It is said that Japan was able to rebuild the country after the second world war with the help of World Bank (WB) loans.1 The loans helped build the Tokaido Shinkansen (Express Train) Railway as well as the Tomei Expressway. And Japan paid back all its loans. Regarding countries receiving Yen loans, such as the Philippines and India, the Japanese government emphasizes that efforts to repay borrowed funds would help them in their "economic development" just as they did to Japan. This idea of "self-help" is not limited to the Japanese Ministry of Foreign Affairs (MFA). The brochure issued by the Tokyo Office of the WB totes Japan as an example of its success, with a photo of the shinkansen. Academics in the field of official development assistance (ODA) also emphasize this concept.
According to one scholar, Japan's concept of "selfhelp" arose from the confidence it gained in having achieved economic development after the second world war. Japan became a member of the Wo r l d Bank in August 1952, and borrowed funds for postwar reconstruction. In the 1950s those funds were used for steel and automobile industries, shipbuilding and dam constructions. Later in the 1960s, the major beneficiaries of the loans were the road and transport sector, for such projects as the construction of the Meishin Expressway and the Tokaido Shinkansen. Based on this experience, Japan emphasizes "self-help" as one of the concepts of ODA.2
The shinkansen and the expressways no doubt benefited the people of Japan. But from another point of view, did these projects bring about democratic politics, just prosperity or social equality?
Japan continued with big public construction projects including more shinkansen and expressways. This led to a government deficit of over 700 trillion Yen, including government bonds and loans, an amount most people deem impossible to repay. Thus while the Japanese government insists that ODA recipient countries pay back their loans, it has already given up on paying its own loans. The Japan Highway Public Corporation, in particular, is the target of harsh criticism for continuing to borrow money to build superfluous expressways. But because of the existing structure of vested interests among the politicians, business people, and government ministries and agencies, the road construction projects have not ceased. WB is not solely to blame for this situation, but it is the WB loans that created the groundwork for post-war public works using large amounts of borrowed funds. The loans provided "speed" and "convenience" into the lives of the Japanese. But at the same time, they brought about an undemocratic system of dubious flow of funds, centralization of power to the bureaucrats, and decision- making behind closed doors. This aspect of the development needs to be paid closer attention.
The 50-year history of Japanese ODA started in 1954 when Japan participated in the Colombo Plan3, an international organization for economic development of Asian and Pacific countries. War reparations to the Philippines, Vietnam, Burma and Indonesia also started that year. For countries which did not claim war reparations, such as Laos and Cambodia, Japan began to extend aid grants as a form of quasi-reparation. These were not paid in cash, but in (Japanese) products and development projects. It in effect built footholds for later operations by Japanese companies abroad, for their exports and participation in economic infrastructure construction projects. These reparations were the starting point of Japanese ODA. The prevalence of economic infrastructure construction projects, such as dams and roads, is a unique feature of Japanese ODA.
The concept of "self-help" emphasized by the MFA and others is in reality loan being offered to Asian and other countries to undertake public works projects.
Out of the total Japanese ODA fund, the grant ratio is extremely low, while the ratio for aid in the form of loans with interest is high. Most of donor countries have more than 90% grant ratio, while Japan trails at 55.3%. Spain, which has the next lowest rate, has 78.1%. The difference between Japan and other donor countries in the ratio of grants to total ODA fund is striking.
Japanese ODA is funded from both the national general account budget and public investment and loans. It uses money borrowed from postal savings and pension funds. This leads to the low grant ratio and requires payment with interest for loans to enable the Japanese government (Japan Bank of International Cooperation as the actual implementing agency) to repay the postal savings and other funds. That is why the government urges repayment using the concept of "self-help".
At the October 2004 Tokyo symposium on ODA, participants from Indonesia and the Philippines highlighted the destruction of the environment and people's lives as well as forced evictions brought about by dam construction projects funded by Japanese ODA (Yen loans in particular). The construction of a huge bridge in Bangladesh caused similar problems.
These problems have been pointed out more than 20 years ago, and yet they repeatedly occur in many countries. The call for a fundamental review of the ODA has been made around the world based on the view that it does not respond to the really urgent situations and needs of the people.
The low grant ratio and emphasis on economic infrastructure projects in Japanese ODA should be changed. Assistance should eliminate inequality in the world, specifically eradicate poverty and create peace. For that purpose, Japan must increase grants on direct services for poverty eradication.
This is not a novel idea.
This idea has been globally agreed upon at the UN Millennium Assembly in September 2000. Countries around the world including Japan adopted the Millennium Declaration, and committed themselves to eliminating poverty, promoting the dignity and equality of human beings, and working towards achieving peace, democracy as well as sustainable development. The Millennium Development Goals that came out of the Declaration set forth specific targets, such as reducing by half the number of people suffering from extreme poverty and starvation by 2015, and required countries to strive further to eradicate poverty around the world. Japan should join these efforts and explicitly include poverty eradication as the target for aid. The 50th anniversary of Japanese ODA should provide an excellent opportunity to do this.
Just before the October 2004 Tokyo symposium, the Reality of Aid-Asia Pacific3 issued a statement after a 3-day conference calling for an ODA "worthy of public trust and support." The statement refers to the Preamble and Article 9 of the Japanese Constitution and proposes "peace and harmony," "prosperity for all" and "just and democratic society" as the visions of future ODA. It also proposes "people-centeredness," "focus on the poorest," "addressing universal human concerns and issues," "preventing injustice" and "aid as an entitlement to the poor" as specific principles.
The statement reflects the critical view of people from other countries in Asia on Japanese ODA. There is a strong concern about the increasing influence of national-interest arguments (i.e., ODA should contribute to securing security and prosperity of Japan) as well as the militarization of aid (such as prioritizing reconstruction assistance to Iraq in the "war against terror").
One of the proposed principles in the statement, "aid as an entitlement to the poor," can be related directly to the right of the people to live in peace, mentioned in the Preamble of the Japanese Constitution. The 50th anniversary of Japanese ODA should be an opportunity to work further for an ODA that contributes to the realization of the people's right to live in peace.
Mr. Kiyokazu Koshida is a Board Member of the Pacific Asia Resource Center (PARC).
For further information, please contact: PARC, 3F, Toyo bldg., 1-7-11 Kanda Awaji-cho, Chiyoda-ku, Tokyo, Japan, ph (813) 5209-3455; fax (813) 5209- 3453; e-mail: email@example.com; www.parc-jp.org
1 Speech of a Japanese Ministry of Foreign Affairs (MFA) representative, Mr. Mitsuhiro Wada, Director, First Country Assistance Planning Division, Economic Cooperation Bureau, in an international symposium on Japanese Official Development Assistance (ODA) held in Tokyo on 9 October 2004.
2 Toshio Watanabe, Yuji Miura, ODA: Nihon ni nani ga dekiru ka (What Japan can do), (Tokyo: Chuko Shinsho, 2003) page 46.
3 See http://www.colombo-plan.org for more details about Colombo Plan.
4 This network publishes the semi-annual report The Reality of Aid.