Promotion of the International Cooperation Initiative

As referred to in Chapter I, Section 3, Item 3 (1), increasing expectations are placed on Japan for its activities in the political field, particularly for maintaining and securing international peace, in view of the remarkable growth of Japan's power in recent years. With the progress made in dialogue between the East and the West, particularly between the United States and the Soviet Union, a significant progress has been made toward peaceful settlement of regional conflicts and problems around the world. "Cooperation for Peace" has become more important than ever before for solving conflicts and ensuring permanent settlements.

Japan must contribute to construct relations of trust between disputing countries and solving contentious issues toward settlement of conflicts. From that standpoint, Japan has exerted consistent diplomatic efforts toward peaceful settlement of the Iran-Iraq conflict, for example, while maintaining contact with both countries. Japan has also been supporting the U.N. Secretary-General in his "shuttle diplomacy" directed at the settlement of regional conflicts in recent years.

(2) Cooperation with the United Nations in its Peace-Keeping Operations by provision of Funds and Manpower

Peace-keeping operations have come to play an important role at a time when the United Nations is stepping up its efforts toward peaceful settlement of regional conflicts. Japan, on its part, is endeavoring to strengthen and expand cooperation with the United Nations in its peace-keeping operations. In an effort to strengthen and expand its cooperation also in terms of fund contributions, Japan voluntarily contributed $5 million and $10 million out of its revised budget for fiscal 1987 respectively to the U.N. Good Offices Mission in Afghanistan and Pakistan which was established in May 1988, and to the U.N. Iran-Iraq Military Observer Group which was formed in August 1988. Japan also voluntarily contributed $13,550,000 from its revised budget for 1988 to the U N. Transition Assistance Group which was established in April 1989.

The United Nations faces financial difficulties in the field of peace-keeping operations that have been rapidly expanding. In order to support the United Nations for satisfactory execution of its peace-keeping operations, a Trust Fund to support and strengthen the Secretary-General's efforts with respect to the peace-making and peace-keeping activities of the United Nations was created, to which Japan made a voluntary contribution of $2,500,000 in fiscal 1989. The Fund will be used to cover emergency expenses for peace-keeping operations that the United Nations may have to undertake somewhere in the future. The fund is the first of its kind ever created.

Now that countries around the world are sending personnel to make manpower contributions to the United Nations' peace-keeping operations, it is important for Japan, a peace-loving country, to make active cooperation in point of manpower, and cooperate with other countries in the cause for peace through the peace-keeping operations of the United Nations.

From this standpoint, Japan dispatched officials of the Ministry of Foreign Affairs to the U.N. Good Offices Mission in Afghanistan and Pakistan in June 1988 and to the U.N. Iran-Iraq Military Observer Group in August 1988, and sent a team of about 30 election supervisors to the U.N. Transition Assistance Group in October 1989, to supervise the elections for a constituent assembly members (scheduled for early November 1989) for about a month.

Japan will also promote cooperation in peace-keeping operations for the Cambodian and the Central American problems, which have shown major progress toward a peaceful settlements, by providing funds and manpower. It is the intention of Japan to reinforce and expand cooperation not only by providing funds but also by sending personnel to assist in the areas which are suitable for Japan such as election surveillance, transportation, communication and medical care.

The Kyoto Conference on Disarmament Issues was held in Kyoto in April 1989 by the United Nations according to a proposal made by the then Prime Minister Takeshita at the Third Special Session of the General Assembly devoted to Disarmament in June 1988. It was the first conference on disarmament held by the United Nations in Japan. Sixty parliament members, diplomats, seismologists, NGO representatives, and journalists from more than 30 countries, also more than thirty persons from many sectors of Japan took part in the four-day conference to engage in lively exchange of views.

The facts that the Kyoto Conference was held in response to the initiative made by a Japanese Prime Minister and that Foreign Minister Uno attended the conference and delivered the opening address were highly regarded by the participants as demonstrating Japan's positive attitude toward disarmament. A wide range of subjects such as (1) security and disarmament, (2) non-proliferation of nuclear, chemical and other weapons, (3) nuclear test ban and verification, (4) openness, transparency, and confidence-building measures, and (5) multilateral and bilateral approaches to disarmament, were discussed at the conference. The Kyoto Conference is highly regarded in that it helped to deepen international understanding of the nuclear test verification system of which Japan had taken the initiative and promote mutual understanding among the participants of the disarmament issues, such as nuclear disarmament and prohibition of chemical weapons.

Japan provides the second largest ODA (Official Development Assistance) in the world after the United States. It is expected to move into first place in the very near future. Declaring itself a peaceful nation, Japan, which is the second largest economic power in the free world and heavily reliant on international economies, is committed to expanding ODA.

Japan's aid is based on two basic philosophy: (1) Humanitarian considerations that poverty, famine and other hardships of developing countries cannot be overlooked, and (2) recognition of interdependence of the international community in the sense that the stability and growth of developing countries are essential to the peace and prosperity of the world as a whole.

Japan has set a medium-term target four times since 1977 in an effort to expand ODA. As a consequence, Japan's ODA drastically increased by 2.51 times on a yen basis, or 4.12 times on a dollar basis, in the 10 years till 1988.

In the general account budget for fiscal 1989, ODA represented the highest rate of increase among major expenditure items, amounting to \755,700 million, up 6.8% over fiscal 1988. On a project basis, the ODA budget amounted to about \1,369,800 million ($11 billion), up 1.6% over the preceding fiscal year. The amount is more than the U.S. ODA budget of a little less than $9,500 million, making Japan's the largest budget of the kind in the world.

After attaining the three medium-term targets since 1977, Japan set the fourth medium-term target (for 1988-1992) in June 1988 in an effort to expand ODA in both quality and quantity.

