Esman (1980), p. 430. 13 Cohen, Grindle and Walker (1985). 14 White (1974). 15 Young (1989), p. 355. Also see Young (1991) and David P.Rapkin, ‘Japan and World Leadership’, in Rapkin (1990), pp. 191–212. 16 See Rix (1992). 17 Rosecrance and Taw (1990), pp. 197–8. 18 The main statistics for Japanese aid performance are those published by the DAC and reported to that body by the Japanese Government. Unfortunately there is some delay in the publication of figures, especially aid disbursement by country. Thus Gaimushō (1991) contains country figures for only 1989. At the time of writing these were the latest available DAC official figures, although some unofficial Japanese figures for 1990 by country were also available in Gaimushō (1991), volume 2. 19 Calder (1988b). 20 Notably by Barbara Stallings on Japan and the debt problem, and Dennis Yasutomo on Japan and the multilateral development banks. 21 Orr (1990).

1  The philosophy of Japan’s f oreign aid 1 An early version of this chapter was prepared for a conference held under the auspices of the Mansfield Foundation and the Georgetown Center for Strategic and International Studies, at Missoula, Montana, and Washington, DC, in May 1987. 2 See Gaimushō (1991), Introduction and Chapters 1–3. 3 Halle (1955), p. 40. 4 On the general debate, see Kissinger (1966), Rosenau (1967), Katzenstein (1978), Ikenberry, Lake and Mastanduno (1988), Friman (1988), Nadelmann (1990). For recent reviews, see Gilpin (1987) and Spero (1990). On Japan, see Tomita and Sone (1983), Stockwin (1988) and Calder (1988a and 1988b). 5 These issues have been widely discussed in the literature on Japan. Most recently, see Pempel (1987) and Inoguchi and Okimoto (1988). 6 For example, on the opening page of the Foreign Ministry’s official postwar history, Gaimushō sengo gaikōshi kenkyūkai-hen (1982), p. 11. 7 Gaimushō keizai kyōryokukyoku keizai kyōryoku kenkyūkai (1984), p. 75. 8 Gaimushō (1989b), p. 19. 9 For example, Hanai (1976), pp. 29ff. 10 Yano (1986), p. 180; and Yano (1982), pp. 246–8. 11 Passin (1952). 12 Nakane (1972). 13 White (1974), p. 34. 14 For example, Hayter (1971 and 1989), Payer (1974), Wood (1986), Lappé, Schurman and Danaher (1987). The quote is from Wall (1973), p. 39. 15 Gaimushō keizai kyōryokukyoku keizai kyōryoku kenkyūkai (1984), p. 75; and Nakane (1972), Part 2, Chapter 6.

Notes  199 16 Goldwin (1963), p. 130; Rubin (1966), 17 OECD (1985), Chapter X. Ongoing negotiations in the OECD are attempting to limit the use of tied aid for commercial purposes. 18 The history of Japanese aid is covered best in White (1964), Caldwell (1972), Rix (1980) and Brooks and Orr (1985). 19 See Inada (1985). The Foreign Ministry report, Gaikō seisho: waga gaikō no kinkyo (published annually), was used, as was the report published annually by the Ministry of International Trade and Industry, Keizai kyōryoku no genjō to mondaiten. 20 ‘Economic cooperation’ was discussed in the second plan of 17 December 1957 (Shin chōki keizai keikaku), mainly in terms of trade, resources and investment in Asia. The first plan of December 1955 referred to the need for an active economic diplomacy, but did not raise the subject of economic cooperation. 21 Gaimushō (1957), p. 9. 22 For details, see Rix (1989–90), pp. 466–8. 23 Gaimushō (1960), p. 19; and Gaimushō (1961), p. 15. 24 Kakitsubo (1961), p. 251. 25 Gaimushō keizai kyōryokukyoku seisakuka (1965), p. 15. 26 Rix (1980), pp. 257–62; and Kokusai kaihatsu jānaru, May 1991, on thirty years of OECF activity. 27 Tsūshō sangyōshō (1989), p. 74. 28 ODA jisshi kōritsuka kenkyūkai (1985), Gaimushō keizai kyōryokukyoku keizai kyōryoku kenkyūkai (1984), Tsūshō sangyōshō (1989). The MITI report has been issued since 1957 and is similar to a white paper in style and presentation, but does not have the official designation of ‘white paper’, because MITI is not solely responsible for economic cooperation or aid. 29 ODA jisshi kōritsuka kenkyūkai (1985), p. 2. 30 Gaimushō keizai kyōryokukyoku keizai kyōryoku kenkyūkai (1984), pp 82–3. 31 The wording of the economic cooperation report was identifical in several places to the wording of the government’s 1980 report on comprehensive security, Sōgō anzen hoshō kenkyū grūpu (1980). For example, the reference to the ‘world historical mission’ was taken from p. 41 of the comprehensive security report, while both reports referred to Japan building its modernisation on a cultural and racial base completely different from that of Europe (p. 40 in the 1980 report and p. 82 in the 1984 report). 32 Yasutomo (1986), p. 33. 33 Tsūshō sangyōshō (1985), pp. 277–8. 34 Tsūshō sangyōshō (1989), p. 61. 35 Tsūshō sangyōshō (1989), p. 74. 36 Major interpretations in Japanese have been Nishi (1970), Ōnishi (1973), lida (1974), Yamamoto (1978), Matsui (1983), Sakurai (1985) and, most recently, Sumi (1989), Igarashi (1990), Kanayama (1990) and Watanabe and Kusano (1991). 37 White (1964), p. 9. 38 For example, Ōta (1986), pp. 79–83. 39 Rix (1980), Chapter 1. 40 Rix (1980), Chapter 1.

200  Notes 41 Keizai kikakuchō chōseikyoku (1991). 42 Gaimushō (1990), p. 6. 43 Igarashi, ‘Keizai taikoku no kadai’, in Igarashi (1991). 44 Tsūshō sangyōshō (1989), pp. 75–8. 45 Gaimushō (1990), p. 25. 46 Current Notes on International Affairs, September 1963, p. 51. 47 Hanabusa (1991), p. 90; Kokusai kaihatsu jānaru, 420, February 1992, pp. 34–5. 48 Gaimushō (1990), p. 27. 49 The Japan Times, Weekly International Edition (hereafter JTW), 18–24 March 1991. 50 JTW, 15–21 April 1991. 51 Gaimushō (1990), p. 47. 52 Gaimushō (1991), p. 58. 53 Gaimushō (1991), p. 42. 54 Gaimushō (1990), pp. 60–1. 55 Gaimushō (1990), p. 49. 56 Gaimushō (1991), pp. 61–2. 57 Gaimushō (1990), p. 50. 58 Japan Economic Survey, June 1991, p. 5; JTW, 6–12 January 1992. 59 JTW, 30 December 1991–5 January 1992. 60 Australian, 15–16 February 1992 and 19 February 1992; Far Eastern Economic Review (hereafter FEER), 26 December 1991. 61 Keidanren Review, 124, August 1990. 62 Kokusai kaihatsu jānaru, 382, October 1988, pp. 22–38. 63 Look Japan, November 1991, p. 3; and Iida (1991), p. 44. 64 Kokusai kaihatsu kyōryoku kihon hōan, 9 October 1989. 65 Keizai kikakuchō chōseikyoku (1991), p. 11. 66 Keizai kikakuchō chōseikyoku (1991), pp. 12–13. 67 Keidanren Review, 126, December 1990; Toyota Foundation Report, 14, November 1991.

2  Aid at home: public response and pressure groups 1 Sasanuma (1991). 2 The series were named ‘Kenshō ODA: gemba kara no hōkoku’, 30 July to 22 August 1989, and its sequel ‘Kenshō ODA: kaikaku e no michi’, 16 September to 27 September 1989. 3 Hanabusa (1991), p. 91. 4 Kelley (1989). 5 Gaimushō (1989b), p. 27; Gaimushō (1991), p. 290; Keizai kikakuchō chōseikyoku (1991), pp. 24–5. 6 Keizai kikakuchō chōseikyoku (1991), p. 7. 7 Keizai kikakuchō chōseikyoku (1991), pp. 7–8. 8 Nishikawa (1989), p. 393. 9 Gaimushō (1989b), p. 27.

