Problems and solutions of Japan's ODA

Takeshi Nakajima

■１、Introduction
　　The international community is now searching for a new post-Cold War international order, and, in this context, Japan's diplomatic efforts to create and maintain a stable and peaceful international environment is becoming increasingly important so as to preserve Japan's present economic survival and prosperity. This means that Japan should focus on and take appropriate action to maintain its vital national interest using every single means that Japan possess.
　　In this essay, therfore, we should like to deal with three current issues concerning Japan's ODA, which is one of the most important resources that Japanese diplomacy owns.

■2、Lack of special organization for ODA
　　The first point at issue is that Japan has many ministries and government offices working in the field of economic cooperation, which deprives ODA of efficiency and a mechanism to work out a simple diplomatic viewpoint in this area.

　　Unlike the image associated with the word "Official Development Assistance", the Ministry of Foreign Affairs is not the only agency managing Japan's economic cooperation. To cite an instance, as we've already seen in the first chapter, while investment and lending for development (開発投融資) is under the jurisdiction of the Ministry of Foreign Affairs, Yen Loans, the major loan assistance program in Japan, are decided upon the Ministry of Finance and the Economic Planning Agency. What is more, loans for assisting medium and small sized enterprises in developing countries are supervised by the Ministry of International Trade and Industry. This complicated system of decision making is called the "Four ministries Regime" customary. Government and some researchers claim that this scheme is working quite sufficiently in order to adjust Japan's loan assistance to other domestic policies and to keep them in balance.
　　The problem is, however, that this sort of deliberation and decision-making within the government not only interrupts the performance of assistance but also conceals the concrete criteria that led to the decisions concerning each assistance. For instance, it was only after 1992 that the ODA charter, laying down some principles of Japan's economic aid, had been established. That means, it took almost 40 years to officially announce a basic set of principles concerning Official Development Assistance. Moreover, since this ODA charter prescribes vaguely, it can hardly be said that it is a practical standard for Japan's international aid. In fact, it is very doubtful whether Japan severely punished India and Pakistan by cutting yen loans with a resolute attitude because of their nuclear tests that obviously violated the ODA charter. This is a good illustration of how poor management has been done within the "Four Ministries Regime".
　　In addition to these disadvantages, an ill defined chain of command between field staffs and government offices makes it impossible to invest more authority in those in the executing sector. A good example can be found in the configuration of directors of the Japan International Cooperation Agency (JICA). Actually, some of executives are send from the above four ministries and other ministries as well. Although JICA is under the jurisdiction of the Ministry of Foreign Affairs, it is to some extent under the control of these different ministries. What is more, some ministries have their own "field agencies" to practice their aid in order to satisfy their factionalism. For example, while the Economic Planning Agency controls the Overseas Economic Cooperation Fund (OECF), the Ministry of International Trade and Industry supervises the activities of the Japan Overseas Development Corporation (JODC), and these two different organizations are doing almost the same thing.

　　With the circumstances mentioned earlier in mind, we can now clearly see where the problem lies. We may come to the conclusion that Japan must have an integrated organization operating its official development assistance. For instance, the United States has a joint agency for international aid, the United States Agency for International Development (USAID), which is virtually under the direct control of the White House. This makes USAID easier to demonstrate leadership in its jurisdiction, and it enables the Agency to eliminate other departments' factionalism. It should also be added that USAID not only manages the process of policy making but also administers the field section, which enables them to get direct responses from the field staffs and reflect their opinion at the policy level more easily.
　　We believe that this kind of system, which is common to most donor countries, would be a good example for restructuring Japanese aid.

■３、People's little interest in ODA
　　Secondly, one of the serious problems concerning Japan's ODA is that the Japanese people have only limited interest in economic assistance, which is thwarting possible reforms concerning Japan's ODA.