Japan's aid is highly appreciated not only by the developing countries but also by the developed countries. The OECD's Development Assistance Committee (DAC) held an aid review of Japan in February 1989 that examined the development assistance efforts and policies of Japan. In the review, the Committee noted that Japan had rapidly in-creased its ODA and had become a major donor country along with the United States, and the positive assistance efforts of Japan were given high marks by member countries. The press release issued after the review expressly stated that the committee welcomed the fourth medium-term target that Japan was implementing, the recent increase in assistance to Sub-Saharan Africa and progress in the liberalization of procurement policy. The press release, however, pointed out that Japan should make further efforts toward improving the ODA/ GNP ratio and the quality of ODA, expanding grant aid, strengthening aid management capacity and procedures for environmental impact analysis, and strengthening country-focused economic analysis and post-assistance evaluation.

Further qualitative improvement of ODA is as important as its quantitative improvement.

Japan ranks lowest of all the 18 DAC member countries in terms of the grant ratio and grant elements that are used as indices of assistance quality. The reason is that loans account for a large percentage of Japan's aid; 38.5% of the total ODA in 1988. However, this is also due to the facts that Japan's aid was directed principally to Asia that is closely related to Japan in history and geography and that there was an extremely high demand for not only grants but also ODA loans, which are offered under favorable conditions, for building social and economic infrastructures in a region of rapid economic expansion.

Since 1978, efforts have been exerted to make Japan's ODA untied in principle (allowing the recipient country to purchase not only from the donor country but from other countries). In 1987, Japan's untied aid in total ODA reached 72.1%, one of the highest in the world.

Of the grant aid in particular, the scheme of providing about $500 million of non-project type grants mainly for African countries are being implemeted on completely untied basis. This shows Japan's positive efforts to pave the way for the recipients to purchase from the third countries.

In addition, foreign consultants are being recruited for teams assigned for development studies.

Of bilateral ODA the ASEAN and other Asian countries have received more than 60%. Africa, the Middle East, and Latin America account for about 10% respectively. It will be increasingly necessary to extend Japan's aid to a diversity of countries in need from a global standpoint. Giving aid on a global scale complies with humanitarian considerations, which constitute one of the main philosophy of Japan's aid policy. And also in response to an international call for increased assistance to the LLDCs of Africa and elsewhere, Japan has increased its aid to Africa by about 10 times on a dollar basis in the past ten years, and is raising the percentage of grants.

Of the bilateral aid in 1988, the economic infrastructures involving energy, transportation, and communication that constitute the basis for economic growth accounted for 39.4%. Emphasis is also placed on cooperation in basic human needs (BHN) to directly help improve the living and welfare of the people of recipient countries through the development of agriculture, education, health, and medical care, as well as on cooperation in environmental protection. Of grant aid 73.1 % is directed to basic human needs.

In addition to the qualitative and quantitative improvement of aid, due care is exercised at each stage of assistance to implement assistance properly, effectively, and efficiently. Efforts have been expended toward satisfactory execution of aid programs through formulation of an appropriate aid policy, policy dialogue, strengthening project finding and formulation capability, strengthening of preliminary surveys, and increase in support for local costs (to be borne by the recipient country). Evaluation of aid made effective with the participation of third-parties, and its qualitative improvement as well as human resources development and increase of follow-up assistance have also been part of Japanese efforts in this aspect. Further efforts will be made in line with the growing volume of aid in the future.

(a) More Positive Contribution to the Economic Development Policies of the Developing Countries

An aid study group for each country and sector was organized within the Institute for International Cooperation of the Japan International Cooperation Agency (JICA) to conduct a full study and analysis of the economic and social situations of developing countries, and study how assistance should be undertaken for a better contribution to the economic development of the developing countries from medium-and long-term points of view. In addition, economic cooperation study missions were sent to major recipient countries to conduct policy dialogues at a high level officials concerned. The results of such policy dialogues are made to reflect on Japan's aid policy. (Such missions were sent to the Philippines in June 1987, to India in February 1989, and to Thailand in July 1989.)

The Ministry of Foreign Affairs has been expanding efforts toward multiple, objective evaluation of aid by frequently commissioning third-parties people including foreign experts and well-experienced individuals from the private sector, and has improved techniques and other aspects of evaluation. (160 projects were evaluated in fiscal 1987.) The evaluation results have been released each year in an Annual Evaluation Report on Economic Cooperation since fiscal 1982. Japan is the only one among the developed countries that releases evaluation results in the form of a comprehensive report.

In order to provide effective and efficient assistance and further expand the volume in the future, it is urgently necessary to improve the assistance implementing force.

The growing size of assistance does not always entail a larger manpower. But it is clear that Japan's assistance staff is considerably short by international standards. Thus, the staff should be reinforced to some extent to handle the increased assistance volume. Closer coordination with NGOs, local governments, other developed countries, and international organizations is essential as a complementary means of achieving the above purpose. In connection with the improvement of the assistance implementing force high-level specialists must be developed to engage in development assistance. From this viewpoint, the idea of the so-called "International Development University Scheme" for invigorating assistance-related education and studies at universities and advanced educational research institutes is being studied.

Development cooperation activities by NGOs offer many advantages that cannot be expected from government assistance alone. These are: (1)development cooperation can be directly undertaken at the grass-roots level, (2) disaster, famine, and other emergencies can be dealt with flexibly and speedily, and (3) assistance to small-scale projects can be designed to exactly meet their needs producing a large effect per unit cost. NGOs also play an important role from the standpoint of promoting economic cooperation with the participation of the people.

Support measures to reinforce coordination between the government and NGOs were improved, and an "NGO Project Subsidy Program" (\110 million) was initiated in the fiscal 1989 budget to reinforce monetary assistance to NGOs.