Notes  201 10 Keizai kikakuchō chōseikyoku (1991), p. 8. 11 Gaimushō (1991), p. 67. 12 Gaimushō (1990), p. 236. 13 Ochiai (1975), Rix (1979). 14 Matsui (1983). 15 Mainichi shimbun shakaibu ODA shuzaihan (1990). 16 Japan Times and Asahi shimbun, both 9 December 1989. The Audit Bureau in 1990 only found 5 projects out of 76 to have failed (Kokusai kaihatsu jānaru, 420, February 1991, pp. 34–5). 17 These reports were Sōmuchō gyōsei kansatsukyoku (1988 and 1989). They are discussed extensively in Chapter 3. 18 Daily Yomiuri, August 1989. 19 Mainichi shimbun shakaibu ODA shuzaihan (1990), pp. 186ff. 20 Rix (1980), Chapter 8. 21 Mainichi shimbun shakaibu ODA shuzaihan (1990), pp. 176–8. 22 ‘Kiso kōsu: nihon no ODA’, Nihon keizai shimbun, 11–31 December 1990. The strong government defence of its policies can be seen in Gaimushō (1990 and 1991). 23 Nihon keizai shimbun, 15 December 1990. 24 Murai (1989). 25 Murai (1989), p, 3. 26 Suzuki Kenji (1989). 27 Suzuki Kenji (1989), pp. 178–9. 28 Kokusai kaihatsu jānaru, 386, March 1989, pp. 10–11. 29 Rix (1980), pp. 111–12. 30 See Japanese newspapers April and August 1986. 31 Abe (1989), p. 19. 32 For example, Gotō (1991a, 1991b and 1991c). 33 Nishi (1970), Ōnishi (1973), Iida (1974). 34 Matsui (1983). 35 Sumi (1989). 36 Sumi (1989), p. 226. 37 Sakurai (1985). 38 Kokusai kyōryoku suishin kyōkai (1990), Gaimushō keizai kyōryokukyoku (1989). 39 Jōhō kikaku kenkyūjo (1991). 40 APIC publishes the annual ODA report on behalf of the Foreign Ministry. 41 Inō (1989). 42 On the career of Kubota Yutaka, head of one of Japan’s major firms of overseas consulting engineers, see Rix (1980), pp. 201–5. 43 Suzuki Nagatoshi (1989), Toriyama (1989). 44 Igarashi (1990). 45 Material on Japanese NGOs is rather scarce, but the Japan NGO Information Center (JANIC, or NGO katsudō suishin sentā) provides a range of publicity and explanatory material. See NGO katsudō suishin sentā (1989). Also the Gaimushō

202  Notes ODA reports have increasingly more detailed sections on NGO activities. Also see Nihon keizai shimbun, 28 December 1990. 46 Gaimushō (1991), pp. 272–83. 47 Interview with Foreign Ministry official in JANIC bulletin Kokoro, Vol. 1, no. 2, November 1989. 48 Gaimushō (1990 and 1991), and Ministry of Foreign Affairs (1991). 49 Kokusai kaihatsu jānaru, 414, August 1991, pp. 46–7; Look Japan, September 1991, p. 47. The Japanese Post Office has also produced a small but detailed pamphlet on the scheme. 50 NGO katsudō suishin sentā (1989 and 1990). 51 Gaimushō (1991), p. 275. 52 Saitō (1989). 53 For local government activities, see Gaimushō (1991), pp. 286–9; and Kokusai kyōryoku jigyōdan kokusai kyōryoku sōgō kenshūjo (1991). For comment on recent local government thinking on these issues, see Yomiuri shimbun (evening), 4 October 1991; and Kobe shimbun (evening), 11 January 1992. 54 NGO katsudō suishin sentā (1989). 55 Kokoro, Vol. 3, No. 1, January 1991; Kokusai kaihatsu jānaru, 409, March 1991, p. 102. 56 Kokoro, Vol. 1, No. 2, November 1989. Also see Yomiuri shimbun, 20 February 1992, for comment on the need for the Japanese Government to be far more supportive in helping Japanese NGOs to work with their overseas counterparts. 57 Hanabusa (1991), p. 103.

3 The real challenge: reforming Japan’s aid administration 1 See Rix (1980), Orr (1990), Gotō (1991b). 2 Tendler (1975). 3 Examples are the critical studies discussed in Chapter 2, especially Matsui (1983). Also; see Watanabe and Kusano (1991). 4 This problem was highlighted in the very first of the second Yomiuri shimbun series on ODA, 16 September 1989. 5 Yomiuri shimbun, 16 September 1989. 6 ‘Taigai keizai kyōryoku kankei kakuryō kaigi no kaisai ni tsuite’, Cabinet Verbal Agreement, 13 December 1988. 7 Kokusai kaihatsu jānaru, 387, April 1989, and 411, May 1991. 8 Rix (1980); Murai (1989), p. 24. 9 Yomiuri shimbun, 16 September 1989. 10 Kokusai kaihatsu jānaru, 409, March 1991, pp. 12–13; Yomiuri shimbun, 19 September 1989. 11 Gaimushō (1990), p. 50. 12 Gaimushō (1991), pp. 294–5; Overseas Economic Cooperation Fund (hereafter OECF) (1991a), p. 83. 13 Gaimushō (1991), p. 74. 14 Yomiuri shimbun, 18 September 1989.

Notes  203 15 Mainichi shimbun shakaibu ODA shuzaihan (1990), Chapter 10. 16 Gaimushō (1990), p. 245. 17 Rix (1980). 18 OECF (1991a), pp. 132–5; Jōhō kikaku kenkyūjo (1991). 19 Kokusai kyōryoku suishin kyōkai (1990). 20 Yomiuri shimbun, 29 December 1991. 21 Sakurai (1985). 22 Keizai Kōhō Center Brief, 43, August 1987. 23 Keidanren geppō, August 1990, pp. 22–3. 24 Igarashi in Igarashi (1990), p. 21. 25 Matsui (1983), Chapter 5. 26 Sumi (1989), Chapter 2. 27 For example, Shūkan posuto, January 1989. 28 Gaimushō (1990), pp. 239–40. 29 Sōmuchō gyōsei kansatsukyoku (1988 and 1989), hereafter referred to as Sōmuchō (1988 and 1989). 30 Full documentation on this commission and its report is to be found in Yomiuri shimbun seijibu (1983). 31 Small-scale grants are first discussed in Gaimushō (1989b), pp. 182ff. 32 See Sōmuchō (1988), Chapter 3.1. 33 Sōmuchō (1988), Chapter 3.1.4–12 and 3.2. 34 Sōmuchō (1988), Chapter 3.1.9. 35 Sōmuchō (1988), Chapter 3.2. 36 Kokusai kaihatsu jānaru, 409, March 1991, pp. 12–13. 37 See appendix in Sōmuchō (1989), p. 250, which detailed ministry responses to the recommendations of the first Sōmuchō report. 38 Jōhō kikaku kenkyūjo (1991), p. 28. 39 Sōmuchō (1989), Chapter 3.1.1–2. 40 OECF (1991b). 41 Sōmuchō (1989), Chapter 3.1.2–3. 42 Sōmuchō (1989), Chapter 3.1.4. 43 Sōmuchō (1989), p. 153. 44 Kakugi kettei, 28 December 1991, ‘Heisei yonendo ni kōzubeki sōchi o chūshin to suru gyōsei kaikaku no jisshi hōshin ni tsuite’. 45 Asahi shimbun, 18 September 1991. 46 Yomiuri shimbun, 28 November 1991. 47 Yomiuri shimbun, 19 January 1992. 48 Rinji gyōsei kaikaku suishin shingikai (1991a and 1991b). For details of interministry debate in the council about reform, see Kokusai kaihatsu jānaru, 420, February 1992, pp. 15–17. 49 Kokusai kaihatsu jānaru, 414, August 1991, pp. 44–5. 50 Yomiuri shimbun, 29 and 31 December 1991. 51 Cabinet decision referred to in note 44 above. 52 Gaimushō (1990), pp. 240–2, has the details. 53 Inoguchi (1986), Nishikawa (1989), Nakatani (1989), Katō (1991). 54 ODA jisshi kōritsuka kenkyūkai (1985).

