Overshadows U.S. : Japan Reaps New Clout in Aid to Asia

TOKYO —  A $9.6-billion foreign aid program that will make Japan the world’s largest aid donor is bringing new political clout to Tokyo and casting a shadow on U.S. influence across Asia, forcing Japan to face up to political and security issues that once were ignored.

From Rangoon to Manila, Beijing to Jakarta, governments are taking note as Japan uses foreign aid as a political weapon, transforming its longtime image as an “economic animal” interested only in promoting exports.

In Burma, for example, Tokyo last year cut off aid in its first protest against repression in a foreign country. It has now lifted the freeze on ongoing projects, but has told the Burmese that new aid will be withheld until another government is elected.

A Distinct Change

“We wouldn’t have done that five years ago,” acknowledged Koichiro Matsuura, director of the Foreign Ministry’s Economic Cooperation Division.

After Chinese troops brutally quelled demonstrations in Beijing early this month, Japan announced what amounted to a freeze on new aid projects to China--although it toned down the political impact by adding a disclaimer that the move was not meant as a sanction.

Japan also has recently used aid as an enticement in promising assistance to Vietnam if it would withdraw its troops from Cambodia, and to Iran and Iraq for ending their war.

“Previously, if 100 countries had to decide their policies on a particular issue, Japan would make up its mind only after the first 50 had reached a decision. That way, Japan always ensured that it would join the majority,” said Morihisa Aoki, deputy chief of mission at the Japanese Embassy in Manila. But now, he noted, “It’s no longer good enough just to watch what the others are doing.”

The Principal Source

And Asian nations are looking more to Japan than to the United States for help in economic development. For 14 of them, Japan is now the principal donor.

Japanese aid focuses on projects ranging from power stations, roads, harbors, railways and communications facilities to water buffalo research and crocodile breeding:

- In Thailand, infrastructure including roads, bridges and a new airport that Japan financed in Bangkok has been credited with igniting the economy of the entire nation.

- In Indonesia, new rice strains developed with Japan’s aid have helped make the country self-sufficient in grain production. Recently Indonesia received a pledge of $2 billion in overall new loans from Tokyo.

- In China, which receives more than half of its foreign aid from Japan, a Japanese Youth Corps volunteer at the Tianjin Institute of Physical Education is teaching Chinese how to play baseball--in a stadium financed by the Los Angeles Dodgers. Beginning in 1990, Japan has promised China more than $1 billion annually in aid for six years. (Japan said nothing about this pledge when it announced its freeze on new aid projects.)

The explosive expansion of Japanese aid--a nearly fourfold increase in the last 11 years--has underscored to Asians a relative decline by the United States, for decades the world’s leading aid donor.

Indeed, Washington itself, burdened by massive budget deficits and “aid fatigue” brought on by its own obligations, is turning to Japan to finance U.S. policies.

In the Philippines, for example, the United States is joining Japan as co-sponsor of a $10-billion multilateral aid program designed to combat poverty and maintain political stability. But while the United States has been more vocal in promoting the five-year package, Japan is picking up most of the bill.

In another instance, former President Jimmy Carter, with cup in hand, came calling on Matsuura, whose rank is the equivalent of a deputy assistant secretary of state. Carter wanted Japanese assistance for the Carter Center civilian aid program in Africa, and Matsuura agreed.

“Essentially, we’re saying to the Japanese, ‘Here’s how to carry out aid. You do it. We don’t have any money,’ ” said one U.S. official in Washington who asked not to be identified.

Although Japan surpassed the United States in 1988 in the amount of official development assistance in its budget, a quirk in the disbursement of American aid enabled Washington to retain its No. 1 position as an aid donor. A $4-billion chunk of U.S. aid appropriated in earlier years was allocated last year, pushing up U.S aid to $12.2 billion from the $8.2 billion that was budgeted.

In 1989, however, Japan has budgeted $9.6 billion worldwide--compared with $8.9 billion for the United States--and this year is viewed as certain to pass Washington.

