Section 3. Positive and Effective Expansion of Assistance


Official Development Assistance (ODA) of Japan reached $3.3 billion in 1980. In 1981 favorable trends were observed in bilateral assistance, but ODA as a whole slightly declined due to a substantial drop in multilateral assistance. The Japanese government, however, has continued to exert efforts to expand development assistance through the establishment of a new medium-term target (setting the total amount of assistance for the five-year period from 1981 to 1985 at $21.4 billion) in 1981. Concerning the distribution of ODA, assistance to "those areas which are important to the maintenance of world peace and stability" has been strengthened. In addition, consultations with developed countries providing assistance and dialogues with developing countries have been promoted, and efforts have been made in order to provide effective assistance.


1. Assistance for Peace and Stability


(1) Following the Soviet military intervention in Afghanistan, Japan increased its assistance to the three "countries bordering conflicts", namely, Thailand, Pakistan, and Turkey. Later, in May 1981, Prime Minister Suzuki visited the United States and confirmed with U.S. President Reagan that "political, economic and social stability of developing countries is indispensable for the maintenance of peace and stability of the world." Based on this concensus, in a joint communique with the United States on May 8, Japan expressed that it would "strive to expand and improve its official development assistance under the new medium-term target" and that the government will strengthen its aid to "those areas which are important to the maintenance of world peace and stability."

(2) Prime Minister Suzuki explained the philosophy behind this policy at the plenary sessions of the House of Representatives and the House of Councillors on May 15 following his return. He said that economic chaos in developing countries would result in political and social instability which may well become a trigger for international conflicts and the cause for international tension. Therefore, economic assistance to developing countries for their economic and social development would contribute to the stability of civil well-being and the improvement of welfare in these areas, which would bring about political and social stability and enable the lessening of international tension on a wider basis. The determination as to which nation falls under the category of "those areas which are important to the maintenance of world peace and stability" would be made independently by Japan on each occasion. Substantial assistance to ASEAN countries and strengthened assistance to the "countries bordering conflicts" are clear indications of Japan's recognition of their importance in achieving world peace and stability. Additionally, assistance which have been provided to China, Egypt, and Kenya and recent ones to Zimbabwe, Jamaica, and Sudan are also based on such recognition.


2. Actual Expenditures in 1981 and the Budget for FY1982


(1) Japan's ODA achievement in 1981 (on a net disbursement basis) totalled $3,170 million or 0.28% of the GNP, which was slightly below the previous year's level. This is attributable to the substantial declines (down 41%) from the previous year in the achievements related to financing and contributions for the international financial institutions and the levelling off of yen loans over the past three years. Japan follows a policy of expanding assistance under the new medium-term target established in January 1981. The smooth expansion of yen loans in the future and the favorable development in negotiations on the replenishment of international financial institutions are hoped for.

(2) In spite of the severe financial situation, special consideration was given in drawing up the ODA budget for FY1982 under the new medium-term target. A total amount of \441.7 billion, up 11.4% over the previous year, was approved for the general account budget. The increase of 11.4% in assistance was quite substantial in comparison with the increase of 1.8% in total expenditures for the general account. This indicated Japan's positive attitude towards assistance. Regarding the total ODA budget, \941.8 billion (0.34% of the GNP) up 6.0% over the previous year, was appropriated. The total amount prepared in FY1982 for economic cooperation under the jurisdiction of the Ministry of Foreign Affairs was \240.7 billion, and that for the ODA budget in general account was \209.1 billion (up 12.1% over the previous year).

The budget for FY1982 aimed at consolidating assistances in three major areas such as basic human needs (BHN), cooperation for human resources development, and the effective use of aid resources in addition to the general expansion of the ODA budget in quality and quantity. Technical cooperation through the Japan International Cooperation Agency (JICA) and grant aid were expanded as well. As the budget for economic cooperation by the Ministry of Foreign Affairs, among bilateral grant aid, $92.0 billion (up 10.8% over the previous year) was appropriated for economic development assistance, $71.1 billion (up 9.0%) for JICA, and $75.7 billion (up 13.3%) for expenses and contributions to the international organization.


3. The Council of the OECD at Ministerial Level and the Ottawa Summit


The Council of the OECD at Ministerial level (June) and the Ottawa Summit (July) were the two major forums of 1981 where developed countries had discussions on the overall political and economic policies including aid policies. The political aspect of the relations with developing countries was expressed in the communique adopted at the council of the OECD at Ministerial level on June 17 as follows: "successful adaptation to growing world economic interdependence and stronger resilience of developing countries are important factors for world stability and peace."

