Japanese ODA: Who Benefits?

Maidhc O'Cathail takes a critical look at Japanese
development aid


Japan celebrated 50 years of Official Development
Assistance (ODA) in 2004. The world's second largest
donor, Japan has disbursed over $230 billion in the
last five decades. So it would seem that Japan has
good reason to feel proud of its generosity to less
fortunate nations. But who benefits from Japanese ODA?
How effective is it? And to what extent is it
motivated by humanitarianism?

"ODA is administered with the primary objective of
promoting the economic development and welfare of
developing countries. Every donor country has the
obligation to uphold this principle," wrote Kazuo
Sunaga, of the Ministry of Foreign Affairs, in a 2004
discussion paper titled The Reshaping of Japan's
Official Development Assistance (ODA) Charter.

But is this just empty rhetoric? According to Euroact
Japan Ltd., which offers consulting services to
companies on the tendering process for lucrative ODA
projects, “Since the [ODA] Charter does not have force
of law, it can be - and in fact is - applied rather
flexibly.”

A 1998 comparative study on bilateral aid entitled Who
Gives Foreign Aid to Whom and Why? is also at variance
with official ODA pronouncements. It criticises Japan
as a donor which seems "to care mostly about UN
votes", does "not particularly reward good policies or
institutions", and is "less reactive than other donors
to the income level of the recipients.” But most
damningly, it finds that Japanese aid “has little
relationship to poverty or democracy."

Moreover, Japan ties “a relatively large amount of
aid” to the condition that the recipient uses it to
buy products from Japan, according to a United Nations
Development Programme (UNDP) report, Aid in the 21st
Century. "Recipient countries lose out from tied aid
on several counts. The absence of open market
tendering means they are denied the opportunity to get
the same goods and services at a lower price
elsewhere." The UNDP report estimates the cost of tied
aid at $2.6 billion a year for low-income countries.

Despite ODA being a honeypot for many sogo shosha
(large trading firms like Sumitomo, Mitsui, and
Mitsubishi), Japan still fails to meet its
international obligations to the poor. Although the UN
Millennium target for development aid is 0.7 per cent
of Gross National Income (GNI), Japan contributed only
0.19 per cent of its GNI in 2004. That's a mere 19 yen
in every 10,000 yen that its economy produces. Only
the United States and Italy are more niggardly toward
the poorest.

One might expect more generosity from Japan, the only
G7 country to have once received ODA. And contrary to
its self-image as a peace-loving nation, Japan spends
almost five times more on its military than it does on
development aid.



On 19 January 2006 Foreign Minister Taro Aso gave a
speech with the instructive title "ODA: Sympathy is
not merely for others’ sake." After quoting the
Japanese proverb “Nasake wa hito no tame narazu” (One
who is kind to others is bound to be rewarded), Aso
proclaimed a less altruistic motive for aid. “ODA is
essentially about having other countries first use the
precious money of the Japanese people for the benefit
of the Japanese people later on.”

Aso identified two types of benefits for Japan. First,
he defended Japan’s "chequebook diplomacy" as a means
of spreading Japanese values such as what he called
“Japan's original philosophy on labour.”

Aso referred to the Kojiki (Record of Ancient Matters)
in which Amaterasu Omikami, the sun goddess, saw gods
working in heaven. “Given that even the gods work,
labor is regarded as a natural deed that will do good
to the people,” Aso concluded, as if it were a
uniquely Japanese perspective.

The Foreign Minister’s two years spent mining diamonds
for his family business in Sierra Leone in the early
1970s seems to have confirmed his prejudice about the
superiority of Japanese ways. “I did not see many
Europeans or Americans who worked hard together with
the local people, contrary to Japanese people,” Aso
recalled. “While I should refrain from generalizing, I
can say that it was only us Japanese who had taken an
approach to work together with the local people,
eye-to-eye.”

Having established the cultural benefit to Japan of
disseminating its superior work ethic to the world,
Minister Aso went on to describe the strategic
benefits of “sympathy”.

In India, the largest recipient of yen loans for the
past three years, Aso witnessed the construction of an
ODA-funded subway system in Delhi. India is
collaborating with Japan on UN reform, he said. Both
countries have been seeking permanent seats on the UN
Security Council.

And helping to build Pakistan's infrastructure would
create “stability in Afghanistan and central Asia and
also has the value of conserving the distribution
routes in the surrounding region,” the Foreign
Minister said. Japan, in other words, needs Pakistan
to ensure the oil keeps flowing to fuel Japan’s
enormous production and consumption.

China, Indonesia, Philippines, Thailand, and India -
the top five recipients of Japanese ODA in 2003-04 -
are countries with varying commitment to democracy and
human rights, and significantly none of them are among
the world's 50 Least Developed Countries - those who
are most in need of assistance.



The 2003 Revised ODA Charter lists four priority
issues : poverty reduction, sustainable growth,
addressing global issues, and peace-building.

But is Japan a good role model for sustainable growth?
On a per-capita basis, Japan uses 2.7 times more than
its fair share of the world’s energy resources. It has
an average ecological footprint of 4.3 hectares,
almost double the global average. That’s how much land
and water area a given population occupies to produce
all the resources it consumes and to absorb its waste.
There are only 1.8 hectares available to each person
in the world. If everyone on Earth were to live like
the Japanese, we would need nearly two and half
planets. Clearly, it's not ecological sustainability
that the ODA Charter means by “sustainable growth.”

Research by the New Economics Foundation (Nef) also
raises doubts about the compatibility of the ODA’s
priority issues of poverty reduction and “sustainable”
growth. The report entitled Growth isn't Working,
released in January 2006, argues that redistribution
of wealth not growth is the key to reducing poverty.
”Redistributing just one per cent of the income of the
richest 20 per cent of the world's population,” the
report claims, “would have the same benefit as world
growth of 20 per cent without redistribution.”

Nef concludes that our current economic obsession with
growth is not only the “self-serving rhetoric of the
rich,” but ultimately self-destructive: “We cannot
afford to continue with a system which sacrifices the
environment on which we all depend for our very
survival to give yet more to those who already have
too much, in the hope that a few more crumbs will fall
from the rich man's table.”



Donor countries generally give aid because it is in
their own interest to do so. Japan is no different,
though it appears to be particularly self-serving. The
Commitment to Development Index (CDI) ranks 21 of the
world's richest countries based on their dedication to
policies that benefit poor nations. Japan ranked last for the past three years.