204  Notes 55 Igarashi (1990), p. 198. 56 Inada (1989), pp. 203–7. 57 Rix (1980), p. 51. 58 Iwaki (1990). 59 Iwaki (1990), p. 98. 60 The Nakanishi bill was entitled ‘Kokusai kaihatsu kyōryoku kihon hōan’, 9 October 1989. 61 Details in Iwaki (1990). 62 Iwaki (1990), pp. 111–12. 63 On ‘policy tribes’, see Muramatsu and Krauss (1984), Inoguchi and Iwai (1987). For some aid aspects, see Kokusai kaihatsu jānaru, 385, January-February 1989, pp. 86–91. 64 Kokusai kaihatsu jānaru, 379, July 1988, p. 23. 65 Suzuki Kenji (1989), pp. 178–84. 66 Referred to in FEER, 23 May 1991. 67 Rix (1980), Chapter 2. 68 Kokusai kaihatsu jānaru, 393, October 1989, p. 16. 69 Gotō (1989). 70 Kokusai kaihatsu jānaru, 393, October 1989, pp. 16–17. 71 Engineering Consulting Firms’ Association (1987); Kokusai kaihatsu jānaru, 419, January 1992, p. 96; Rix (1980), p. 59. 72 Matsui (1983), p. 204. 73 Nihon keizai shimbun, 28 November 1991; Hanabusa in Hanabusa and Murai (1987). 74 Watanabe and Kusano (1991). 75 Viviani and Wilenski (1978), p. 28. The monograph also includes references to the British case. 76 Nihon keizai shimbun, 19 September 1991. 77 In Watanabe and Kusano (1991), available in the final stages of preparing this book, the authors emphasise the need for horizontal coordination and leadership in the Japanese aid decision-making process. They propose the formation of a group of Administrative Vice-Ministers to coordinate policy, and the unification of the aid evaluation functions, to centralise information about the aid process.

4 Policy innovation in Japanese aid 1 2 3 4 5 6 7

See Gaimushō (1991), p. 58. For information on targets, see appendices in Gaimushō (1989b, 1990 and 1991). Ministry of Foreign Affairs (1991), p. 21. FEER, 13 June 1991, p. 14. OECF data, March 1991; and Yomiuri shimbun, 29 December 1991. Figures in this section come from Gaimushō aid reports, 1989–91. Ministry of Foreign Affairs (1991), p. 22. The grant element of aid refers to its level of concessionality. To qualify as ODA, loans require a GE of above 25 per cent, which is a function of the interest rate, grace period and repayment period. The

Notes  205 lower the interest rate and the higher the grace and repayment periods, the higher the GE. A commercial rate loan of 10 per cent has a GE of 0 per cent, a grant has a GE of 100 per cent. For example, a 2 per cent loan over 30 years with a 10 year grace period has a GE of 61.9 per cent. OECF loans to Indonesia in 1990 were of this type, whereas loans to Korea in 1990 were at 4 per cent for 25 years with 7 years’ grace period, with a GE of 45.09 per cent. For a GE table, see Kaigai keizai kyōryoku kikin (1991), pp. 496–7. 8 Overseas Economic Cooperation Fund (1991a). 9 Gaimushō (1991), pp. 14–18. 10 The 1990 statistics (reported in Gaimushō (1991)) refer to 1988–9 averages on share of grants. There is always a time lag in the publication of these data. 11 FEER, 13 June 1991. 12 On untying, see Gaimushō (1991), p. 19. ‘General untying’ places no restrictions on who may tender for a project. ‘LDC untying’ restricts tenders to Japanese or LDC applicants. ‘Tied aid’, of course, allows only Japanese tenders. 13 Gaimushō keizai kyōryokukyoku (1989), p. 219. 14 Rix (1980), Chapter 6. 15 Ministry of Foreign Affairs (1990), pp. 19–20. 16 Ministry of Foreign Affairs (1990), pp. 19–20. 17 Kaigai keizai kyōryoku kikin (1991), p. 24. 18 OECF data provided to the author. 19 OECF data, February 1991. 20 Jōhō kikaku kenkyūjo (1991), Chapter 1.5. 21 Jōhō kikaku kenkyūjo (1991), p. 24. 22 OECF data, February 1991; and Gaimushō (1991), volume 2. 23 Kaigai keizai kyōryoku kikin (1991) for figures. 24 A major source for this section has been the annual reports of the OECF. See, for example, Overseas Economic Cooperation Fund (1991a). 25 Overseas Economic Cooperation Fund (1991a), p. 115. 26 Kikin chōsa kihō, No. 51, March 1986, pp. 4–53; and Chokusetsu shakkan ni kansuru kondankai (1987). 27 Gaimushō (1991) and OECD Development Assistance Committee (1991). 28 Gaimushō (1991), pp. 113–20. 29 Gaimushō (1991), pp. 113–20. 30 Yomiuri shimbun, 29 December 1991. 31 Kokusai kaihatsu janaru, 398, April 1990, p. 10. 32 Kokusai kaihatsu janaru, 398, April, 1990, p. 14. 33 FEER, 13 June 1991. 34 Ministry of Foreign Affairs (1990), p. 129. 35 Ministry of Foreign Affairs (1990), p. 130. 36 Dennis Yasutomo’s work is of importance in this regard. 37 Ministry of Foreign Affairs (1991), p. 27. 38 ODA jisshi kōritsuka kenkyūkai (1985), p. 7. Achieving greater representation is still taking time (FEER, 20 June 1991), although the IMF now has its first Japanese department chief (FEER, 5 September 1991). 39 Ogata (1989), Fukai (1982).

206  Notes 40 FEER, 17 May 1990; Australian, 5–6 May 1990. 41 Yasutomo chapter on Japan and the Asian Development Bank in Koppel and Orr (1992). 42 Ryōkichi Hirono, ‘Japan’s Leadership Role in the Multilateral Development Institutions’, in Islam (1991), p. 178. 43 Rix (1990), Chapter 5. 44 Stallings (1990). 45 Japan Economic Survey, October 1989. 46 OECF data. 47 OECF data. 48 Overseas Economic Cooperation Fund (1991), p. 21. 49 Yasutomo (1983), and his chapter on Japan and the Asian Development Bank in Koppel and Orr (1992). 50 Japan Economic Survey, October 1989; Islam (1991), Part III. 51 Gaimushō (1991), p. 29. 52 See Murai (1989) and Ampo, Vol. 21, No. 4, 1989. 53 A mistranslation in the English version of the Foreign Ministry’s 1990 aid report (Ministry of Foreign Affairs (1990), p. 122), showing ‘$52 billion’ as the amount of Japan’s 1990 contribution to the UNEP (it was first calculated as $5.2 million, see Gaimushō (1990), p. 187), but the final figure in Gaimushō (1991) report (p. 224) was $7.2 million), led to Japan’s use of the mistranslation in its 1991 Memorandum to the DAC (p. 55), and a further error in the DAC Secretariat report (DCD/DAC/ AR(90)2/21 of 24 May 1991), where the figure was given as ‘$52 million’. 54 Kokusai kaihatsu jānaru, 408, February 1991; and Yomiuri shimbun, 29 December 1991. On popular attitudes to the environment, see poll reported in Daily Yomiuri, 9 February 1992. 55 Kikin chōsa kihō, No. 60, July 1988, p. 12. 56 Overseas Economic Cooperation Fund (1990), p. 16. 57 Overseas Economic Cooperation Fund (1991b), p. 19. 58 Daily Yomiuri, 4 January 1990. 59 Ampo, Vol. 21, No. 4, 1989; JTW, 14–20 October 1991. 60 For example, Economic Eye, Winter 1991. 61 Keidanren Review, 129, June 1991. 62 Sumi (1989), p. 60. 63 Sumi (1989), pp. 218–21. 64 On middle income country emphasis, see Yomiuri shimbun, 14 June 1991; on environmental aid politics, see FEER, 12 March 1992. 65 Kokusai kaihatsu jānaru, 400, June 1990, pp. 9–17; Kusano (1991); and Sumi (1990). 66 OECD Development Assistance Committee (1991). 67 Gaimushō (1991), pp. 259–60. 68 DAC Press Release on the annual examination of Japan, SG/ PRESS(91)37, 21/6/91. 69 Gaimushō (1991), p. 264. 70 Summary of joint evaluation report, no date. 71 Australian International Development Assistance Bureau (1991).

