Japan From the Land of The Rising Sum

By Thomas A. Sancton

In Antananarivo, capital of Madagascar, authorities are making plans to spend $3.8 million on a new fleet of garbage trucks, a purchase long deemed too expensive to contemplate. Pakistan will be spending $3 million to help finance an experimental farm in Baluchistan province. In Bolivia the government has received $11.3 million to spend on a vegetable-seed production project.

The source of the windfalls: Japan. Long criticized for its tightfistedness toward the world's poorer countries, Japan is now second only to the U.S. in handing out development assistance, and it is closing fast. According to the latest figures of the Organization for Economic Cooperation and Development in Paris, in 1986 Tokyo gave $5.6 billion, vs. Washington's $9.6 billion. This year Japan has authorized more foreign aid than the U.S. ($10 billion vs. $9.2 billion). Japan has also begun to recycle some of its growing financial reserves throughout the developing world: at the 1987 Venice summit of industrialized nations, Tokyo pledged $20 billion in loans and other plans for helping developing nations plagued by debt. Says Masamichi Hanabusa, director- general of the Economic Cooperation Bureau in the Ministry of Foreign Affairs: "Since our national capability has increased, we have come to look on our aid program as our contribution to international society."

The raw figures, however, make the Japanese look considerably more openhanded than they actually are. Tokyo's growing generosity is largely a function of the yen's almost twofold appreciation against the greenback since 1985. According to the OECD, Tokyo's aid level in 1986 increased 48.4% in dollar terms but only 4.8% in Japanese currency. Moreover, Japanese development assistance has traditionally included a higher percentage of loans, as opposed to outright grants, than has U.S. aid.

One aim of Tokyo's largesse is to counter U.S. complaints that Japan does not shoulder its fair share of international obligations. Japanese aid in 1986 amounted to 0.29% of gross national product, less than the OECD average of 0.35% but ahead of the 0.23% rate for the U.S. But while the U.S. sinks 6% of GNP into defense spending, much of which goes to protecting allies and international sea lanes, Japan devotes only 1%.

The Japanese program began modestly after World War II as reparations paid to Southeast Asian countries ravaged by the Imperial Army. In the 1960s, admits a Japanese official, "loan aid was primarily aimed at promoting exports and securing raw materials." Only by the 1970s did much of Japan's aid begin to flow into loans and grants for such projects as port facilities in the Philippines, highways in Indonesia and hospitals in Bolivia.

In addition to such altruistic motives as helping Third World development and atoning for its World War II guilt, Japan's almsgiving is prompted by enlightened self-interest. "If you want to see which countries are most important politically to Japan, just look down the list at how much aid they spend in each one," says Nathaniel Thayer, an expert in Asian studies at Johns Hopkins University. About two-thirds of Tokyo's assistance goes to Asia, a proportion that reflects its stake in the region as both a market for Japanese products and a source of cheap labor.

Japanese officials reject criticism that their aid is mainly aimed at promoting exports, insisting that it comes with virtually no strings attached. In fact, OECD figures show that only 13.4% of Japanese help is "tied," meaning that recipient countries are required to spend the money exclusively on Japanese goods or services. By contrast, 38% of U.S. aid is tied, and 46.5% of British.

In practice, however, much of Japan's money does filter back home: Japanese experts designing aid projects, for example, tend to recommend the purchase of Toyota trucks or Sony audiovisual equipment rather than foreign products. As a result, even recipients of "untied" aid often wind up buying Japanese. An official with an international lending organization sums it up: "The Japanese want to be seen as philanthropic, but like all other countries involved in development assistance, they realize that trade can follow aid and they want something in exchange."

With reporting by Barry Hillenbrand/Tokyo, with other bureaus