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Wednesday, Aug. 22, 2012

Better ways to allocate cash

Special to The Japan Times

John Perkins, an American author, wrote in "Confessions of an Economic Hit Man" that "If people in this nation understood what our foreign policy is really about, what foreign aid is about, how our corporations work, where our tax money goes, I know we will demand change."

A similar statement could be made on Japan's recent Official Development Assistance policies. Does Japanese aid, as the Organization for Economic Cooperation and Development officially defines it, truly promote the general welfare of the recipient countries? Unfortunately, recent results leave us with a negative answer.

In the past decade, nearly half of Japanese financial assistance essentially took the form of loans, with a strong emphasis on the construction of social infrastructure, to which over 40 percent of our aid was allocated in 2010. In addition, 42 percent of our aid in 2009 was sent to the Pacific sphere, including the emerging economic superpower: China. This blatant effort to benefit sectional interests, along with a general lack of coordination and monitoring, has undermined Japanese aid effectiveness for years.

Sharp criticism of Japan's aid policies has been raised by nongovernment organizations and scholars. On the pretext of "encouraging self-help efforts" of the aid recipients, the Japanese government has relied heavily on yen loans, infrastructure and technical training — forms of assistance that only foster dependence relationships and fail to directly promote the well-being of the impoverished.

Diplomatic strategies and the legacy of war reparation payments, rather than pure humanitarianism, have dictated the allocation areas, causing a concentrated investment in the Asian region, benefiting Japanese corporations that handle the construction projects.

Shackled by the national "virtue" of political secrecy, aid policies are administered in the absence of an objective evaluation system that monitors whether the aid money is provided with purpose, economy and effectiveness.

In contrast, one country manages to exemplify a wise administering of foreign aid despite the European financial crisis: the United Kingdom.

Since the U.K.'s establishment of the Department for International Development, the U.K. has given significant importance to global poverty reduction and now disburses over $13 billion, ranking second in the world. Parallel with its commitment to poverty alleviation, the largest portion of British aid is allocated to Africa in the form of grants, and needless to say, social welfare and basic human needs constitute the top of the priority list.

Furthermore, independent agencies and local experts are consulted on a regular basis to ensure good governance, transparency and maximal efficacy in the aid policymaking procedure.

The aforementioned fundamental differences in Japanese and British aid provisions have been reflected in recent statistics. Take Ethiopia's case as an example. Out of the $50 million that Japan disbursed to Ethiopia in 2010, about a quarter was allocated for large-scale construction, while food relief or water sanitation accounted for a significantly smaller portion. The U.K., a humanitarianism-based donor, contrastingly offered nearly $400 million, 90 percent of which covered basic welfare expense — health, hunger alleviation, education, water sanitation and security.

Also important to note is that the British DFID releases an annual report that presents its aid results in actual numerical values for each individual recipient (In Ethiopia in 2011, 125,405 people achieved food security, 769,623 gained access to improved hygiene, and 1,672,000 children received primary education from U.K. aid).

Furthermore, the U.K. establishes and constantly reviews an operational plan that sets development targets and achievement methods for the aid spending period of 2012-2015. The ineffectiveness demonstrated by Japanese aid cannot hold a candle to the U.K.'s high motivation for almsgiving supported by the coherency and transparency of its overseas assistance.

Now let us examine our infrastructure projects in Ethiopia. A close analysis reveals a wide gap between ideals and reality; contrary to the explanation by government officials, Japanese aid projects do not quite facilitate local self-help efforts, but rather end up a failure.

In August 2005, a lack of prior research caused a large-scale well-digging in Tuka to falter with a water vein "missing."

In March 2007, a school construction project in Oromia was brought to a standstill due to deficiency in local reports and to misestimation of equipment costs. Experts also report the grave ecological consequences of our architectural programs, including environmental destruction and ground subsidence, which directly affect the lives of the local population. Numerous other projects were fatally dashed by local political instability and unpredicted inflation.

It would be highly advisable for the Japanese government amid a ballooning budget deficit to run a thorough and meticulous revision of its ODA policymaking, and going even further, to drastically cut the amount of foreign aid.

If Japan considers overseas assistance as a diplomatic tool to pursue its own economic interests, it is nothing short of laughable; wasteful handouts contradict the concept of providing aid for the general welfare and the empowerment of the developing nations.

Now would be an appropriate time to root out useless aid once and for all and look to the U.K. for guidance to emulate its ever-growing ardent efforts in achieving global poverty elimination.

Taro Kono is a Liberal Democratic Party member of Japan's Lower House. He has served as parliamentary secretary for internal affairs and communications, senior vice minister of justice, chairman of the House of Representatives' Standing Committees on Foreign Affairs, and deputy secretary general of the LDP.

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