To obtain the understanding and cooperation of the people about economic cooperation, it is extremely important to inform the people in what form economic cooperation is actually extended and how it is contributing to the progress of the developing countries and improvement of the peoples' living standard. Information on the present state of economic cooperation by Japan has been disseminated by the Ministry of Foreign Affairs and assistance implementary agencies including JICA and the Overseas Economic Cooperation Fund (OECF). Japan in no way is lagging behind other developed countries as regards the information activities.

It is just as important to inform the international community of Japan's assistance improving the living standard in developing countries and their economic growth. In view of better diplomatic effects to be brought on Japan's assistance by such activities, the Ministry of Foreign Affairs is carrying on an extensive range of information activities.

October 6 was designated as "International Cooperation Day" in 1987, and various events on international cooperation have been held on and around that day since 1987 to promote people's recognition and awareness of the importance of international cooperation, particularly economic cooperation.

Technical cooperation has dual features: one is to train the people who undertake national development in developing countries, and another is to promote mutual understanding and friendship between the peoples of Japan and developing countries through person-to-person contact. Japan is expected to expand its technical cooperation making use of its rich stock of technical know-how.

According to international statistics of technical cooperation in 1987 based on DAC accounting, Japan ranked fourth with $853 million (\123,400 million) among the 18 DAC member countries after France, the United States and West Germany. In order to improve Japan's ODA in quality, the volume of technical assistance must be expanded with due attention to its qualitative improvement and to the structural reinforcement of JICA and other executing organizations.

Technical cooperation on a government-to-government basis is extended mainly through JICA to which the MOFA grants \113,700 million in subsidies in fiscal 1989. It takes in various forms to meet the diverse needs of developing countries.

Medium-caliber engineers and administrative officials of developing countries are received in Japan as trainees to transfer knowledge and technologies in specific fields. (4,821 trainees were received in fiscal 1988.)

Japanese experts advanced technologies or knowledge concerning planning, research and study, instruction, or educational activities, are assigning them to government organizations on institutions of developing countries. This is one of the basic forms of technical cooperation along with acceptance of trainees. (2,388 experts were sent in fiscal 1988.)

This form of technical cooperation is called "Equipment Supply Program," and provides equipment and materials necessary for technical guidance, promotion, and transfer of technologies by experts or Japan Overseas Cooperation Volunteers (JOCV) team members dispatched to developing countries or for activities of trainees back in the home countries. (77 cases amounting to \1,988 million in fiscal 1988)

The development study is teams of consultants conducted by the JICA. The JICA dispatches appropriate experts to developing countries, prepares and submits reports to the recipient governments, and pursues technology transfer to the counterpart agencies in those developing countries. The reports contain basic data on the basis of which the recipient governments make policy judgment over development plans.

This is a comprehensive type of technical cooperation efficiently and organically combining the three elements above: Sending specialists, accepting trainees, and supplying equipment and materials. This cooperation covers five specific fields: Centers, hygiene and medical treatment, population and family planning, agriculture and forestry, and industrial development.

A kind of cooperation that combines funds (soft loans) and technical assistance (dispatching experts, accepting trainees, and conducting surveys) provided for the social and economic development of developing countries. The funds are used in cases where it is difficult to obtain loans either from the Japan Export Import Bank or the Overseas Economic Cooperation Fund.

Japanese youth with technical expertise are sent to developing countries as part of technical cooperation. They live with the local people to help their nation building efforts by training these people and strengthen friendship between Japan and those countries. (889 people were assigned to 38 countries in fiscal 1988. 1,871 people are working in developing countries as of May 1989.)

Young people of the ASEAN and other Pacific countries who will be responsible for the development of their own countries are invited to Japan to deepen mutual understanding, and to strengthen true friendship and trust through contact with Japanese young people. A total of 1,085 youths were invited to Japan in fiscal 1988.

The Japan Disaster Relief Team (initiated in 1985) was dispatched to major disaster-stricken areas in Sudan (flood), Nepal (earthquake), Jamaica (hurricane), and Armenia, Soviet Union (earthquake) in fiscal 1988.

Japan's grant aid has been increasing at a fast pace each year since its initiation in fiscal 1968. The fiscal 1988 budget for grant aid amounted to \193 billion, about 2.8 times as much as the budget 10 years ago, i.e., \68,600 million for fiscal 1978. It has shown a particularly high rate of growth in ODA, and has been an important factor for qualitative improvement of assistance. Grant aid is extended in the following forms.

General grant aid constitutes the core of Japan's grant aid. It is extended as a rule to those project which bring little economic profit and are relatively difficult to implement with developing countries' own funds or loans. It is applied generally to the areas of basic human needs and human resources development, which are directly connected to betterment of the peoples' lives. Export promotion, and the construction of LLDC infrastructures which have been covered by ODA loans so far may now be considered for candidates for grant aid.

General grant aid, extended to 54 countries, in fiscal 1988 amounted to \126,400 million (including grant aid for debt relief and non-project type grant assistance). Following up the resolution adopted at the ministerial meeting of the Trade and Development Board (TDB) of the United Nation's Conference on Trade and Development (UNCTAD) held in March 1978, Japan has been extending since fiscal 1978 grant aid for debt relief to virtually cancel ODA loans for which arrangements had been concluded between Japan and LLDCs or MSACs (18 countries) by the end of fiscal 1977. A total of about \11,888,620,000 was extended to 11 countries in fiscal 1988.

Japan, most advanced and experienced in fisheries in the world, extended grant aid for fisheries amounting to \10,500 million for 24 projects in fiscal 1988, including Ecuador's National Fish Culture and Ocean Study Center Project, Ghana's Fishing Port Restructuring Project, and Morocco's Coastal Fisheries Development Project.