Notes  207 72 Sōmuchō (1988), p. 297; Sōmuchō (1989), p. 121–2. 73 For example, Gaimushō keizai kyōryokukyoku keizai kyōryoku hyōka iinkai (1989). 74 Economic Eye, Spring 1989, p. 13. 75 Ministry of Foreign Affairs (1989), p. 29. For the Audit Bureau report, see Kokusai kaihatsu jānaru, 420, February 1992, pp. 34–5. 76 Gaimushō (1991), pp. 266–8.

5 Ties that bind: Japanese aid and Asia 1 Olson (1970). 2 See list of yen loans made from 1957 in Tsūshō sangyōshō (1989), volume 2, and other editions. 3 The work of David Steinberg is most relevant here, such as his paper in Koppel and Orr (1992). 4 FEER, 11 July 1991. 5 For a good general survey of some of the issues in the Japan— Myanmar relationship, see FEER, 11 July 1991, pp. 39–41. 6 Yasutomo (1986). 7 Rix (1980), pp. 228–31. 8 Rix, ‘Managing Japan’s Aid: ASEAN’, in Koppel and Orr (1992). 9 Lee (1984). 10 FEER, 16 August 1990. 11 FEER, 19 September 1991. 12 Kaigai keizai kyōryoku kikin (1991). 13 Daily Yomiuri, 25 December 1991. 14 OECF data, February 1991. 15 Gaimushō (1991), pp. 314–32. 16 OECF data, February 1991. 17 Koppel and Plummer (1989), p. 1045. 18 Ministry of Foreign Affairs (1991), pp. 63–5. 19 Ministry of Foreign Affairs (1991), p. 3. 20 Gaimushō (1991), pp. 89–90; Ministry of Foreign Affairs (1991), p. 30. 21 Ministry of Foreign Affairs (1991), pp. 8–12. 22 Kokusai kaihatsu jānaru, 407, January 1991, pp. 23–4. 23 Gaimushō (1991), pp. 23–5. 24 Kokusai kaihatsu jānaru, 409, March 1991, pp. 10–11. 25 Tsūshō sangyōshō (1989), p. 91. 26 Tsūshō sangyōshō (1989), p. 151. 27 Gaimushō (1990), volume 2, discussed in the introductory pages of each regional section. 28 Rix (1982), Rix in Koppel and Orr (1992), Sudo (1988a and 1988b). 29 Sudo (1988a and 1988b), and the view of the former Japanese Foreign Minister Sonoda Sunao, in Sonoda (1981). 30 Kokusai kaihatsu jānaru, 408, February 1991, pp. 16–17.

208  Notes 31 Overseas Economic Cooperation Fund (1990 and 1991a). 32 Rix (1980), pp. 263–5. 33 OECF documents and Kokusai kaihatsu jānaru, 411, May 1991, pp. 87–8. 34 Australian, 14 June 1989, and Japanese newspapers for the period June 1989 to early 1990. 35 FEER, 21 December 1989, 25 January 1990. 36 FEER, 19 July 1990, 25 April 1991, 22 August 1991; Gaimushō (1990), volume 2, p. 89. 37 FEER, 19 December 1991. 38 FEER, 16 May 1991. 39 Gaimushō (1991), p. 184. 40 Overseas Economic Cooperation Fund (1990), p. 20. 41 Overseas Economic Cooperation Fund (1990), p. 40. 42 Overseas Economic Cooperation Fund (1991a), p. 26. 43 FEER, 16 August 1990. 44 JTW, 6–12 January 1992. 45 Shiraishi (1990). 46 Gaimushō (1989a), p. 33. 47 Gaikō foramu, November 1989, p. 29. 48 JTW, 5–11 November 1990. 49 Daily Yomiuri, 8 November 1991; Yomiuri shimbun, 5 November 1991; Kokusai kaihatsu jānaru, 420, February 1992, special issue on Japan’s aid to Indochina. Page 91 has a list of nine Japanese trading companies operating in Vietnam. 50 Yomiuri shimbun, 19 January 1992. 51 Yomiuri shimbun, 6, 16 and 19 January 1992. 52 FEER, 16 and 30 January 1992; also Daily Yomiuri, 7 November 1992. 53 FEER, 30 January 1992. 54 Shiraishi (1990), pp. 102–4. 55 Yomiuri shimbun, 16 June 1992. 56 JTW, 27 January-2 February 1992; also Daily Yomiuri, 1 March 1992. Japan has agreed to send Japan Overseas Cooperation Volunteers to Cambodia again, after they were withdrawn in 1970. 57 Yomiuri shimbun, 13 November 1991. 58 FEER, 23 January 1992; Daily Yomiuri, 27 February 1992 and 7 March 1992. 59 FEER, 27 February 1992.

6 Japan and foreign aid leadership 1 Julia Chang Bloch, ‘A US-Japan Aid Alliance?’, in Islam (1991). 2 Islam (1991), p. 222. 3 One of the most outspoken and persuasive of these commentators has been Ōkita Saburō. 4 Yanagihara and Emig in Islam (1991), p. 69. 5 Asanuma in Islam (1991), p. 111. 6 Kokusai kaihatsu jānaru, 412, June 1991, p. 15.

Notes  209 7 Daily Yomiuri, 25 January 1992. 8 Yomiuri shimbun, 29 December 1991. 9 Rix (1992). 10 Gaimushō (1991). As explained in earlier chapters, country figures are usually published late, due to the need to use official DAC statistics. 11 Mosley (1987), p. 234. 12 Riddell (1987), p. 267. 13 Cassen and Associates (1986), pp. 294–5. 14 See OECF-sponsored series of articles on aid in Nihon keizai shimbun, December 1990, especially 24 December 1990. 15 Gaimushō (1991), p. 55. 16 Overseas Economic Cooperation Fund (1991), p. 13. 17 Suzuki Nagatoshi (1989). 18 Gaimushō keizai kyōryokukyoku keizai kyōryoku hyōka iinkai (1989), p. 5. 19 Gaimushō keizai kyōryokukyoku keizai kyōryoku hyōka iinkai (1989), p. 7. 20 Hasegawa (1989), p. 20. 21 Hasegawa (1989), p. 21. 22 See articles in Ampo, Vol. 21, No. 4, 1989, for a range of critical assessments in English of the Japanese aid programme. They are translations of Murai (1989). 23 Islam (1991), p. 213. 24 Islam (1991), pp. 134–5. 25 Yasutomo (1986). 26 Gaimushō (1990), pp. 47–50. 27 Yasutomo, ‘The Political-Strategic Context of Japan’s Aid Diplomacy’, (1989). 28 Inada Jūichi, ‘ODA to nihon gaikō’, in Igarashi (1990), pp. 77–8. 29 Orr (1990), especially Chapter 5. 30 Cassen and Associates (1986), especially Introduction. 31 Asanuma in Islam (1991), p. 107. 32 A 16 billion yen aid package was, however, announced in March 1992 (Yomiuri shimbun, 17 March 1992). The murder of JICA workers in July 1990 by antigovernment guerrillas helped bring home to the Japanese Government the economic and political problems of Peru. 33 Foundation for Advanced Information Research (1988). 34 Nishihara Masashi of the National Defense College, interviewed in Japan Economic Survey, December 1991. 35 Gaimushō (1990), pp. 4–6. 36 Yasutomo (1989–90), pp. 502–3. 37 Saitō (1990), p. 7. 38 Saitō (1990), p. 179. 39 Yomiuri shimbun, 14–18 December 1991. 40 See Chapter 4. For comment on former Finance Minister Hashimoto’s leadership role in the G7 on discussing aid to the Soviet Union, see FEER, 24 October 1991. 41 Gaimushō (1990), pp. 35–56. 42 OECD Development Assistance Committee (1991); and OECD press release SG/ PRESS(91)37, 21 June 1991, on DAC Aid Review of Japan. 43 Interview with senior aid official of DAC member nation, July 1991.