　　Over the past few decades, a considerable number of studies have been made on Japan's political decision-making process, and according to these studies, three major actors play their roles in order to pursuit their individual interests. That is, politicians, bureaucrats and pressure groups including local constituencies and various trade associations. In the first place, politicians, who always aim at winning the next election to maintain his power, represents the interest of his supporters by exercising his political power over bureaucrats. Bureaucrats, who cannot be indifferent to success and fame, accept those requests made by politicians in exchange for political support of his promotion. Finally, pressure groups acquire their private interests by offering organized votes and campaign funds to politicians. The above relationships make it clear that the Japanese government is heavily influenced by these three actor's intentions.
　　As political actors are chasing their special interests, public interests are left behind. As M. Olson acutely pointed out in his study "The Logic of Collective Action", people tend to avoid making contribution to a large social group, because in a large group the power of individual member is relatively weak, which makes them easy to free ride the profit. High schools in Japan, for example, some students often skip clean-up duty because they tend to think that other students might do it and their absence would not affect the collective interest. On the other hand, when it comes to the year-end examination, everybody get serious about it since it is critically important to their private interests. This simple example makes it clear that people have a tendency to pursuit private interests, and public interests are often ignored. And here one gets a glimpse of the secret background of Japanese political system.
　　Let us now return to ODA. Under these circumstances, it is next to impossible to expect much from politicians. As a matter of fact, some politicians supporting ODA may be looking for Japanese enterprises' profit, so as to gain their political fund.
All these things make it clear that the only key holder to change this situation is, of course, the people who elect politicians. However, the same may be said, no doubt, of people's attention towards economic cooperation, and there is evidence to support this. According to the opinion poll among 2000 Japanese adults conducted by APIC, 51% answered that they do not know either the outline of ODA, or even the word "Official Development Assistance" itself. Moreover, only 14.2% of people knew that there was a 35% of budget cut in Fiscal Year 1996's ODA. Furthermore, 98.9% still believe that Yen Loans have been provided as a tied aid in spite of the fact that 99% of Yen Loan has now been untied.

　　On these grounds we have come to the conclusion that we need some positive steps to raise public awareness and help form the public opinion. For instance, introducing Japan's international assistance in high school textbooks in an appropriate way seems effective in promoting and cultivating people's interest towards ODA. In this program we will teach students not only details of development assistance but also its importance from a diplomatic point of view, so that they would be able to consider aid as a means to maintain and expand Japan's national interests. Assisting NGO's advertisement is also an effective measure to appeal to the public opinion, since those volunteer groups do not have sufficient means to communicate with the public it. But the most important thing is that the Ministry of Foreign Affairs publicizes themselves the advantage of the Official Development Assistance, since they are the very people who have sufficient information to convince media. At the present time, the Association for Promotion of International Cooperation (APIC), an affiliated organization of the Ministry of Foreign Affairs is in charge of promoting ODA, including the publication of the ODA annual report, information service, and short courses for publicity. Still and all, it is insufficient to form and to move the whole country. In short, they are ready to answer questions but they are just waiting until the question arrives. In fact, the Plaza for International Cooperation, a branch office of APIC located in Azabu, does contain some valuable information, but the problem is that the Plaza itself is unknown to the public.

■４、Quality of ODA
　　The third question that we must consider is the quality of Japan's ODA, which has been criticized for a long time.
Usually, the quality of ODA is measured by three different guidelines: Grant Share, Grant Element and Tying Status. Grant Share is the percentage of donation in entire ODA, and according to the annual report, Japan's Grant Share is now 41.4%, while 20 other donor countries reach more than 70%. This means that a large part of Japan's ODA are loans. Grant Element is the index of condition of repayment, and a loan of Grant Element 0 means that loan has been given in a commercial condition. According to the annual report, Japan's Grant Element is now 80.5%, which is again the lowest figure among 21 major donor nations. This is why some experts claim that these numbers represent the poor quality of Japanese ODA.

　　Opinions are divergent on this point, however, and there are two objections that can be raised against these criticisms.
　　First of all, it would be fallacious to say that low Grant Share means poor quality of assistance. Historically, donor nations shifted their development assistance from large-scale project to those that satisfy Basic Human Needs (BHN), seeing that project assistance hardly solved people's poverty. Nevertheless, despite increasing grass-roots donation and Basic Human Needs to respond to some criticisms, Japan still attaches greater importance to project loans because the composition of recipient nations is totally different from other European donor countries. For instance, 38.2% of the United Kingdom's bilateral assistance are given to Africa and Middle East in 1996, where people are still living in extreme poverty. On the other hand, 46.9% of Japan's bilateral assistance are given to Asian nations in 1996, where most countries already have a relatively firm economic basis. To put it another way, no small a number of recipient nations of Japan's ODA are suitable for loan aids so that their economy can take off.
　　What is more, it would also not make sense to assume that low Grant Element is the outcome of Japanese ODA's commercialism. As we have seen, numbers of statistics vary according to the nation's geographical location. In other words, when we cross-examine donor nations' quality of aids, we should notice that each nation has a different policy and different reasons for their assistance.

■５, Conclusion
　　For the time being, It is unavoidable to face restrictions on the ODA budget in order to rebuild the national economy. We may, therefore, reasonably conclude that Japan should make its ODA more efficient by solving some problems mentioned above.

Takeshi Nakajima (university student)

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©KENSHOKAI/Takeshi Nakajima 1999 All Rights Reserved.