In view of the growing expectations on Japan for disaster relief, Japan has been trying to respond more quickly to assistance needs, and strengthen and expand coordination with international organizations extending disaster assistance. Disasters of the largest magnitude in recent years occurred in many parts of the world in fiscal 1988, including floods in Bangladesh, a large-scale earthquake in the Soviet Union, and hurricane disasters in Central America. New developments in Afghanistan and the Iran-Iraq conflict also raised international sentiments for helping stricken people. Taking those into account, Japan extended grand aid for disaster relief totaling abut \8,218,208,000 for 33 cases in fiscal 1988.

Grant aid for cultural activities provides funds to purchase equipment and materials necessary for promoting education and research, preserving and utilizing cultural assets and ruins, and holding culture-related performances and exhibitions in developing countries. Japan has been extending this type of assistance as part of international cooperation related to cultural exchange since fiscal 1975. Such assistance provided by Japan in fiscal 1988 amounted to \2 billion for 51 cases (on a budget allocation basis).

Japan provides funds (more than those equivalent to 300,000 tons of wheat each year) to developing countries, suffering from food shortages to buy cereals (rice, wheat, maize, etc.) and pay for transportation thereof. The food aid for fiscal 1988 (on a budget allocation basis) totaled \13,967 million consisting of the grants to 23 countries and two international organizations (which provide food aid to refugees).

A total of \31,957 million was provided as grant aid for increased food production in fiscal 1988 to 45 countries and one international organization to purchase fertilizers, insecticides, agricultural equipment, etc. which are necessary to execute projects for increasing food production.

(i) Untied grant assistance for structural adjustment support (Non-project grant assistance)

In its "Emergency Economic Measures" of May 1987, Japan decided to extend approximately $500 million untied non-project grant assistance (grants to support efforts for economic structural adjustment) over three years to mainly Sub-Saharan Africa. Accordingly, the assistance got under way in fiscal 1987 and is being continued into fiscal 1989. In fiscal 1987 and 1988, 19 African countries received \35,600 million (about $300 million). The assistance meets the needs of African countries as it enables the countries, beset with economic difficulties such as growing debts and deficits in international balance of payments, to purchase urgent supplies from abroad, helps them improve their international balance of payments and is expected to bring about immediate effects. Thus this aid is greatly appreciated by the aid recipient countries. Taking the positive effects of and the continuing needs for the non-project grant assistance, Japan announced at the Arch Summit held in Paris to further extend about $600 million over three years from fiscal 1990 to African and other low-income and debt-distressed countries in support of their efforts to improve economic structures.

The fourth medium-term target of ODA formulated in June 1988 spells out expansion of grant aid cooperation, particularly expansion of grant aid to LLDCs, as well as debt relief measures for LLDCs. As a result, Japan has expanded the debt relief measures that have been implemented with respect to ODA loans for which arrangements had been concluded by the end of fiscal 1977, to also cover ODA loans to LLDCs, for which arrangements had been concluded between fiscal 1978 and fiscal 1987. (17 LLDCs will benefit by this.) The ODA loans to be subject to the expanded measures amount to a total of about \680 billion (about $5,500 million), and expanded grant aid measures for debt relief will virtually offset the ODA debts of the LLDCs, together with those for ODA loans concluded in fiscal 1977 and before.

A small-scale grant assistance scheme was introduced in fiscal 1989 to enable the Japanese Embassies, which are well versed in the economic and social conditions of developing countries, to speedily and accurately respond to requests from local public organizations, research institutes, medical facilities, or NGOs operating in the developing country to finance their relatively small projects (The budget allocation for small-scale grant assistance was \300 million).

To ensure more effective execution of grant aid, the following steps are being taken.

When providing grant aid, efforts are made to link it with technical cooperation as far as possible to enhance the effects from such aid. (e.g., dispatch of experts to a vocational training center constructed with grant aid from Japan.)

When Japan is to extend cooperation in regions or fields where it does not necessarily have sufficient experience, an attempt is made to do so with the effective cooperation with other donor countries or organizations which have abundant knowledge and experience in the regions and fields in question.

In order to support the effective operation of projects carried out in the past under grant aid, and from the standpoint of maintaining continuity and providing aid responding to different needs of the recipients, follow-up aid is provided as new additional assistance for the expansion of pertinent facilities or supply of spare parts for the equipment furnished under Japanese grant aid, if Japan finds it recommendable after dispatching a study team at the request of the government of the recipient country or taking the results of an evaluation survey into account. In addition, so-called "rehabilitation assistance" is provided for the improvement, reinforcement, and expansion of existing projects carried out by the recipient government or under aid from donors other than Japan.

ODA loans, which account for a large portion of Japan's non-grant assistance, have the advantage of enhancing self-help efforts of the recipient countries to attain economic development by imposing repayment obligations. Another merit of this type of assistance is that it supplies funds required to implement large scale projects and support the economic development of the recipient countries. ODA loans are extended mainly to developing countries which have a relatively strong demand for development funds such as ASEAN countries and play an important role in those countries.

ODA loans extended in fiscal 1988 on an Exchange of Note (E/N) basis amounted to \1,115,612 million, up 58.5% over fiscal 1987, surpassing the \1 trillion level for the first time. The main reasons for the sharp increase in ODA loans in fiscal 1988 were the provision of large amounts of ODA loans to Indonesia and China, a loan to Malaysia under the ASEAN-Japan Development Fund (AJDF), and loans to Kenya, Nigeria, and other African countries. Rescheduled debts of ODA loans at the Paris Club amounted to a total of \54,548 million, an increase of \48,292 million over the preceding fiscal year.

The share of ODA loans extended to Asian countries accounted for 83% of the total, while the ODA loans to Non-Asian regions, particularly to African countries, increased by 235% over the year before.

(c) ODA Loans Meeting Diverse Needs of Developing Countries Non-project type ODA loans increased in FY1988 (accounting for about 40% of the total) and the following measures were taken to meet the diversified needs of developing countries.