210  Notes 44 Islam (1991), especially Part V; also FEER, 12 March 1992. 45 OECD press release SG/PRESS(91)72, DAC High Level Meeting, 4 December 1991. 46 Kokusai kaihatsu jānaru, 420, February 1992, p. 7, and 421, March 1992, pp. 21–3. Also see FEER, 10 October 1991, and lida (1991), p. 44, on Western and Japanese approaches to aid coming closer. 47 Olson (1970), Langdon (1973). 48 Langdon (1973), p. 89. 49 Asahi shimbun, 20 May 1964. 50 Asahi shimbun, 18 August 1977. 51 Sudo (1986). 52 Yasutomo (1986) has details of this period.

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Bibliography  213 Hanai Hitoshi (1976), Nihon no seiji fūdo to gaikō, Tokyo, Ningen no kagakusha Hasegawa Junichi (1989), Japan’s Official Development Assistance and an Analysis of the Macroeconomic Effects of Aid, Occasional Paper 89–06, Program on US-Japan Relations, Harvard University Hasegawa Sukehiro (1975), Japanese Foreign Aid: Policy and Practice, New York, Praeger Hayter, Teresa (1971), Aid as Imperialism, Harmondsworth, Penguin ______ (1989), Exploited Earth: British Aid and the Environment, London, Earthscan Igarashi Takeshi (ed.) (1990), Nihon no ODA to kokusai chitsujo, Tokyo, Nihon kokusai mondai kenkyūjo, Iida Tsuneo (1974), Enjo suru kuni sareru kuni, Tokyo, Nikkei shinsho _____ (1991), ‘In Defense of Japan’s Aid Program’, Japan Echo, Vol.XVIII, No.3, pp.41–4 Ikenberry, G.John, Lake, David A. and Mastanduno, Michael (eds) (1988), ‘The State and Foreign Economic Policy’, International Organization, Vol.42, No.1, pp.1–243 Inada Jūichi (1985), ‘Hatten tojōkoku to nippon’, in Watanabe Akio (ed.), Sengo nihon no taigai seisaku, Tokyo, Yūhikaku, pp.285–314 _____ (1989), ‘Taigai enjo’ in Ariga Makoto, Uno Shigeaki, Kido Shigeru, Yamamoto Yoshinori and Watanabe Akio Kōza kokusai seiji 4: nihon no gaikō, Tokyo, Tōkyō daigaku shuppankai, pp. 183–209 Inō Tadatoshi (1989), Kokusai gijutsu kyōryoku no michi, Tokyo, NHK Books Inoguchi, Takashi (1986), ‘Japan’s Images and Options: Not a Challenger, but a Supporter’, Journal of Japanese Studies, Vol.12, No.1, pp.95–119 _____ and Iwai Tomoaki (1987), Zoku giin no kenkyū: jimintō seiken o ushidoru shuyakutachi, Tokyo, Nihon keizai shimbunsha _____ and Okimoto, Daniel I. (eds) (1988), The Political Economy of Japan, Volume 2: The Changing International Context, Stanford, Stanford University Press Islam, Shafiqul (ed.) (1991), Yen for Development: Japanese Foreign Aid and the Politics of Burden-Sharing, New York, Council on Foreign Relations Press Iwaki Shigeyuki (1990), ‘Seifu kaihatsu enjo (ODA) to kokkai: keizai kyōryoku e no kokkai kanyo kyōka o meguru rongi o chūshin ni’, Refarensu, November, pp.98–120 Jōhō kikaku kenkyūjo (1991), 1991 nenpan keizai gijutsu kyōryoku binran, Tokyo Kaigai keizai kyōryoku kikin (1989), Kankyō hairyo no tame no OECF gaidorain (shohan), October, Tokyo —— (1991), Kaigai keizai kyōryoku binran 1991, Tokyo Kakitsubo Seigo (1961), ‘OECF no unyō ni okeru mondaiten’, in Kokusai gijutsu kyōryoku kyōkai chōsabu, 61 nenpan keizai kyōryoku no jisseki to kadai, Tokyo, Kokusai gijutsu kyōryoku kyōkai Kanayama Nobuo (1990), Enjo taikoku nippon ni hajimaru kaikaku, Tokyo, Mitsumine shobō Katō Mutsuki (1991), ‘“Kokusai kyōryokuchō” no shinsetsu o teian sura’, Chuo kōron, August, pp.98–111 Katzenstein, Peter J. (1978), Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States, Madison, University of Wisconsin Press

214  Bibliography Keizai kikakuchō chōseikyoku (1991), Keizai kyōryoku seisaku kenkyūkai chūkan hōkoku, Tokyo Kelley, Jonathan (1989), Australians’ Attitudes to Overseas Aid: Report from the National Social Science Survey, Canberra, Australian International Development Assistance Bureau Kissinger, Henry (1966), ‘Domestic Structure and Foreign Policy’, Daedalus, Vol.95, No.2, pp.503–29 Kokusai kyōryoku jigyōdan kokusai kyōryoku sōgō kenshūjo (1991), Gurobaru jidai no chihō jichitai: ‘chihō jichitai to kokusai kyōryoku no arikata’ ni kansuru kenkyūkai hōkoku, Tokyo, Kokusai kyōryoku shuppankai Kokusai kyōryoku suishin kyōkai (1990), Keizai kyōryoku sanka e no tebiki, Tokyo, APIC Koppel, Bruce and Orr, Robert M. Jr (eds) (1992), Power and Policy in Japanese Foreign Aid, Boulder, Westview Press —— and Plummer, Michael (1989), ‘Japan’s Ascendancy as a Foreign-Aid Power’, Asian Survey, Vol.XXIX, No.11, pp.1043–56 Kusano Atsushi (1991), ‘Rebutting the Aid Critics: A Report from India’, Japan Echo, Vol.XVIII, No.3, pp.45–53 Langdon, Frank (1973), Japan’s Foreign Policy, Vancouver, University of British Columbia Press Lappé, Frances Moore, Schurman, Rachel and Danaher, Kevin (1987), Betraying the National Interest, New York, Grove Press Lee, Chaejin (1984), China and Japan: New Economic Diplomacy, Stanford, Hoover Institution Press Mainichi shimbun shakaibu ODA shuzaihan (1990), Kokusai enjo bijinesu: ODA wa dō tsukawarete iru ka, Tokyo, Aki shobō Matsui Ken (1983), Keizai kyōryoku: towareru nihon no keizai gaikō, Tokyo, Sanseidō Ministry of Foreign Affairs (1989), Japaris Official Development Assistance 1989 Annual Report, Tokyo, APIC —— (1990), Japaris Official Development Assistance 1990 Annual Report, Tokyo, APIC —— (1991), Aid Review 1990/91 Memorandum of Japan, March, Tokyo Mosley, Paul (1985), ‘The Political Economy of Foreign Aid: A Model of the Market for a Public Good’, Economic Development and Cultural Change, Vol.33, No.2, pp.373–93 —— (1987), Overseas Aid: Its Defence and Reform, Brighton, Wheatsheaf Books Murai Yoshinori (1989), Musekinin enjo taikoku nippon, Tokyo, JICC Muramatsu Michio and Krauss, Ellis (1984), ‘Bureaucrats and Politicians in Policymaking: The Case of Japan’, American Political Science Review, Vol.78, pp. 126–46 Nadelmann, Ethan A. (1990), ‘Global Prohibition Regimes: The Evolution of Norms in International Society’, International Organization, Vol.44, No.4, pp.479–526 Nakane Chie (1972), Tekiō no jōken: nihonteki renzoku no shikō, Tokyo, Kōdansha Nakatani Iwao (1989), ‘Ima motomerareru “enjo tetsugaku”’, Chūō kōron, August, pp. 164–75

