As explained in the first chapter, development issues have become the focus of growing attention in the international community. In response, many Western countries have announced an increase in their ODA budgets. The international community as a whole is strengthening its partnership toward achieving the Millennium Development Goals (MDGs) - its shared development goals - and international conferences on such specific development themes as education and water are being held more and more frequently. This strengthening of international cooperation can also be seen in efforts to utilize ODA more effectively and efficiently, such as the formulation of Poverty Reduction Strategy Papers (PRSPs) and the harmonization of aid procedures.

By contrast, against a backdrop of severe economic and fiscal conditions, Japan's ODA budget has been falling sharply since 1998, and hopes for a quantitative increase in ODA in the foreseeable future are slim. However, Japan is still the world's second largest donor after the United States and must remain actively involved in the development of recipient countries while taking account of international trends in development aid. This will require making full use of limited ODA funds by making ODA more efficient and effective. Stricter priorities must be set for the use of ODA, and the target countries and sectors must be further narrowed down. Such efforts are vital for gaining public understanding of ODA.

Based on such thinking, in addition to traditional forms of support like economic and social infrastructure improvement, human resources development, and intellectual support, Japan is actively applying ODA to such areas as peace building and human security, promoting public participation, and enhancing the "visibility of Japanese aid," while continuing to place emphasis on the Asian region.

Japan's own future rests on a foundation of peace and prosperity in Asia. Japan already devotes over half of its bilateral ODA to Asia. In 2002 Japan launched the Initiative for Development in East Asia (IDEA) to discuss the future direction of development in East Asia and to systematize East Asia's development experience, including the role Japan's ODA played in the development process, and disseminate it to the world. The Joint Ministerial Statement from the first IDEA Ministerial Meeting in August 2002 was an important initial step. In the future it will be crucial to promote comprehensive development by coordinating development more closely with trade and investment toward regional peace, stability, and prosperity in accordance with the Joint Ministerial Statement. ODA will be used to strengthen ties with members of the Association of Southeast Asian Nations (ASEAN) while taking into full consideration the trend of building closer economic partnerships within East Asia. As for the Initiative toward Japan-ASEAN Comprehensive Economic Partnership, Japan will actively provide technical support and capacity building to ASEAN members, particularly new members, to enhance their competitiveness so that they can play a meaningful role in the partnership. At the same time, Japan is conducting a thorough review of its ODA to China--placing particular emphasis on the environment, human resources development, and improvement of living standards in and social development of inland regions--in accordance with the Economic Cooperation Program for China.

Both developed and developing countries have high regard for the unique contribution Japan has made toward the consolidation of peace and nation building in Afghanistan, Sri Lanka, Aceh (Indonesia), Mindanao (Philippines), and elsewhere, which is detailed in Chapter 2, Section 3. These activities already constitute a pillar of Japanese foreign policy, and their importance is likely to grow. Philippine President Gloria Macapagal-Arroyo offered high praise for Japan's efforts during her December 2002 visit to Japan, saying, "The yen is mightier than the sword."

The concept of "human security" focuses attention on each individual and seeks to eliminate threats that deprive them of their dignity. The core concerns of human security include poverty, education, health and medical care, the environment, water, and public hygiene, all of which also feature in the MDGs. Japan will endeavor to provide support in these areas in line with international trends in assistance.

In addition, it is important to bear in mind the contribution that ODA can make to Japan's own economic and social revitalization. In this respect, the Special Term for Economic Partnership (STEP), a new condition for the provision of yen loans, was introduced in July 2002 in the hope that Japan's outstanding technology and expertise will be actively utilized in assistance. It is also important to contribute to the revitalization of Japan's economy, society, and local communities and create new "frontiers" for the utilization of Japan's valuable human resources by encouraging the growing trend among Japanese men and women of all ages to participate in international cooperation and by bolstering support for international cooperation activities by NGOs, non-profit organizations (NPOs), communities, local governments, businesses, and others.

In the light of recent developments in the domestic and international situation surrounding ODA, in December 2002 Foreign Minister Yoriko Kawaguchi announced that the ODA Charter, the foundation of Japan's ODA strategy, would be extensively reviewed in order to provide a clearer expression of Japan's ODA philosophy based on a longer-term perspective. The review process within the government will begin with the preparation of a draft in coordination with relevant ministries and agencies through the Inter-Ministerial Meeting on Official Development Assistance. In addition to deliberations by the Board on Comprehensive ODA Strategy, there will also be broad and exhaustive public debate through hearings with implementing agencies, NGOs, and the business community and through public meetings. The final conclusions will be reached through the deliberations of the Council of Overseas Economic Cooperation-Related Ministers by around the middle of 2003.

As for the points covered by the review, a Basic Philosophy of ODA will be more clearly articulated by adding such viewpoints as Japan's security and prosperity, as well as the "universal values" cited in the present Charter, which include "a humanitarian viewpoint," "interdependence among nations of the international community," "environmental conservation," and Japan's mission as "a peace-loving nation." With regard to the Principles, their future role will be considered in the light of the roles and functions the present Principles have played in Japan's ODA policy. Based on the premise of discernment in implementation, Japan will continue to make Asia, as a Priority region, the primary focus of its ODA. The Priority issues identified in the present Charter include global issues, basic human needs, cooperation for human resources development, and infrastructure improvement. The review will take account of the changes in development issues that have taken place internationally since the present ODA Charter was drawn up and will be revised with appropriate provisions covering such aspects as the utilization of ODA for peace building, human security, and international development goals. Also, based on past recommendations on ODA reform, consideration is being given to the establishment of regulations regarding "policy formulation and implementation system," "necessary measures for effective and efficient implementation," and "matters to be considered in policy formulation and implementation" in order to secure strategic, prompt, transparent, and efficient implementation of ODA.