There have been growing needs for non-project type loans to overcome balance of payments difficulties with the debt problem becoming more serious than ever. In addition to the commodity loans that have been extended so far, Japan is trying to increase non-project type loans to support economic policies of developing countries. A series of loans have been extended under the more than $20 billion recycling scheme.

The first loan under AJDF aimed at supporting development of private sectors in the ASEAN countries was extended to Malaysia. It is one of the examples of non-project type loans.

The part of the project cost which is classified as local cost is to be borne by the recipient country in principle, but demands for loans to finance such local cost are on the increase because of financial difficulties of developing countries. The new system, in which either a fixed percentage of the total project cost, or the total foreign currency amount of the project, whichever is higher, will be provided, was introduced in fiscal 1989 to meet the needs for local cost financing in a flexible manner.

Some developing countries are faced with the decline in productivity of existing facilities and machines due to advanced age. Thus, it is important to improve their operating rates and productivity. ODA loans amounting to \64,943 million were extended to 15 projects in four countries in fiscal 1988 for rehabilitation and renovation of facilities and machines.

To meet the demands of developing countries and ensure efficient implementation of assisted projects, Japan has been making efforts to make the procurement conditions of ODA loans untied. The rate of general untied assistance in fiscal 1988 on an Exchange of Notes (E/N) basis was 77.4%.

Japan lowered the level of interest rates in 1987 and 1988. The average rate in fiscal 1988 was 2.7%, about 1.0% lower than in fiscal 1985.

A new agreement was reached on a debt rescheduling measure for low-income countries at the Paris Club meeting held in October 1988. The agreement was an answer to the economic declaration announced at the Toronto Summit held in June 1988. The new scheme allows creditor countries to select one of the following three options for debt relief.

Option A: To write off one-third of the debt, with the remaining two-thirds to be rescheduled over 14 years (including an 8-year grace)

Option B: To be rescheduled over 25 years at market interest rate (including a 14-year grace period)

Option C: To be rescheduled over 14 years at a preferential interest rate (including an 8-year grace period).

ODA loans are extended on the premise that the principal and interest are to be repaid, which place certain limits on providing ODA loans to debt-rescheduling countries and LLDCs on account of their repaying ability. However, Japan is studying the possibility of providing ODA loans on case by case basis from the standpoint that stimulating the economy by providing loans under concessional conditions will pave the way for success in the economic and social reforms of recipient countries in the long run.

In fiscal 1988, new loans totaling about \72,578 million were extended to eight rescheduling countries. The number of such countries is expected to increase in the future as accumulated debt burden grows worse. It will thus be important to provide ODA loans to those countries.

International trend of assistance to LLDCs is basically providing grant assistance, and Japan is committed to promoting its grant assistance as set forth in the Fourth Medium-Term Target. In cases where fund requirements are too large to be covered by grant assistance, Japan has been providing ODA loans on case by case basis. In FY 1988 ODA loans totaling about \75,900 million were provided to eight LLDCs including \7,600 million to Burundi, Mali and Togo under the special co-financing scheme with IDA.

Japan deems it the country's major responsibility in the international community to contribute to the development of the developing countries not only by providing bilateral cooperation but also through cooperation with the activities of international financial institutions such as the World Bank, U.N. organizations such as UNDP and other multilateral organizations. As the world's second largest donor country, Japan plays an important role in the Development Assistance Committee (DAC) (Note) of the OECD, where policy issues and other aid-related matters are discussed. Japan, along with France, holds vice chairmanship in the DAC since January 1989. (The U.S. serves as chairman of the DAC.)

In 1988 Japan's multilateral ODA was $2,711,800,000, a 22.9% increase over the previous year. The share of multilateral ODA in Japan's total ODA increased slightly from 29.6% in 1987 to 29.7%. Japan's multilateral ODA has been steadily increasing and as a result the share of Japan's multilateral ODA in the total DAC multilateral ODA increased rapidly from 9.0% in 1975-76 (average) to 21.6% in 1986-87 (average). The share of multilateral ODA in the total of Japan's ODA in 1986-87 (average) was 30.5% and remarkably higher than the DAC average (23.6% excluding contributions to the EC). To compare the advantages of bilateral and multilateral ODA, the former can operate effectively and flexibly along the lines set by Japan's foreign policy, work to improve relations with recipient countries, the latter can make use of the expertise of the various international organizations, secure the political neutrality of aid, and can be provided to the developing countries where Japan's aid implementing force is not enough. Japan will continue to expand multilateral aid while maintaining an appropriate balance between bilateral and multilateral aid.

As shown in the table below, Japan has been actively cooperating with the main international financial institutions, including the International Bank for Reconstruction and Development (World Bank or IBRD), and the International Development Association (IDA). Japan's shares of capital subscription in IBRD and IDA are 6.69% and 15.36% respectively (second largest). Japan, along with the United States, has the largest capital subscription share in the Asian Development Bank (ADB). Japan also ranks first in capital subscription to the African Development Fund indicating an increasing emphasis. Japan attaches to its relations with Africa.

Japan became the first signatory among the developed countries to the agreement on establishing the MIGA (Multilateral Investment Guarantee Agency) which guarantees against non-commercial risks in direct investments by member countries.

Japan has been actively cooperating not only with the United Nations Development Program (UNDP) which constitutes the core of technical cooperation in the United Nations system, but also the World Food Program (WFP), UNICEF (United Nations International Children's Emergency Fund), the United Nations Fund for Population Activities (UNFPA), the United Nations Industrial Development Organization (UNIDO), the Food and Agricultural Organization for the United Nations (FAO), the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), and other United Nations aid organizations in their assistance activities. The contributions to these U.N. aid organizations amounted to $3,782 million in 1988, up 5.2% over the preceding year. The contribution to the UNDP was highest at about $89 million. It is important for Japan to support the assistance efforts of the UNDP and other U.N. organizations that are making great contributions to developing countries.