Bibliography  215 NGO katsudō suishin sentā (1989), Teigensho: NGO to ODA no nozomashii kankei no arikata ni tsuite, Tokyo —— (1990), NGO dairekutorii: kokusai kaihatsu kyōryoku ni tazusawaru minkan kōeki dantai, Tokyo Nishi Kazuo (1970), Keizai kyōryoku, Tokyo, Chuko shinsho Nishikawa, Jun (1989), ‘Japan’s Economic Cooperation: New Visions Wanted’, Japan Quarterly,. Vol XXXVI, No.4, pp.392–403 Ochiai Hideo (1975), Sumatora no kōya kara: aru nōgyō no gijutsusha no hatsugen, Tokyo, NHK Books ODA jisshi kōritsuka kenkyūkai (1985), Seifu kaihatsu enjo (ODA) no kōkateki kōritsuteki jisshi ni tsuite, Tokyo, December OECD (1985), 1985 Report: Twenty-Five Years of Development Cooperation, A Review: Efforts and Policies of the Members of the Development Assistance Committee, Paris, OECD —— (1987), Development Cooperation: Efforts and Policies of the Members of the Development Assistance Committee, 1987 Report, Paris, OECD —— (1989), Development Cooperation: Efforts and Policies of the Members of the Development Assistance Committee, 1989 Report, Paris, OECD —— (1990), Development Cooperation: Efforts and Policies of the Members of the Development Assistance Committee, 1990 Report, Paris, OECD —— Development Assistance Committee (1991), Aid Review 2990/91, Report by the Secretariat and Questions for the Review of Japan, DCD/ DAC/AR(90)2/21, 24 May, Paris, OECD Ogata Sadako (1989), ‘Shifting Power Relations in Multilateral Development Banks’, Journal of International Studies (Institute of International Relations, Sophia University, Tokyo), No.22, pp.1–25 Olson, Lawrence (1970), Japan in Postwar Asia, London, Pall Mall Press Ōnishi Akira (1973), Kaihatsu enjo, Tokyo, Nikkei shinsho Orr, Robert M. Jr (1989–90), ‘Collaboration or Conflict? Foreign Aid and US-Japan Relations’, Pacific Affairs, Vol.62, No.4, pp.476–89 —— (1990), The Emergence of Japan’s Foreign Aid Power, New York, Columbia University Press Ōta Hiroshi (1986), ‘Soredemo keizai kyōryoku wa kakasenai’, This Is, No.12, pp.79–83 Overseas Economic Cooperation Fund (1990), OECF: Annual Report 1990, Tokyo —— (1991a), OECF: Annual Report 1991, Tokyo —— (1991b), Operational Guidance on OECF Loans, March, Tokyo Passin, Herbert (1952), ‘Socio-cultural Factors in the Japanese Perception of International Order’, Japan Institute of International Affairs Review, pp.51–75 Payer, Cheryl (1974), The Debt Trap, Harmondsworth, Penguin Pempel, T.J. (1987), ‘The Unbundling of “Japan Inc.”: The Changing Dynamics of Japanese Policy Formation’, Journal of Japanese Studies, Vol.13, No.2, pp.271–306 Rapkin, David P. (ed.) (1990), World Leadership and Hegemony, Boulder and London, Lynne Rienner Publishers

216  Bibliography Riddell, Roger C (1987), Foreign Aid Reconsidered, Baltimore, The Johns Hopkins University Press Rinji gyōsei kaikaku suishin shingikai (1991a), Kokusaika taiō kokumin seikatsu jūshi no gyōsei kaikaku ni kansuru dai-ichiji tōshin, 4 July, Tokyo (1991b), Kokusaika taiō kokumin seikatsu jūshi no gyōsei kaikaku ni kansuru dai-niji tōshin, 12 December, Tokyo Rix, Alan (1979), ‘The Mitsugoro Project: Japanese Aid Policy and Indonesia’, Pacific Affairs, Vol.52, No.1, pp.42–63 —— (1980), Japan’s Economic Aid: Policy-making and Politics, London, Croom Helm —— (1982) ‘Japan and ASEAN: More than Economics’, in A.Broinowski (ed), Understanding ASEAN, London, Macmillan, pp. 169–95. —— (1987), Japaris Aid Program: Quantity versus Quality, Canberra, Australian Development Assistance Bureau —— (1989–90), ‘Japan’s Foreign Aid Policy: A Capacity for Leadership?’, Pacific Affairs, Vol.62, No.4, pp.461–75 —— (1990), Japan’s Aid Program: A New Global Agenda, Canberra, Australian International Development Assistance Bureau —— (1992), ‘Japan and the Region: Leading from Behind’, in R. Higgott, J.Ravenhill and R.Leaver (eds), Pacific Economic Relations in the 1990s: Conflict or Cooperation?, Sydney, Allen and Unwin Rosecrance, Richard and Taw, Jennifer (1990), ‘Japan and the Theory of International Leadership’, World Politics, Vol. XLII, No.2, pp. 184–209 Rosenau, James N. (1967), The Domestic Sources of Foreign Policy, New York, Free Press Rubin, Seymour (1966), The Conscience of the Rich Nations: The Development Assistance Committee and the Common Aid Effort, New York, Harper and Row Saitō Shirō (1990), Japan at the Summit: Its Role in the Western Alliance and in Asian Pacific Co-operation, London, Routledge Saitō Yū (1989), ‘Seifu kaihatsu enjo to kaihatsu NGO katsudō’, Keizaigaku ronsō (chūō daigaku), Vol.30, No.3, pp.105–20 Sakurai Masao (1985), Kokusai kaihatsu kyōryoku no shikumi to hō, Tokyo, Sanseidō Sasanuma Michihiro (1991), ODA enjo hihan o kangaeru, Tokyo, Kōgyō jiji tsūshinsha Selim, Hassan M. (1983), Development Assistance Policies and the Performance of Aid Agencies: Studies in the Performance of DAC, OPEC, the Regional Development Banks and the World Bank Group, London, Macmillan Shiraishi Masaya (1990), Japanese Relations with Vietnam: 1951–1987, Southeast Asia Program, Cornell University Sōgō anzen hoshō kenkyū grūpu (1980), Sōgō anzen hoshō senryaku, Tokyo, Ōkurashō insatsukyoku Sōmuchō gyōsei kansatsukyoku (1988), ODA (seifu kaihatsu enjo) no genjō to kadai, Tokyo, Ōkurashō insatsukyoku —— (1989), ODA (seifu kaihatsu enjo) no genjō to kadai II, Tokyo, Ōkurashō insatsukyoku Sonoda Sunao (1981), Sekai nihon-ai, Tokyo, Daisansei kenkyūkai

