Section 5. Cooperation through International Organizations
1. Cooperation through the World Bank Group
(1) International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA)
(a) The IBRD and the IDA, established in 1945 and 1960 respectively, have been playing important roles in the socio-economic development of developing member countries. In fiscal year 1986 of the World Bank (July 85 to June 86), the IBRD approved loans totaling about $13,179 million and the IDA about $3,140 million with the bulk of them going to agricultural and rural development, and electric projects.
(b) The two organizations are currently tackling various problems of aid to sub-Saharan African countries, the resource allocation with resource need from China and India in mind, snowballing external debts in developing countries, and so on. An agreement was reached on the eighth replenishment of the IDA totaling about $12,400 million after negotiations. Japan is to contribute about $2,600 million of the total.
(c) From the viewpoints of coping with developing countries' accumulated debt problems in an appropriate manner and contributing to the world through helping the global economy develop on a stable basis, Japan reached basic agreement with the IBRD in December 1986 in addition to the conventional cooperation on the establishment of special funds for recycling Japanese public and private funds in the amount of about $2 billion to developing countries through the IBRD.
(d) The IBRD's authorized capital stock rose to $78,650 million as a result of the special capital increase in 1984 with Japan's share standing at 5.2% to make Japan the second largest capital subscriber as in the case of the IDA. The IDA's seventh replenishment worth $9,000 million was carried out in August 1984, to which Japan extended positive cooperation by contributing 18.7% of the total, a higher ratio than in the previous replenishment. Other major countries lowered their contribution shares, however.
(e) Special Facility for Sub-Saharan Africa
A decision was made in May 1985, on the establishment of Special Facility for sub-Saharan Africa, which was proposed in the World Bank's August 1984 Joint Action Program for sub-Saharan Africa to support efforts of the countries in the region to solve various difficult problems. The Facility started operations in July 1985 with the IDA serving as its administrator. Japan has been cooperating with the Facility by contributing a total of \1,750 million in Special Joint Financing-\14,000 million in ODA loans and \3,500 million in grant assistance-in fiscal 1985 and a total of \15,700 million also in Special Joint Financing-\12,000 million in ODA loans and \3,700 million in grant to the Facility-in fiscal year 1986. Japan plans to continue cooperating with the Facility in fiscal 1987, making it likely that it will become the largest country cooperating with the Facility.
(2) International Finance Corporation (IFC)
(a) The IFC, an affiliate of the World Bank, was established in 1956 to foster productive private enterprises of developing member countries and to contribute to their economic development. In fiscal year 1986 of the World Bank ended in June 1986, the IFC approved 85 cases of investments worth about $1,156 million.
(b) As a result of the second general capital increase in December 1985, its authorized capital stock came to $1,300 million with Japan's capital subscription share standing at 4.69%, or the fifth among its members.
2. Cooperation through Regional Development Banks
(1) Asian Development Bank (ADB), Asian Development Fund (ADF) Included
(a) The ADB was established in 1966 to contribute to the socio-economic development of the Asia-Pacific region. It approved loans totaling about $2,001 million in 1986 with the bulk of them going to the housing, education, and welfare; agriculture; transport and telecommunications; and energy fields.
(b) After the third capital increase, the ADB's authorized capital stock came to about $19,663 million at the end of December 1986 with Japan's subscription share standing at 14.84%, placing it on the top of the list alongside the United States. As for the ADF, which makes concessional loans, an agreement was reached on the fourth replenishment of $3,600 million covering 1987 through 1990. Japan will contribute 36.7% of the total, or about $1,300 million. The total accumulated contribution to the ADF has to about $7,765 million by the end of December 1986, and Japan is placed on the top of the contribution ranking with an overwhelming 50.5%. Japan is thus cooperating positively with the ADB.
(2) Inter-American Development Bank (IDB), Inter-American Investment Corporation (IIC)
(a) The IDB was established in 1959 to promote economic development of Central and South America. Its approved loans in 1986 amounted to about $3,037 million with the bulk of money allocated to energy, agriculture, and mining and manufacturing industries.
(b) The IDB's authorized capital stock aggregated about \35,022 million at the end of December 1986 with Japan's subscription share standing at 1.1%, putting it on top of the list of non-regional member countries. Pledged contributions to the Fund for Special Operations providing concessional loans have amounted to about $8,420 million by the end of December 1986, and Japan is placed on the top of the list of nonregional member countries with 2.1% share of the total.
(c) The IIC was established to accelerate development of the economies of Central and South America by investing in and making loans to private enterprises in Central and South American countries. On March 23, 1986, the Agreement Establishing the IIC became effective when 22 countries concluded it.
