Japan’s ODA at the Crossroads: Disbursement Patterns of Japan’s Development Assistance to Southeast Asia

Abstract

The article examines the recent changes in Japan's official development assistance (ODA) to Southeast Asia in response to domestic and international challenges after the cold war. It argues that Japan is in a position where it has to choose between spending and earning strategies in the disbursement of aid. Influenced by external and internal developments, Japan has tilted toward a spending approach over the last decade. Due to a limited ODA budget, Japan has to optimize the use of aid and disburse it more strategically. Also significant is the noticeable across-the-board increase in the grant allocation to Southeast Asia and Vietnam's emergence as a major recipient. Key words: foreign aid in Asia, Japan, ASEAN Introduction On several occasions, Japan has utilized its official development assistance (ODA) to confront issues and problems both at home and abroad. Japan's record as an aid donor dates back to the period of reparations in the 1950s. Indeed, Japan has come a long way from being a capital supplier of a few million dollars to being one of the largest sources of official development assistance, with billions of dollars at its disposal. Since the first disbursal, Japan's ODA has helped accomplish many of the country's foreign-policy objectives. Apart from reparations and export promotion, the Japanese have also used aid as a form of investment, a confidence-building measure, a solution for bilateral problems, a manifestation of economic power and global leadership, and a tool for buying power and influence in various international organizations. For many years, the conventional notion has been that Japan's aid disbursement is oriented toward its geoeconomic interests. In the 1980s, observers noted the lack of philosophy in Japanese aid, while some Japanese scholars struggled to justify the close alignment of Japan's aid with U.S. strategic interests. A more coherent direction in aid disbursement began to take shape in the early 1990s in response to domestic and international challenges. The end of the cold war, for instance, provided more leeway to Japan's conduct of its foreign policy, which meant flexibility in aid disbursement beyond U.S. strategic considerations. Several studies also noted the improvement of Japan's aid in the 1990s in terms of its quality and characteristics. Since the 1990s, Japan's disbursement of aid has diverged into two paths. One track follows the traditional geoeconomic orientation, the other more humanitarian goals. Hook and Zhang attributed the divergence to Japan's bureaucratic rivalry, particularly between the Ministry of Foreign Affairs (MFA) and the Ministry of Economy, Trade and Industry (METI, formerly MITI), over the management of aid.1 The METI promotes the mercantilist uses of aid that advance Japan's economic interests while the MFA emphasizes the political uses of aid in ways commensurate with Japan's post-cold war regional and global responsibilities. The Hook and Zhang study, however, maintained that the actual disbursement of aid in the 1990s followed the METI rather than the MFA discourse and dismissed the latter as merely rhetoric. On the other hand, Katada examined the domestic and international forces behind the development of Japan's two- track aid approach.2 He averred that domestic institutional constraints and budgetary limitations have made the divergence possible. Certain international factors such as Japan's membership in the Organization for Economic Cooperation and Development (OECD) have improved the quality of Japan's aid, particularly the untying of its aid and the allocation of more grants. As human security began to emerge as an important issue in the post-cold war era, in 1998 Japan's MFA incorporated the concept in its international cooperation and declared that Japan would strive to make the 21st century a human-centered century.3 Following this announcement, the government of Japan and the United Nations Secretariat established the UN Trust Fund for Human Security (UNTFHS). …