Many American officials say they see Japanese aid as a complement to U.S. foreign policy, an expansion of the U.S.-Japanese alliance. For example, Japan has responded to U.S. requests for aid to countries that Washington considers strategically important, such as Egypt, Turkey, Pakistan, Jamaica, El Salvador and Honduras.

“We regard Japan as dovetailing with our own interests and objectives,” U.S. Ambassador Nicholas Platt said in an interview in Manila.

As a result, Japan’s voice in U.S. policies, particularly in Asia, is growing. If the Philippine military took power in a coup, another American official asserted, “the first thing we would do would be to consult Japan.”

And Thomas Reese, deputy assistant administrator for the U.S. Agency for International Development, conceded that “an increasingly important focus in the Asian region is on dialogue and coordination with the Japanese.”

Security Anchor

To be sure, Asian nations still look to the United States to provide an anchor for security--and cringe at the thought of Japan assuming such a role. But military concerns are becoming a secondary issue in the region.

As Thailand’s prime minister, Chatichai Choonhavan, told former Japanese Prime Minister Noboru Takeshita last month: “In Southeast Asia, war is no longer a topic. Economic development and poverty are the issues.”

At the same time, a continuation of present trends seems likely to leave American aid in Asia focused on “dirty military work” while Japan’s goes to the “clean job” of lifting living standards.

Japan’s motive in deciding to dramatically increase aid was to promote economic development “from a humanistic viewpoint,” Matsuura said.

But as the aid grew, an awareness of security concerns emerged. In the Philippines, the new outlook is apparent in the tripling of aid in the last three years, to $925.4 million.

Even to officials such as Toshiaki Tsuchiya, head of a Japan Forestry Agency team that is working on a reforestation project in the remote town of Carranglan, the increase was aimed at encouraging the Philippines to let the United States keep its air and naval bases there. The bases help protect sea lanes essential to Japan’s trade in South Asia and the Middle East.

“Our motivation is strategic,” acknowledged Aoki, the deputy chief of mission in Manila.

The increased aid, which started after Corazon Aquino became president in 1986, also marked the first time Japan has made an explicit commitment to promote democracy. In the past, Japan dispensed aid without regard to the nature of the recipient government.

“If (former President Ferdinand E.) Marcos wanted kickbacks, they accommodated him,” one diplomat in Manila said. “If he wanted an uneconomical project, Japanese built it for him. Now the Japanese want to be viewed as a mature and responsible player in Asia rather than a crass economic animal.”

Asian leaders are paying attention to the transformation. In an interview in Manila, Philippine Foreign Secretary Raul Manglapus said that the old “economic animal” approach that stirred violent anti-Japanese protests in the region in the 1970s has disappeared as Japan’s horizons have broadened.

“It would be illogical,” Manglapus said, “to suggest that Japan is not interested in the (U.S.) bases staying here. They constitute social security for its lifelines.”

‘Total Economy’

With aid approaching $1 billion a year, Aoki said, Japan finds itself committed to the “total economy of the Philippines,” not just to specific projects, as has been traditional with Japanese aid.

“We can’t continue giving aid by just looking at the feasibility of one project after another,” he said. “We have to engage in a political dialogue . . . impose conditions on loans. We must comment on the country’s overall economy. We don’t intend to become a multinational Santa Claus.”

Nonetheless, a longstanding policy of providing aid only on request still ties Japan’s hands in urging reforms in other countries.

“It’s hard to provide truly helpful assistance with such a passive policy,” Mitsuhide Yamaguchi, chairman of the Overseas Economic Cooperation Fund, charged in a discussion printed in the Japanese magazine International Development Journal.

The policy also has led to Japanese support for corrupt governments, said Takashi Hosomi, Yamaguchi’s predecessor at the loan agency from 1981 to 1987. But he said that the Japanese position is that a citizen in a recipient country has to live under whatever government that exists.