Bibliography  217 Spero, Joan Edelman (1990), The Politics of International Economic Relations, fourth edition, New York, St Martin’s Press Stallings, Barbara (1990), ‘The Reluctant Giant: Japan and the Latin American Debt Crisis’, Journal of Latin American Studies, Vol.22, pp.1–30 Stockwin, J.A.A.S. (ed.) (1988), Dynamic and Immobilist Politics in Japan, London, Macmillan Sudo Sueo (1986), ‘Nanshin, Superdomino and the Fukuda Doctrine: Stages in JapanSoutheast Asian Relations’, Journal of Northeast Asian Studies, Vol.V, No.3, pp.35–51 —— (1988a), ‘The Road to Becoming a Regional Leader: Japanese Attempts in Southeast Asia, 1975–1980’, Pacific Affairs, Vol.61, No.1, pp.27–50 —— (1988b), ‘Japan-ASEAN Relations: New Dimensions in Japanese Foreign Policy’, Asian Suruey, Vol. XXVIII, No.5, pp.509–25 Sumi Kazuo (1989), ODA enjo no genjitsu, Tokyo, Iwanami shinsho —— (1990), Kirawareru enjo: segin, nihon no enjo to narumada damu, Tokyo, Tsukiji shokan Suzuki Kenji (1989), Kokusaiha giin to riken no uchimaku: ODA ni muragaru seijikatachi, Tokyo, Yell Books Suzuki Nagatoshi (1989), Nihon no keizai kyōryoku: tojōkoku keizai hatten no shiten kara, Tokyo, Ajia keizai kenkyūjo Tendler, Judith (1975), Inside Foreign Aid, London, The Johns Hopkins University Press Tomita Nobuo and Sone Yasunori (1983), Sekai seiji no naka no nihon seiji, Tokyo, Yūhikaku Toriyama Masamitsu (1989), Mabushisa to takumashisa to: keizai kyōryoku no gemba kara, Tokyo, Tōyō keizai shimpōsha Tsūshō sangyōshō (1985), Keizai kyōryoku no genjō to mondaiten 1985, Tokyo, Tsūshō sangyō chōsakai —— (1989), Keizai kyōryoku no genjō to mondaiten 1989, Tokyo, Tsūshō sangyō chōsakai Viviani, Nancy and Wilenski, Peter (1978), The Australian Development Assistance Agency: A Post-Mortem Report, Brisbane, Royal Institute of Public Administration Wall, David (1973), The Charity of Nations: The Political Economy of Foreign Aid, New York, Basic Books. Watanabe Toshio and Kusano Akira (1991), Nihon no ODA o dō suru ka, Tokyo, NHK Books White, John (1964), Japanese Aid, London, Overseas Development Institute —— (1974), The Politics of Foreign Aid, London, Bodley Head Wood, Robert E. (1986), From Marshall Plan to Debt Crisis: Foreign Aid and Development Choices in the World Economy, Berkeley, University of California Press Yamamoto Tsuyoshi (1978), Nihon no keizai enjo, Tokyo, Sanseidō Yano Tōru (1982), ‘Kokusai kankyō to nihon gaikō no kadai’, Hōgaku seminā sōgō tokushū, No.18, pp.246–8 —— (1986), Kokusaika no imi: ima ‘kokka’ o koete, Tokyo, NHK Books

218  Bibliography Yasutomo, Dennis (1983), Japan and the Asian Development Bank, New York, Praeger —— (1986), The Manner of Giving: Strategic Aid and Japanese Foreign Policy, Lexington, Lexington Books —— (1989–90), ‘Why Aid? Japan as an “Aid Great Power”’, Pacific Affairs, Vol.62, No.4, pp.490–503 Yomiuri shimbun seijibu (1983), Dokyumento gyōsei kaikaku, Tokyo, Yomiuri s himbunsha Young, Oran (1989), ‘The Politics of International Environmental Regime Formation: Managing Natural Resources and the Environment’, International Organization, Vol.43, No.3, pp.349–75 —— (1991), ‘Political Leadership and Regime Formation: on the Development of Institutions in International Society’, International Organization, Vol.45, No.3, pp.281–308

Index

Abe Motoo 60 Administrative Management Bureau 129 Administrative Reform Commission 81 Administrative Reform Promotion Council 88, 89, 90, 97 Afghanistan 137 Africa 48, 68, 117, 135, 141, 145, 147, 154; and Japanese aid 168 African Development Bank 118, 123 aid, Japan: to Asia, 113, 134–60, 194; criticisms 51–2, 60–4; development impact 3–5, 151, 165–71; domestic concerns 30–1, 42; and foreign policy 94, 96, 161–89; new agenda and Japan 180–4; policy innovation 7–8, 102–33, 192–5; as tool 171–7 aid administration 72–101; criticism 73–8; consultative model 99–101; problems 3, 73–8; public debate 78–80; reform 3, 7–8, 72–101, 192; Somucho review 81–7; structure 73–5; study of 5–7 aid cycle 77 aid expansion plans 88, 103–6, 185–6

aid guidelines 37–8 aid minister 92, 95 aid ministry 79, 90–4, 95–9 aid procedures 63 aid studies, early 61–2 ASEAN-Japan Development Fund 149–50 Asia 22–4, 48, 134–60; dependence on Japanese ODA 142–3; focus of Japanese aid 144–7 Asian Development Bank 118, 121, 123–4, 155, 182, 185 Association for the Promotion of International Cooperation 63, 97 Association of Southeast Asian Nations (ASEAN) 138, 142, 147–52, 176, 194 Audit Bureau 33, 52, 129 Australia 98, 108, 113, 129, 130, 142 Austria 108 Bahrain 164 Bangladesh 116, 123, 136, 137, 140, 156, 171 basic human needs 39, 117–18 Belgium 66 Bhutan 137 Brady Plan 122, 124   219

220  Index

Brazil 113, 164 Brunei 164 budget, aid 60, 77, 80, 93–4, 96, 97, 105 Burma, see Myanmar business, role of in aid 55, 94, 109–10 Cabinet 74, 88, 90, 94, 97, 99, 193 Cambodia 139–40, 158, 159, 177, 180, 190 Canada 66–7, 129–30 cartoons and aid 50 charity 16, 18, 41–2, 65, 70 China 31, 35, 111, 113, 123, 135, 138–9, 142–3, 152, 164, 168–9, 171, 173, 176, 177–8, 186 Christian principles 16 co-financing 155 Colombo Plan 43, 135, 184 comprehensive security 27; see also strategic aid Constitution 94 consultants 108–12 coordination 77–8, 96 corruption 58–9 Councillors, House of 93 country programming 128 Crown Agents (UK) 117, 118 culture and aid philosophy 15–17 debt problem 122–4 debt relief 117 democratisation and aid 35, 172 Denmark 66 Den Hideo 92, 93 Development Assistance Committee (DAC) 3, 4, 19, 43, 48, 85, 90, 91, 104, 108–9, 181–3, 184, 188, 191; and Japan 106–8, 182–3; reviews of Japan 104–5, 128, 144, 182; terms targets 107 development education 50–1 Diet 59, 60, 92, 93–4 disbursement of aid 106, 115

donor motives 17–19 donor policies 4–7 Eastern Europe 4, 31, 35, 120, 154, 172 economic cooperation 20, 30, 75 economic cooperation bill 92 economic cooperation law 79, 93–4 Economic Planning Agency 21, 40, 47–9, 74, 85, 98, 129–30 Egypt 111 Engineering Consulting Firms Association 97 Environment Agency 125, 127 environmental aid 62, 76, 79, 124–8, 154, 186 European Bank for Reconstruction and Development 120 evaluation of aid 129–32, 167; see also aid, development impact Export-Import Bank of Japan 23, 122–3, 136, 149, 184 export promotion 19–20 food aid 82 food production assistance 82 four ministry system 74–5, 85–6, 100–101; see also loans France 66, 91, 106, 112, 135, 141, 142 Fukuda Doctrine 148, 185 Fukuda Takeo 102, 103, 149, 185 grant element 107, 204–5 n.7 General Agreement on Tariffs and Trade 43 Germany 66, 67, 106, 108, 112, 121 grant budget 81, 83 grants 77–8, 81–4, 107, 115–18, 141; Asia 143; small grants 81–2, 117, 154, 166–7; and untying 109 Group of Seven 76, 153 Group of Twenty Four 4, 120 Gulf crisis 31, 33–4, 88, 95, 163, 178