Later, the Summit Meeting was held from July 19 in Chateau Montebello located in a suburb of Ottawa. Deliberative discussions on aid policies took place in response to the instructions given at the Venice Summit during the previous year to review "aid policies and procedures and other contributions to developing countries" to report back their conclusions.

The Regan Administration of the United States stressed the importance of the roles played by the private sector and those by trade and investments for development. Great Britain had faced difficulties in its domestic economy, and was forced to reduce its aid budget by 15% in the coming three years as a part of the curtailment of government expenditures. West Germany stated that it would increase its aid budget at a rate twice that of the federal budget. Together with West Germany, the new Mitterand Administration of France (which expressed its intention to increase ODA excluding those to overseas prefectures and territories to the level equivalent to 0.7% of GNP by 1988) showed a very positive attitude in its aid policy. Finally, in Item 14 of the Communique at the Ottawa Summit, it was clearly stated that "We are committed to maintaining substantial and, in many cases, growing levels of Official Development Assistance and will seek to increase public understanding of its importance. We will direct the major portion of our aid to poorer countries, and will participate actively in the United Nations Conference on the Least Developed Countries."


4. The UN Conference on Least Developed Countries and North-South Summit


In addition to these conferences held among developed countries, a series of dialogues between North and South were held in 1981 in which many countries including developing countries, participated. Thirty-one countries were designated as least developed countries according to the criteria of the per capita GDP, the share of manufacturing output in the GDP and the rate of literacy. "The Substantial New Program of Action for the 1980s for the Least Developed Countries" (SNPA) was adopted in the United Nations Conference on Least Developed Countries held in Paris in September 1981. The SNPA stated the sub-target of ODA toward the least developed countries, which would be within the target scope of ODA set at 0.7% of GNP. In other words, the program aims at achieving by 1985 a doubling of ODA to LLDC through efforts by individual doners to either devote 0.l5% of its ODA to LLDC or double its ODA to LLDC in the coming years.

The North-South Summit ("International Meeting on Cooperation and Development") was held in Cancun, Mexico in October 1981 and brought together the leaders of 22 countries from North and South. Various aspects of North-South relations including the Global Negotiations, food security, agricultural development, commodities, trade and industrialization, energy, and money and finance were discussed.


5. Consultation on Aid Policies with Developed Countries


It is important that close consultations be held with other developed countries providing assistance in order to ensure the effective use of funds as well as for the coordinations to implement effective aid policies. The Japan-U.S. Consultations on aid policy has been held almost every year since 1978 with the United States. The consultation was held in Tokyo in February 1982 and was attended by Administrator McPherson of the Agency for International Development (AID). At this time, an agreemet was reached on the importance of "policy dialogue" with developing countries and the implementation of "the Japan-U.S. joint project". For example, school education in Tonga and agricultural cooperation in Thailand are currently under consideration as joint projects. In relation to the overall aid policy, discussions were held on the appropriate balance between security considerations (an aspect of interdependence) and humanitarian considerations. A consultation on aid policy was also held with West Germany. Representatives met in Bonn in June 1981 for the first meeting and discussed the overall bilateral aid policy (course of action, budget, policy by regions, priority areas, etc.). Concerning relations with the EC, consultations were held on aid policy in general when Mr. Cheysson, the member of the commission of European Communities responsible for development (French Foreign Minister of the present Mitterand Administration) visited in April 1981. Later, based on an agreement reached at this meeting, a series of consultations have been held between Japan and the EC in the capital cities of major African nations (Kenya, Tanzania, Zambia, Nigeria, Zair, and Zimbabwe). In addition to the OECD Development Assistance Committee (DAC) which consists of representatives of developed nations, and the Conference of Consortium sponsored by the World Bank, Japan is determined to attach increased importance to such bilateral conferences since they provide the precious opportunity to realize a closer exchange of views in the future.


6. Policy Dialogue and Evaluation


In order to ensure effective use of limited aid funds and to expand aid under the new medium-term goals in the midst of severe financial conditions, it is essential to secure the effective and efficient implementation of aid. It is important to conduct a thorough prior appraisal of the projects to which aid is to be extended at the time of their selection through diplomatic offices abroad and through the dispatch of survey teams. Furthermore, after such aid is extended, follow-up studies should be conducted in order to evaluate the results so that areas to be improved are clearly identified and reflected in future aid. From such points of view, the Ministry of Foreign Affairs established the Economic Cooperation Evaluation Committee in January 1981 in order to supervise various evaluation activities which have been practiced to date. Japan also attaches importance to the "policy dialogue" in its annual consultation with developing countries and conferences of consortium to recommend developing countries to implement appropriate economic measures in their own countries.


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