The Multinational Monitor

November 1988 - VOLUME 9 - NUMBER 11

J A P A N  T H E   N E X T  E M P I R E


The Real Beneficiaries of Japanese Foreign Assistance

By Ellen Hosmer

AT THE TORONTO SUMMIT in June, Japan crowned its emergence as a major international player. Meeting with the six Western industrial powers--the United States, West Germany, France, Britain, Italy and Canada--Prime Minister Noboru Takeshita promised to contribute to the world's economy in a way befitting a preeminent economic power. With great fanfare, Takeshita announced an ambitious program to increase his country's official development assistance (ODA) to $50 billion over the next five years, a figure that would double the country's contributions to Third World development. And he put the final touches on a $5.5 billion debt forgiveness plan for the least developed countries.

Japan hopes to stifle growing criticisms from the international community and particularly the United States that it is not pulling its weight on the international scene. Rejecting the controversial route of spending more on defense or the costly route of working to lessen trade deficits, Japan hopes to bolster its image by bolstering its contributions to the developing world. Environmentalists, however, are already cautioning that increased aid from Japan may do more harm than good unless adequate safeguards are required of Japan's official development assistance.

In fiscal year 1988, Japanese ODA will increase by roughly 40 percent, in dollar terms, to a figure near $10 billion. Although the increase is less impressive when measured in yen, the rise in the value of the yen as compared to the dollar has let Japan far outpace other donor nations. (ODA calculations are in U.S. dollars.) This year Japanese ODA is expected to finally exceed that of the United States. Under pressure to recycle still more of its trade surplus--$87 billion in 1987--to the lesser developed countries, the trend toward increasing ODA expenditures will most certainly continue. In recent years Japan's ODA has soared. By 1986, only the United States surpassed Japan in official aid. The United States gave $9.7 billion while Japan gave $5.6 billion. In fiscal year 1987, Japan spent $7.4 billion in ODA. Its share of ODA by 1986 had grown to 12 percent of total contributions, an impressive figure considering Japan only began giving aid in the 1960s.

In fact, between 1977 and 1986, Japan's aid quadrupled, while U.S. ODA doubled. Despite these significant increases, Japan's ODA as a percentage of its GNP is still only 0.29 percent compared to the 0.36 percent average for all donor countries and a 0.7 percent U.N. target.

As growth in the world's economy has slowed, Japan has increasingly taken up the slack in development aid. Notes Japan's Ministry of Foreign Affairs in its 1987 ODA annual report, "It has become increasingly difficult for the United States to maintain its former leadership role in the formulating and maintenance of the international order that it held by virtue of overwhelming predominance in the international economy."

But Japan's increasing power on the international aid front worries environmentalists and development experts worldwide, who fear it is a role that the country is ill-prepared to play. Japan's forays into the role of international aid giver are marred by a history of questionable loans. Aid projects sponsored by Japan have frequently benefited the Japanese economy but done little to spark sound development abroad. When such loans did promote development, it was a byproduct of the economic benefits Japanese companies could obtain, says Yoichi Kuroda of the Tokyo-based Japan Tropical Forest Action Network (JATAN). "[The Japanese] don't have a strong environmental or even development background," says Fran Spivy-Weber, the National Audubon Society's director of international programs. "There's a lack of expertise."

After years of trying to push through basic environmental criteria for World Bank, U.S. Agency for International Development (AID) and Inter-American Development Bank (IDB) loans and fighting environmentally or developmentally unsound loans, environmentalists say increases in Japan's ODA, especially in money not allocated to multilateral development agencies, could be a significant setback. International lenders are today more sensitive to environmental considerations but still often ignore environmental standards.

But coming on the heels of major policy initiatives by multilateral development agencies to take the environment into consideration when implementing projects, Japanese intransigence in implementing even minimal environmental safeguards is cause for serious concern. "The official reaction of Japanese Government departments involved in ODA (except for the Environment Agency) has largely been to attempt to deny that environmental problems exist with regard to ODA projects, hide the fact that they exist, or deny any responsibility for them," notes a study on Japan's development assistance written by JATAN and Friends of the Earth Japan for the International Citizen's Conference on the World Bank, Environment and Indigenous People held in September.