Index  221

humanitarianism 18, 28, 32, 42–3, 48 human rights 156 Hungary 120 Ikeda Hayato 33, 135, 184 income doubling plans 21 India 113, 127, 136, 155, 167 Indochina 120, 139–40, 154, 188, 194 Indonesia 24, 37, 59, 102, 113, 135, 144, 150, 151, 155, 164, 171, 184; see also Intergovernmental Group on Indonesia, and Timor, East information on aid 50 innovation in aid, see aid, policy innovation Institute of Developing Economies 63 Inter-American Development Bank 123 Intergovernmental Group on Indonesia 119, 138, 149 International Cooperation Day 50 International Development Association 118, 123 International Monetary Fund 121, 123, 181 International Tropical Timber Organisation 124–5 Italy 66, 112 Jamaica 123 Japan: as aid power 8–11, 32, 161–89, see also leadership; and Asia 16–17, 134–60; as bridge 30; and development 164–71; as donor 4–6, 180–4; duty 29; global political role 177–80; insularity 16; and international institutions 181–4; as model 183, 194; modernisation 15; political and strategic objectives 172–3; political initiatives 184–7; and Third World 171–7 Japan-Asia Investment Fund 123 Japan International Cooperation

Agency (JICA) 50, 59, 61, 69, 74, 75, 76, 81, 83–4, 88, 89, 90, 92, 100, 116, 145, 152, 193; and country programming 128; and environment 125; and OECF 90, 100 Japan Socialist Party 92 joint financing 113–14 Kaifu Toshiki 34–5, 102–3, 140, 153, 159, 163, 177, 186, 191; see also political principles Keidanren (Federation of Economic Organisations) 38–9, 78–9; and environmental policy 126 Keizai Dōyukai (Japan Committee for Economic Development) 96–7 Kishi Nobusuke 22, 23, 59, 135, 184 Kōmeitō 39, 92 Kubota Yutaka 63 kudos 175 Laos 137 Latin America 122, 135, 141, 147, 168 leadership in aid, and Japan 8–11, 161–89, 195–6 Liberal Democratic Party 54–5, 90, 98 LLDCs 115–18, 137, 144 loans 77–8, 84–7, 106–7, 112–15, 141, 154–5; contribution to Asia 151; and untying 108–12 Mainichi shimbun 53–6 Malaysia 111, 113, 123, 149–51, 155 Management and Coordination Agency, see Sōmuchō Mexico 76, 113, 127, 154 Middle East 141, 147, 168 military role, Japan 159, 178; see also United Nations peacekeeping Minato Tetsurō 95

222  Index

Ministry of Agriculture, Forestry and Fisheries (MAFF) 99 Ministry of Construction 99 Ministry of Finance (MOF) 19, 73, 74, 80, 82, 96, 99, 105 Ministry of Foreign Affairs (MFA) 14, 16, 19, 20–2, 24–6, 31–2, 34–8, 41, 42, 50, 51, 53, 55, 63, 64, 66, 70, 74–6, 80, 82, 88–90, 96, 99, 105, 192, 194; and aid ministry 90–1; and aid philosophy 14, 20, 24–6, 32–4; and aid to Asia 145; and environmental aid 126 Ministry of Foreign Affairs Advisory Committee on ODA 24–6 Ministry of International Trade and Industry (MITI) 19, 20–2, 24, 27–8, 32, 53, 63, 74–5, 99, 100, 145–6, 150, 194 Ministry of Posts and Telecommunications 67 Ministerial Committee on Overseas Economic Cooperation 74 Miyazawa Kiichi 37, 122, 124, 156, 158, 163, 186 Mongolia 140, 177 Morocco 59 MSACs 117 multilateral banks and Japan 120–2 multi-bi cooperation 119 multilateral aid 106, 118–22 Myanmar 31, 35–6, 37, 113, 116, 136–7, 148, 156, 164, 172, 173, 174, 188, 189 Nakanishi Tamako 39–40, 92–3 Nakasone Yasuhiro 93, 102, 186 National Land Agency 74 Nepal 137 Netherlands 66, 67 New AID Plan 145–6, 149 newspapers and aid 45–6, 51–7, 81 Nicholson, Harold 59 Nigeria 113, 164 Nihon keizai shimbun 56–7

non-government organisations (NGOs) 46, 50, 64–70, 75, 89, 181, 192; apan NGO Center 67–8; NGO subsidy 70; types 67–8 non-project grants 117–18 North Korea 139 Norway 67 ODA charter 36, 79, 90, 97, 99–101, 190 Ōhira Masayoshi 95, 102, 186 OISCA 65 Ōkita Saburō 95 Organisation for Economic Cooperation and Development (OECD) 2, 3, 43, 125; see also Development Assistance Committee Overseas Economic Cooperation Fund (OECF) 23–4, 50, 61, 74–5, 76, 84–7, 88–92, 96, 100, 113–15, 119, 122–3, 138, 149, 169, 184, 193; budget 115; country programming 128; environmental guidelines 125–6; recipients 113 Overseas Technical Cooperation Agency 184 Pacific economic cooperation 186 Pakistan 35, 36–7, 136, 169 Papua New Guinea 111, 126 Paris Club 113, 122–3 Paris Summit 124 Paraguay 164 peacekeeping, see United Nations peacekeeping Peru 175 Philippines 52, 59, 111, 113, 119, 149–51, 164, 171, 173–4, 188, 189 philosophy of aid 13–44, 61–2, 88, 107, 123, 191 Poland 120, 123 political principles of aid-giving 34–8, 102–3, 172, 174, 191

Index  223

politicians 58–9, 94 poorest countries 115–18; see also LLDCs post-evaluation 132 poverty 166, 170–1 prime ministers and aid 74, 97, 98, 102, 184–7 Prime Minister’s Office 47–8 pressure groups 70–1; see also non-government organisations private sector 69 project-finding surveys 85 public debate 7, 45–6 public opinion 47–51 Qatar 164 quality of aid 107–8, 133 quantity of aid 103–8 recycling 122–4 rehabilitation loans 114 request first principle 75, 82–3, 128, 193 rescheduling 123 resources and aid 20–2, 28, 147 Russia 178 Satō Eisaku 185 scandals 57–60 security 18–19, 147–8, 178; see also strategic aid self-help 16, 39, 42, 87, 122, 170–71 Sōmuchō 52, 53, 80–7, 130 South Asia 136, 142 Southeast Asia 58, 141, 153, 185 Southeast Asian Development Fund 22, 184 South Korea 24, 59, 113, 137, 185 South Pacific 173, 176, 188 Soviet bloc 3 Soviet Union 4 Special Advisory Council on Promoting Administrative Reform 88–90

Sri Lanka 113, 136 staffing of aid 76, 79, 87 statistics for aid 198 n.18 strategic aid 5, 27–9, 137, 147–8, 172–3 structural adjustment loans 36, 113 Sudan 116 surveys 111 Suzuki Zenkō 186 Sweden 66, 91 Switzerland 67 Syria 113 Taiwan 137–8 Takeshita Noboru 102, 104, 149, 152, 156–7, 186; international cooperation initiative 104, 186 Tanaka Kakuei 185 targets for aid 103–6, 109 technical assistance 53, 63, 77–8, 81–4, 86 tendering 109–12 Thailand 111, 113, 151, 155, 169, 171 Timor, East 37, 102 trade and aid 19–22, 147 two-step loans 113 United Kingdom 66, 98, 110, 135, 141 United Nations 118–21, 135, 139 United Nations Conference on Trade and Development 23, 184–5 United Nations Children’s Fund 137 United Nations Development Programme 117, 119 United Nations Environment Programme 119, 124–5 United Nations Fund for Population Activities 119 United Nations High Commissioner for Refugees 119 United Nations peacekeeping and Japan 153, 158, 159, 178, 180 United Nations Relief and Works

224  Index

Agency for Palestine Refugees in the Near East 119 UNTAC 158 United States 33, 43, 66, 106, 112–13, 121, 135 United States and Japanese aid 5, 10, 161–3, 171, 176–7 United States and Japan, aid alliance 162 untying 108–12, 183–4 Vietnam 52, 68, 156–8, 185

volunteer savings scheme 67, 68, 71 wastage in aid program 52–3, 62; see also evaluation of aid World Bank 36, 113, 114, 118–21, 122–3, 155, 181, 183 World Food Programme 119 Yomiuri shimbun 52–3 Yoshida Shigeru 184