In view of the usefulness of assistance by the U.N. aid organizations mentioned above, Japan is also exerting efforts to reinforce coordination with Japan's binational cooperation arrangements. In fact, some instances of cooperation have been realized in recent years.

(iii) In 1988, Japan contributed approximately \2.9 billion (about $22,960,000 - third largest after the United States and the World Bank) to the International Agricultural Research Center under the Consultative Group on International Agricultural Research Center (CGIAR) such as the International Rice Research Institute (IRRI), which is well known for the "Green Revolution," to assist developing countries in conducting agricultural research and increasing food production. Japan has extended a wide range of cooperation to a number of international aid organizations in its attempt to provide attention to the specific needs of recipient countries.

International cultural exchange aims at securing mutual understanding and trust between peoples by promoting the exchange of persons, ideas, and thinking, thus contributing to the construction of peaceful and stable international relations. International exchange enables a wide variety of cultures to interact and stimulate each other, thereby enriching our culture and developing world culture. At the same time, international cultural exchange allows Japan to positively respond to the heightened interest in this country existing overseas. Further, international cultural exchange is important for Japan, since it deepens overseas understanding of this country, promotes its internationalization through contact with different cultures, and helps it develop into a country with a culture rich and open to the world.

Prime Minister Takeshita requested the "Advisory Group on International Cultural Exchange" (headed by Chairman Gaishi Hiraiwa of Tokyo Electric Power Company) in May 1988 to examine how to promote international cultural exchange. The Advisory Group presented to the Prime Minister in May 1989 a report on the discussions made on the subject.

The report (see the appendix for its outline) emphasizes that it is an urgent national task for Japan to strengthen international cultural exchange at a time when greater contributions in the international community are demanded of it. Specifically, the report made proposals on important policies such as the strengthening of the basis of activities for the Japan Foundation and pointed out the need of paying special considerations towards enhancing the government budget for the purpose, thus laying important guidelines for the promotion of international cultural exchange by Japan hereafter.

In response to the report, the "Conference for the Promotion of International Cultural Exchange" was created in the Cabinet in June 1989 to promote cultural exchange in general from a wide range of view across the government agencies.

[Appendix]

THE FINAL REPORT OF THE ADVISORY GROUP ON INTERNATIONAL CULTURAL EXCHANGE

(SUMMARY)

1. International cultural exchange should have the following four ideas:

(1) International Cultural Exchange Indispensable for National Security;

International cultural exchange should contribute to the construction of a peaceful and stable international environment by promoting exchange of persons and intellectual exchange, and ensuring mutual understanding and trust.

(2) International Cultural Exchange Contributing to the Development of World Culture;

International cultural exchange will enable a wide variety of cultures to interact and stimulate each other, thereby creating a richer culture and developing world culture.

(3) International Cultural Exchange Positively Responding to growing Overseas Interest in Japan;

International cultural exchange allows Japan to positively respond to the rapidly increasing and diversified interest in this country prevailing overseas.

(4) International Cultural Exchange for Promoting the Internationalization of The Japanese Society;

International cultural exchange provides increased opportunities for making contacts with different cultures, thereby promotes the internationalization of Japan, and helps Japan to develop into a country with a rich and open culture.

2. The Advisory Group indicates the following two points as fundamental elements in international cultural exchange:

(1) Actors Responsible for Exchange and Their Roles;

In order to drastically reinforce international cultural exchange, nationwide participation in such activities is indispensable at all levels, including individuals, private organizations, and central or local governments. For this purpose, it is necessary to identify appropriate roles at each level and promote cooperation and coodination of their activities, thus promoting efficient and effective exchange on a nationwide scale.

(2) Securing of Funds and Fostering of Personnel;

Organizations responsible for carrying out international cultural exchange activities in Japan are far weaker than those in other developed nations. This situation calls for radical improvement. National budgets for international cultural exchange should be rapidly reinforced and special considerations should be paid in this regard, as such budgets are determinating factors for the presence and development of Japan in the international society. Also, it is desirable to make better use of private funds and of favorable tax treatment measures accordingly. Greater consideration should be paid to requests for personnel and their placement.

3. The Advisory Group proposes the following as important policy measures to be pursued:

(1) Policy in Each Field of Activity;

a. Assistance to Japanese Language Studies;

It is necessary to drastically reinforce Japanese language teaching projects in the Japan Foundation Japanese Language Institute and to set up Japanese language centers in areas of foreign countries where demand for Japanese language studies is particularly high.

b. Assistance to Japanese Studies;

It is proposed that a center on contemporary Japan be established in the United States, which is to become the core of Japanese studies and information network, thus significantly expanding the supply of information and materials on modern Japan.

c. Enrichment of Cutural Exchange through the Arts, and Strenghtening of Its Basis;

Exchange in the fields of arts should be reinforced by promoting such exchange activities among other nations, holding large-scale international cultural events, and enhancing the activities of Japan Foundation ASEAN Culture Center, thereby ensuring a two-way flow of cultures.

d. Enhancement of Cooperation for the Preservation of Cultural Heritage and the Strengthening of the Basis for Such Cooperation;

Besides establishing the Japanese Trust Fund for the Preservation of Cultural Heritages in UNESCO, cooperation between the Ministry of Foreign Affairs, the Agency for Cultural Affairs, the Japan Foundation and the Japan International Cooperation Agency should be strengthened. And a system for dispatching personnel for the cooperation in this field should be established as soon as possible.

e. Supply of Information on Japan through the Use of Audio-Visual Media;

One of the most pressing tasks is to supply materials which give an accurate picture of Japan. In particular, our supply of information to congressmen, intellectuals and the general public in the United States, should be immediately increased by strengthening activities of the Ministry's overseas establishments and information and culture centers abroad;

f. Enrichment of Scientific Exchange and the Strengthening of Its Basis;

The activity base of the Japan Society for the Promotion of Science should be strengthened for the purpose of international scientific exchange.

g. Strengthening of Intellectual Exchange;

High-quality intellectual exchange should be strengthened so as to create networks with overseas intellectual groups. Also, positive support should be given to the exchange activities of private organizations such as the Japan Institute of International Affairs and the Japan Center for International Exchange.

h. Promotion of Education for a Better Understanding of the World;

Efforts should be made to educate the people so that everyone will have a sufficient understanding of and respect for different and diverse cultures. Activities supplying information need to be strengthened in Japan to this end.