"Discussions in the [U.S.] Foreign Relations Committee in April revealed that, for the Greater Carrajas Development Program in Brazil, the recommendation in 1982 of the JICA [Japan International Cooperation Agency] Planning Department was that impact surveys should be done secretly so as to avoid international criticism." Loans, on the whole, were used to bolster the Japanese economy, paving the way for natural resources to flow into Japan, or ensuring that raw materials were available in the sums that the Japanese economy needed. Cases documented by groups like that of JATAN and Friends of the Earth Japan show the lack of even simple environmental or cultural safeguards in Japanese aid efforts and a complete disregard for a project's sustainability. Japan's loans to Malaysia demonstrate the glaring problems associated with Japanese foreign assistance, says Kuroda of JATAN. Japan depends on Malaysia for its tropical raw wood. Nearly 80 percent of the tropical timber harvested in the Malaysian state of Sarawak, the major supplier of tropical timber in the world, goes to Japan.

It is in this state that Japanese ODA has caused the most bitterness. A small $1.5 million loan given by the JICA is demonstrative, says Kuorda. The loan was given to build a 41-meter wide, 28-kilometer long road in the Limbang area of Sarawak. The road cuts into lands where the Penan people, a nomadic Indian tribe, live. Although the indigenous people claim title to the land, logging companies have been able to establish logging operations there.

In Limbang, the huge Japanese trading company C. Itoh & Co. and a local company have done the same. The local company in the joint venture is owned by James Wong, Sarawak's Minister of the Environment, notes Yoichi Kuroda of JATAN. JICA awarded the loan to build the road to C. Itoh and Wong. Although JICA has defended its decision, claiming that the road was indeed development assistance to the local people, an investigation by JATAN found otherwise. According to Kuroda, JlCA's claims that the road was to be used by local people to better their way of life were patently untrue. Contrary to JlCA's assertions that the road had made possible a new school and increased medical access, Kuroda found that the region's school had been there for nearly 30 years and medical visits continue to be made by helicopter. And the local people, with neither cars nor bikes and often no shoes, prefer to walk on the paths, says Kurodo. In addition, soil erosion stemming from deforestation is silting up the river, the Penan's main form of transportation. Although C. Itoh and Wong severed ties with the logging operations in the area after intense criticism, JICA refuses to back down.

For the indigenous Penan people, the road and the logging that has come with it have been devastating. Already Sarawak has lost more than a third of its tropical rainforest and concessions have already been given for huge chunks of what remains. The Penan people in 1987 and 1988 blockaded many of the logging roads in the area, including JlCA's C. Itoh road, to call attention to the impact logging was having on their way of life. They say their traditional hunting grounds have been decimated, their lands have been deforested and their rivers have been polluted.

Problem Projects
Japan's Overseas Economic Cooperation Fund (OECF) and the Asian Development Bank have also financed environmentally unsound projects. Both played a major role in financing the construction of Batang Ai Dam in Sarawak, which devastated 20,000 acres of forest and displaced thousands of natives. The OECF, the country's "number one" official development assistance agency, disbursed $4.3 billion in 1987, and has funded dozens of similarly controversial projects.

The OECF provides concessional loans to developing countries' governments, governmental institutions and corporations. Throughout the description of the loan projects in its annual report, OECF notes the importance of the projects to the economic development of Japan. There is the Paper and Pulp Development Project in Brazil that will "make a steady supply of pulp available to Japan and other countries," and the Saudi Arabia Methanol Project which "makes a supply of methanol available to Japan." More controversial are the Asahan Hydroelectric and Aluminum Project in North Sumatra, Indonesia and the Amazon Aluminum Project in Brazil. When in full operation, the Asahan project will generate 513 megawatts of electricity and some 225,000 tons of aluminum annually while the Amazon Aluminum project will produce 320,000 tons of aluminum and 800,000 tons of alumina annually.

The OECF notes that the latter will do much to develop the region in the Amazon where bauxite is to be mined and that both will boost aluminum supplies available to Japan. But environmentalists say both projects are costly to the ecosystem in which they were built and to the indigenous populations of the regions. In both cases, however, Japan needed to produce cheap aluminum. The OECF is also involved in the Narmada River Dam project in India, which will flood thousands of acres of forest and displace some 70,000 people.

(balance of this article omitted here; unscannable)