(d) The IIC's authorized capital stock stood at $200 million at the end of December 1986 with Japan's contribution share standing at 3.1%, placing it in the second place alongside France and West Germany behind the United States.
(3) African Development Bank (AfDB) and African Development Fund (AfDF)
(a) The AfDB and the AfDF were established as regional development banks in 1964 and 1973 respectively, with the aim of promoting socioeconomic development in Africa. The amount of their approved loan in 1966 stood at about $1,034 million and about $586 million respectively, with the bulk of money going to agriculture, transport and public works sectors.
(b) The AfDB's authorized capital stock stood at about $6,605 million at the end of December 1986 with Japan's contribution accounting for 4.6% of the total, placing it in the second position behind the United States among non-regional member countries. The amount of AfDF's total subscriptions stands at about $4,291 million including fourth General Replenishment, Japan also holds the second slot with a 13.7% share behind the United States.
(4) International Fund for Agricultural Development (IFAD)
(a) The IFAD was established in 1977 with a view to promoting agricultural development in developing countries. Its approved loans have amounted to about $150 million in 1986 with the bulk of money going to rural development and agricultural development projects.
(b) Pledged contributions to the Fund have amounted to about $2,610 million up to the end of 1986. Japan's share is 5.9% of the total, making it the second largest donor among developed countries behind the United States. In 1986, Japan pledged to contribute $16 million to the IFAD's Special Program for sub-Saharan Africa.
(c) In September 1986, Japan invited President Idriss Jazairy of the IFAD for an exchange of views with the Minister for Foreign Affairs and other government officials on the aid issues.
3. OECD's Assistance-Related Activity
(1) Development Assistance Committee (DAC)
(a) The DAC is one of the three major OECD committees along with the Trade Committee and the Economic Policy Committee. The DAC comprises 18 nations; including Japan; the United States and France; and the European Community (EC) Commission and its main activities are discussions on various problems concerning aid such as aid policies, and collection and analysis of statistics on aid by member countries, whose outline is announced annually as a report of the DAC chairman. Japan actively participates in DAC activities as a major donor nation.
(b) DAC Meetings
They form the main pillar of the DAC activities and themes discussed between April 1986 and March 1987 include aid coordination, energy, technical cooperation and urban development.
(c) 25th High-Level Meeting
The high-level meeting is a forum for discussions on important development problems and is held annually with the participation of senior aid officials, including cabinet ministers. The latest meeting was held December 1-2, 1986. At the 1986 meeting, a guiding principle concerning aid coordination was adopted. It calls for the need for a sufficient exchange of information between donor nations and aid organizations at the local level and the reinforcement of accompanying arrangement for aid implementation. It came up with a basic view that aid coordination should be carried out with developing countries, letting them play central roles, and pointed out the need for developing countries to strengthen their administrative capacities.
Moreover, it noted the need to step up support to sub-Saharan African countries, in particular those implementing structural adjustments among them.
(d) Aid Review of Japan
Aid Review refers to the review of each DAC member country's aid record and policy by other members and is held every two years for each country. In the review of Japanese aid conducted on January 20, 1987, high marks were given to Japan's methodical efforts to expand ODA as regards aid volume and strong expectations were placed on Japan's Third Medium-Term Target. As for the quality of aid, it was pointed out that Japan needs to improve its aid quality, which is much lower than the average of the DAC member countries. Furthermore, reviewing countries also called for Japan to increase aid to LLDCs in sub-Saharan Africa and South Asia, to raise the ratio of general untied aid and to improve the aid implementation system.
(e) Associated Financing Issue
An agreement was reached at the OECD ministerial meeting in April 1985 on raising the minimum permissible grant element to 25% as regards tied and untied ODA, and the so-called associated financing. This is designed to regulate the provision of tied financial resources because the use of aid funds for commercial purposes, which amounts to the deviation from the intended purpose, is feared to hobble fair and free trade. Later consultations were held on further strengthening the regulations at meetings of the Export Credit Arrangement Group and the DAC Working Party on Financial Aspects. As a result, agreements were reached on changing wording- from grant element to concessionality level only with regard to strengthening of regulations, on the partial introduction of the market interest rate in computing the discount rate concerning the concessionality level, and on raising the minimum permissible concessionality level to 50% for LLDCs and to 35% for the other developing countries. Also at the DAC meetings, an agreement was reached on stepping up the regulations and transparency of associated financing, and tied and untied ODA in the form of the revision of the AF guiding principle agreed upon in 1983.
(2) OECD Development Center
(a) Its main activities are research and development on development issues and the promotion of cooperation between the OECD member countries and research organizations of developing countries.
(b) For an exchange of views on the center's action program, ambassadorial-level advisory committee and informal meetings were held.