(2) International Cultural Exchange Policy Tailored to Region and Country;

It is important to carry out active cultural exchange taking into careful consideration the specific characteristics of each region and country. Also regional studies need to be strengthened.

(3) Strengthening of the Basis of the Japan Foundation's Activities;

The basis of activity of the Japan Foundation must be strengthened by reinforcing financial/human resources and overseas offices from the standpoint of medium and long-term prospects. In the future it will be necessary to expand priority projects, including the creation of a world-wide network of the Japanese language studies, the establishment of a center on contemporary Japan, holding of large-scale international cultural events, support for exchanges among other countries, assistance to cultural development in developing countries and cooperation for the preservation of cultural heritage.

(4) Strengthening of the System for the Promotion of International Cultural Exchange;

A joint liaison committee composed of representatives of the central government, local governments and private organizations must be set up as soon as possible to establish a system of liaison and cooperation between governmental and private bodies.

4. The Adivisory Group strongly hopes that the government will formulate an action program for international cultural exchange and exchange views at the ministerial level as the occasion demands.

(3) Implementation of Principal Measures for Strengthening International Cultural Exchange

(i) Japan is positively responding to the rapidly growing interest abroad in Japan, manifested by mounting enthusiasm for Japanese language studies and Japanese studies. The number of persons studying the Japanese language in the world, which was about 1,030,000 according to a 1984 survey, is expected to reach 4 million by 1995. Apart from sending Japanese language teachers as before, the "Japan Foundation Japanese Language Institute" was opened in Urawa City in July 1989 for the purpose of training teachers and developing teaching materials with a view to further reinforcing Japanese language studies.

On Japanese studies, emphasis is being shifted from special studies in the field of the humanities such as language, literature, history, religion, which have been the main subjects of study in the past, to practical studies in the field of social sciences on modern Japan, such as economy. The scope of studies has spread further to encompass information on Japan as a subject for general education. Cooperation, including that through the Japan Foundation, is being extended for these studies.

(ii) Japan has been actively holding and cooperating in cultural events to promote the understanding of other countries toward Japan and to contribute to the development of the world culture. In fiscal year 1988, Japan took part in the bicentennial celebrations of Australia, the culture and art festival of the Seoul Olympics, "The Shaping of Daimyo Culture" exhibition in Washington D.C., and other large scale cultural events. Cultural events by Japanese overseas establishments, Japan Week introducing the general aspects of Japan, various performances, exhibitions, and audio-visual events by the Japan Foundation were also held.

In April 1988, the Japanese-German Center in Berlin was constructed as a base of exchange with Japan. Funds were contributed in fiscal year 1988 by the Japanese government as well as private sectors to the construction of a gallery of Far Eastern Art in the Art Institute of Chicago as a permanent facility to introduce Japanese culture. Preparations are being made for the construction of the Japan Culture House in Paris by 1993.

(iii) It is also important that the cultures of different countries around the world be introduced to Japan. In fiscal year 1988, many events for introducing foreign cultures, such as the India Festival and the Latin America and the Caribbean Festival, were held in Japan. And in fiscal year 1989, the "Japan Foundation ASEAN Culture Center" to introduce ASEAN cultures to Japan is scheduled to be opened in Tokyo.

(i) The exchange of youths who will shoulder the future of their nations is important for promoting mutual understanding between countries. Japan has been promoting many programs to this effect, including various youths inviting programs and the Friendship Program for the 21st Century with the ASEAN countries.

(ii) The number of foreign students accepted by Japan was 25,643 as of May 1988, which represents an increase of more than 4.5 times over the past ten years. Japan takes a positive attitude toward this, setting up the "Ministerial Meeting of Promotion of Student Exchange" in April 1988 to improve the accommodations and facilities for foreign students with a view to helping foreign students having difficulties due to the sharp appreciation of the yen and lodging shortages.

(iii) Under the JET (Japan Exchange and Teaching) Program, a program to invite youths from abroad as language instructors in schools and coordinators for international relations in local governments, 1,443 persons were invited from six countries (the United States, the United Kingdom, Australia, New Zealand, Canada and Ireland), in fiscal year 1988. These invited foreign youths are helping improve English-language education in Japan and promote international exchange at the local level.

(iv) Opinion leaders, journalists, and personalities of developed countries are invited in an effort to promote their understanding of Japan. Regarding sports exchange, the "World Sports Coach Summit III" was held in March 1989, and in June 1989, the Cabinet approved Nagano's bid to host the 1998 Winter Olympics.

(i) It is the responsibility of the present generation to preserve the many cultural properties as the common heritage of mankind, and bequeath them to the next generation. Apart from the cooperation extended to the International Safeguarding Campaigns by UNESCO, Japan, which has recently established the UNESCO "Japanese Trust Fund for the Preservation of the World Cultural Heritage" of $3 million, plans to assist operations for the preservation and restoration of various historic ruins by entrusting the UNESCO with this fund.

(ii) Since 1975, Japan has been extending "Cultural Grant Aid" (a maximum of \50 million per case) to help developing countries improve their culture and education, and has been highly appreciated. Further cooperation, including cooperation in software, will be extended in the future.