The Japanese, Hosomi said, “don’t have an international mind. They are moved by irrational sentimentalism--a feeling that something’s got to be done to help poor people.”

Thus, he said, he sees no pattern of supporting democracies emerging as a result of Japan’s action toward Burma and the Philippines.

“We are supporting despotism in Indonesia,” Hosomi declared. “Japan isn’t that much of a stickler about ideology.”

Japan’s reticence to get involved in Asian diplomacy has been reinforced by experiences such as that of Takayuki Matsumoto, 25, a member of the Japan Overseas Cooperation Volunteers, the equivalent of America’s Peace Corps.

When Matsumoto first appeared on his motorcycle in the villages of an impoverished region of eastern Luzon, in the Philippines, “people threw stones at me,” he said. “I didn’t know what to do.”

Matsumoto, an expert in artificial insemination, said the stone-throwing stopped only after farmers realized that he was trying to help them increase their income.

And in China, Japanese officials reported even before demonstrations swept the country last month that Youth Corps volunteers were forbidden by the Chinese government to accept invitations to Chinese homes--out of fear for their safety. Japanese did not fully accept this reasoning but confessed that they could not ignore it.

As some Americans see it, the Japanese have been overly reticent. An American official at the Asian Development Bank in Manila said:

“I don’t think Japan has the psychological makeup . . . to pound the table and demand reforms. They have been willing to provide the money without really worrying about how it was spent. They haven’t been willing to do the sort of work the International Monetary Fund or the World Bank would do in demanding reforms.”

They also lack “a well-defined development theory,” he said, adding: “They are becoming more assertive, but they are still very much feeling their way.”

As an aid donor, Japan has followed in the tracks of others, Kensuke Yanagiya, president of the Japan International Cooperation Agency, which is in charge of grant aid, said in his magazine discussion with Yamaguchi.

“Anything that lacked a precedent, or that other donors weren’t doing, wasn’t for us,” he said. “Now we need to show creativity and ingenuity.”

Major Expansion

As recently as 1978, American aid was more than 2.5 times larger than Japan’s and since then has increased 57%. But Japan has more than doubled its assistance in terms of the yen spent--and in the dollar terms in which aid recipients view it, aid has expanded nearly four times.

Masao Fujioka, president of the Asian Development Bank, said in an interview in Manila that U.S. budget deficits were responsible for the American falloff. However, he added pointedly, “Japan also has a budget deficit but is willing to spend money for aid.”

Around the globe, Japan has become the No. 1 aid donor in 25 countries and gives at least some aid to all 128 members of the United Nations classified as developing nations. Even in Africa, where Britain has asked Japan to join its aid projects, the Japanese will soon catch up with the level of U.S. and West German aid, Matsuura said.

And the trend promises to intensify. In February, Japan committed itself to expanding aid beyond Asia, where about 70% is now concentrated.

Still, Yanagiya acknowledged that Japan has developed no aid philosophy. As a result, he said, many people are “left to conclude that we’re stepping up our donations because of external pressure.”

A professor at Tokyo International University, Koichi Mera, wrote last year in a magazine article that “aid seems to have been viewed as little more than the price of admission to the club of rich nations.”

Hosomi, the former loan agency head, said that Japan’s political leaders--who he charged “don’t know the difference between Paraguay and Uruguay”--have refused to increase aid personnel or to reform the labyrinth of 16 agencies involved in the program despite their advocacy of increased aid. Instead, he said, they are more interested in the appearance and size of the program than in its quality.

As a result, trading companies and engineering firms that benefit from aid projects wind up designing many projects “based on Japanese ideas that won’t work in recipient countries,” Hosomi said. “They are happier if there are no aid personnel supervising projects,” he added.

Japan still assigns only 1,503 people to administer its global aid program, or less than half the staff of the U.S. Agency for International Development. Since 1977, the number of personnel has increased by only 13%.