4. Cooperation through U.N. System
(1) United Nations Development Programme (UNDP)
(a) UNDP plays a central role in technical cooperation implemented by the U.N. system and it carried out projects totaling $676.53 million in 1985. UNDP is implementing various projects through U.N. specialized agencies.
(b) Japan contributed $64.8 million to UNDP in 1986, keeping the position of the second largest donor behind the United States. Moreover, Japan established a $1 million fund for human resources development in UNDP.
(2) Food and Agriculture Organization of the United Nations (FAO)
(a) FAO, a U.N. agency specialized in food and agriculture, conducts various researches and analyses, collects and relays information, and extends technical assistance to developing countries. In 1986, FAO reviewed the degree of easing of food crisis in Africa and studied ways to support the recovery of production. Furthermore, it regularly provided to member countries information on food production and shortage situations, information collected by its early warning system.
(b) In 1986, Japan made an assessed contribution of $24.67 million to FAO and a voluntary contribution of about $3.64 million to nine FAO field projects.
(3) World Food Programme (WFP)
(a) WFP, established as a joint program by the United Nations and FAO contributes through multilateral food assistance to the development of developing countries and undertakes emergency food aid. In 1985, the Programme undertook projects totaling $867 million in 1985.
(b) Japan made a contribution of $11.23 million to the WFP regular resources in 1986 as well as a contribution of a $3 million to the International Emergency Food Reserves (for use in emergency food assistance).
(c) Japan's food aid policies and programs were introduced at a meeting of the Committee on Food Aid Policies and Programmes held in October 1986.
(4) United Nations Industrial Development Organization (UNIDO)
(a) UNIDO is a U.N. agency promoting industrial development of developing countries. It collects information, conducts various researches and analyses, and extends technical cooperation to developing countries. UNIDO became an independent specialized agency of U.N. on January 1, 1986. With the assumption of the post of Director-General Mr. Domingo L. Siazon Jr. of the Philippines, UNIDO has started a review of new direction of activities, including the utilization of the private sector.
(b) Japan made an assessed contribution of $6.72 million and a voluntary contribution of $480,000 for training and investment promotion activities in 1986.
5. Cooperation through Other Major Organizations
(1) Consultative Group on International Agricultural Research (CGIAR)
CGIAR is an international forum established in 1971 for the promotion of agricultural research in order to cope with agricultural development and food problems, which have been major concerns for developing countries, from long-term and systematic standpoints. It has under its umbrella 13 international agricultural research organizations, including International Rice Research Institute (IRRI), which is well-known for bringing forth the "Green Revolution."
Among the members contributing to the CGIAR are 24 countries, including Japan, and 16 members of international organizations and foundations. Japan contributed about $3,200 million to the CGIAR in fiscal year 1986.
(2) Asian Productivity Organization (APO)
The APO is an international organization established in 1961 to develop productivity of Asian and Pacific nations. As of the end of fiscal year 1986, it comprises 14 countries, including Japan, and two areas and its Secretariat is located in Tokyo.
The APO is contributing to the development of productivity in the Asia-Pacific Region by holding training courses, dispatching experts and receiving missions. Japan, as the largest contributor to the APO, donated about \580 million in fiscal year 1986 and spent about \360 million for use as part of expenses of projects implemented in Japan.
(3) Southeast Asian Fisheries Development Center (SEAFDEC)
SEAFDEC is an international organization established in 1967 for fisheries development in Sou theast Asia on the basis of a resolution of the Ministerial Conference for Economic Development of Southeast Asia. It has five members-Japan, Thailand, the Philippines, Singapore and Malaysia and is engaged in such activities as fishery training, resources survey, marine product processing and aquaculture research.
Japan contributed about \250 million financially to the center and 11 of its experts were being dispatched at the end of fiscal year 1986.
(4) Asian Institute of Technology (AIT)
The AIT was established in 1967 in the suburbs of Bangkok in 1967 as a graduate college designed to foster experts in the engineering field (doctors and masters) in the Asian region. It has nine divisions, such as Structural Engineering and Construction, Agricultural and Food Engineering and Geotechnical and Transportation Engineering, which is now attended by about 600 students from almost all over Asia.
Japan contributed about \320 million to the AIT in fiscal year 1986 and were dispatching nine faculty members to the AIT at the end of fiscal year 1986.
(5) Others
Furthermore, Japan is extending cooperation in the forms of financial cooperation and the dispatch of experts to the Colombo Plan, the Southeast Asian Agency for Regional Transport and Communications Development, whose secretariat is located in Malaysia, the International Centre for Diarrheal Disease Research, Bangladesh, and other organizations.