Contributions were made to the Japan Scholarship Fund for ASEAN Youths, Japan-ASEAN Exchange Projects, and Special Exchange Program between Japan and Europe in fiscal year 1988 for international cooperation in promoting culture and science.

(d) Enrichment and Strengthening of the International Cultural Exchange Inplementation System.

(i) Japan has cultural agreements with 25 countries and cultural arrangements with 8 countries to enhance cultural exchange with them. In fiscal year 1988, cultural consultations or meetings of mixed commissions on cultural exchange were held with the Federal Republic of Germany, France, Spain, the Soviet Union, and Italy, and the 14th Japan-U.S. Conference on Cultural and Educational Interchange (CULCON) was also held. At these meetings, discussions were made on the ways of further promoting cultural exchange in the future.

(ii) The Japan Foundation, a special corporation under the Ministry of Foreign Affairs, was established in 1972 as the central organ to carry out international cultural exchange, and has since been playing an active role in a wide range of fields covering cooperation in Japanese language studies and Japanese studies, exchange of persons, exchange of arts, audio-visual exchange, and exchange of publications. The Ministry of Foreign Affairs has been supporting the Japan Foundation by increasing its staff and government financial contributions to it. As proposed in the report of the "Advisory Group on International Cultural Exchange," it is necessary to further reinforce the budget, improve the operations, and train necessary personnel.

(iii) Interest in international cultural exchange in the private sector has risen so much as never before. There are increasing instances of Japanese participation and cooperation in the field of culture around the world; large scale cultural events such as the "Europalia Japan '89" scheduled for the autumn of 1989 in Brussels and the proposed construction of cultural facilities such as the Japan Culture House in Paris. Increasing coordination and cooperation between government and private sectors is essential to these activities which must be expanded even more in the future. The special donation system of the Japan Foundation, which allows the donations extended by private sectors to this Foundation to be tax exempt, is contributing to stimulating international cultural exchange activities on the part of private sectors, and in fiscal year 1988, a new measure, the so-called "tax deduction for international exchange activities," was introduced, which makes tax-exempt the countributions made by companies or individuals to those non-profit organizations whose primary objectives are international exchange.

To respond to growing demand for information on international cultural exchange, the Ministry of Foreign Affairs publishes "World Plaza," an information publication on international cultural exchange, with the cooperation of the Japan Forum since December 1988, and started a local touring campaign for the purpose of introducing the Japan Foundation's activities and promoting coordination with local governments in fiscal year 1989.

(4) Cultural Exchange Operations (Figures for FY1988 unless otherwise specified)

The population explosion and the intensification of economic and social activities in recent years are causing social distortion in many forms. And the growing political, economic, and social interdependence among countries has augmented it on a global scale. In the developed countries, environmental problems arose as their rapid economic expansion generated serious pollution problems and caused destruction of nature, necessitating those countries to spend much time and effort to deal with the problems. In developing countries, pollution and destruction of nature similar to those experienced by the developed countries have been spreading due to a population explosion, the concentration of population to cities, and rapid industrialization. Particularly, the destruction of the ozone layer, the global warming, the destruction of tropical forests, etc. have raised environmental problems of global scale which can seriously affect the very basis of human existence. It has come to be recognized as the most important problem that mankind must deal with by mustering the wisdom of each country regardless of East and West, North and South.

As pointed out in the above, environmental problems have now assumed proportions that can only be dealt with on a global scale. Yet, it is necessary to pay special attention to the situations of the developing countries involving, for example, their complex national sentiments over the necessity of economic development and the environmental problem, as well as their population problem. The developed countries should help the developing countries effectively deal with the environmental problem, and international cooperation in financial and technical aspects must be promoted to give support to the developing countries endeavoring to protect the environment on their own.

Japan has been promoting international cooperation in envrionmental protection, and the recent developments dictate the greater efforts on the part of Japan to deal with the problem.

Japan is at the world's top level in terms of bilateral economic cooperation records concerning the prevention of pollution and the protection of forests etc. Japan has also been working for the protection of the global environment through the UNEP, and activities under many conventions for the preservation of the environment, etc.

In view of the importance of supporting the developing countries in their efforts to protect the environment, Japan offered, at the Arch Summit of seven industrialized democracies in July 1989, to increase its aggregate sum of bilateral and multilateral assistance to about \300 billion over the next three years for environmental efforts on the part of the developing countries. Japan defined its policy of extending cooperation particularly in (1) the preservation of forests, principally of tropical forests, and their study, and (2) in improving the capabilities of the developing countries to deal with environmental problems.

In particular, Japan is determined to expand its support to the International Tropical Timber Organization (ITTO) in compliance with the Economic Declaration of the Arch Summit which called on the participating countries to aide the organization. Japan regards the ITTO as the organization most suitable for sustainable development of tropical forests.

In May 1989, a "Ministerial Conference on Global Environmental Protection" was set up from the standpoint of coping with the problem of global environmental protection by the concerted efforts of the various ministries and agencies of the government, and Japan's basic policy on global environmental protection was set forth.

The "Tokyo Conference on the Global Environment and Human Response Toward Sustainable Development" cosponsored by the UNEP and attended by knowledgeable persons from around the world is scheduled for September 1989, and the International Garden and Greenery Exposition" will open in April 1990, constituting part of the extensive range of activities continued by Japan from the standpoint of promoting international cooperation.

As a "Nation Contributing to the World," Japan will be committed even more actively to international cooperation to protect the global environment through bilateral arrangements and international organizations.

In implementing environmental measures, however, decisions should be made after considering them from various standpoints taking fully into account the conditions of the individual country because environmental protection standards vary from country to country.

Apart from environmental considerations, efforts must be kept up also regarding the global issues such as natural disasters, drug and other problems spreading across national borders.

Note: The DAC of the OECD comprises 18 major donor countries, including the United States, Japan, France, West Germany, Canada, Italy, and the United Kingdom, as well as the EC. 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.