Few Japanese are inclined to volunteer even for the aid posts that exist. “People just don’t want to go overseas,” Matsuura complained, calling this “the biggest problem in increasing aid.

“We can build hospitals,” he said. “But trying to find doctors and nurses to staff them doesn’t go smoothly.”

Factors that encourage Japanese to stay home include worries about adapting to different cultures, losing out on promotion and fears that their children will not get into a good university if they leave Japanese schools.

Despite the size of its aid program, Japan’s generosity, in relative terms, falls short of international standards. Aid as a percentage of gross national product is below the average of the 18 major donor nations. And year after year, Japan ranks last or next to last in the grant element of its aid. Only 40% of Japan’s total aid is in the form of grants, compared with 92% of American aid.

Among the advanced nations, Matsuura complained, “Japan is the only one without a CARE program.” When a retired ambassador tried to start one, he obtained pledges of only $23,000 from corporations and individuals, even though Japan received billions of dollars in CARE aid after World War II, he said.

In addition, he said, the 270 non-government aid groups in Japan collect only $100 million a year in donations--less than $1 a year per person.

Although Japan’s loans typically bear interest rates of only 2.5% and are repayable over periods of up to 30 years, Asian nations are beginning to complain about the burden of repayment. When Takeshita was in Southeast Asia in early May, he heard pleas for debt relief from the leaders of Malaysia, Indonesia and the Philippines.

But a new generosity has appeared since Japan opened its aid projects to international bidding. In Beijing, Di Huifang of China’s Ministry of Foreign Economic Relations and Trade praised Japan for untying its aid loans, “unlike such countries as France or England, which require procurement of their countries’ products.”

Because of the freedom to purchase goods from the cheapest source, China was able to add nine yen-financed projects to a 1984-89 Japanese aid package after the yen appreciated in value, she said.

Meanwhile, the Japanese public’s support for government aid programs is high--so much so that newly installed Prime Minister Sosuke Uno is unlikely to order any major change in aid policy. An opinion poll last fall by the prime minister’s office found that 80% of those polled supported aid and only 9.1% favored reducing or eliminating it.

But recently the Japanese mass media have focused more attention on aid, nearly all of it critical, Matsuura said. Environmental disruption caused by aid projects and the failure to raise the living standards of ordinary citizens in recipient countries have become points of discontent.

Reports of Japanese payoffs to Marcos and his cronies in the Philippines “dealt a severe blow to the entire Japanese aid program,” said Kenji Oshima, policy chief of the Foreign Ministry’s Economic Cooperation Bureau.

Sacrosanct Status

Nonetheless, successive governments have given aid an almost sacrosanct status. Since 1978, the Finance Ministry has permitted special increases for aid in the national budget, even as it has cut or frozen nearly all other items.

Although aid appears to have raised Japan’s image among Asian leaders, Japanese confess that it has had little impact at the grass-roots level.

“Unfortunately,” Aoki said, “Japan’s aid has no image” in the Philippines, for example.

One of the most successful projects, a 1,319-mile road from northern Luzon to southern Mindanao known officially as the “Philippines-Japan Friendship Highway,” is widely referred to as the “Marcos Highway.”

Most Filipinos, the Japanese complain, believe that “it is only natural for the rich to give to the poor.” And many Chinese seem to regard aid as a substitute for reparations from World War II, they say.

So far, the Japanese have proved remarkably patient in waiting for their war-stained image to improve. Japan’s “experience of being an aid recipient is fresh in our memory,” Yamaguchi said. Indeed, only this year is Japan paying off the last installment on loans from the World Bank.

Tsuchiya, the forestry agency official, talked about the agony involved in 13 years of work with only limited success in the Carranglan reforestation project. Surveying a vast expanse of bald mountains, he sighed and said, “It gives you a feeling of hopelessness.”

Yet, he added, “We Japanese remember our own backwardness. It helps us understand the backwardness of developing countries.”