Japanese foreign aid: what’s in it for Japan?

Foreign aid is a key instrument of international engagement in Japan’s foreign policy toolkit. Although Tokyo is no longer the world’s top aid donor that it once was in the 1990s, it still was the world’s number four aid donor in 2015 with close to a US$10 billion annual budget.

It is not just the size of the aid budget that has changed. So has Tokyo’s thinking behind foreign aid.

In the 1980s, when Japan became an aid superpower, criticisms mounted both internationally and domestically over the mercantile nature of its aid. Money often flowed into the private accounts of corrupt political leaders in Asia and into projects that created severe environmental damage. Japan responded with alacrity, issuing its first ODA charter in 1992 and revising it again in 2003.

A new approach to aid can be read in Japan’s current Development Cooperation Charter, released in 2015. Although the new charter maintains some of the key aspects of the previous charters, such as human security, poverty alleviation, health, and women’s welfare, it has introduced some new and controversial agendas as part of its aid program.

While previous charters clearly kept military or defence-related activity outside the aid zone, the Abe government’s enthusiasm for the ‘proactive contribution to peace’ concept opened new possibilities, including the use of the aid budget for non-combat military purposes. Japan has recently provided surveillance ships to Vietnam’s coast guard, along with a similar package to the Philippines. The strategic orientation of such aid packages is clear: both Vietnam and the Philippines have maritime disputes with China and are worried about China’s flexing of its military muscle in the South China Sea.

Using its aid budget, Japan now also offers educational opportunities for military personnel from Southeast Asian nations through Japanese educational institutions. These mid-career military personnel spend an extended period in designated Japanese institutions learning history, politics, diplomacy and international relations. The rationale behind providing education in liberal arts is based on the premise that a good understanding of history and international relations will make these military personnel appreciate the benefits of peace and the disastrous consequences of war.

Japan’s renewed focus on Southeast Asian countries can also be noted through the latest ODA white paper, released in April 2016. In view of Japan’s standoff with China in the East China Sea and Beijing’s relentless and assertive claims in the South China Sea, Japan actively promotes the notion of freedom of navigation of sea lanes and aims to develop a network of like-minded nations in the region. To achieve Japan’s objectives of the rule of law, maritime security, cybersecurity and peace-building measures, the white paper notes the importance of Southeast Asian nations as partners.

Although building networks of like-minded nations is nothing unusual in Japan’s postwar foreign policy history, what is rather remarkable is the use of its aid budget for activities that are broadly military in nature, even though they are not directly for combat purposes.

The use of aid to bolster its national interest is another key policy change in Japan’s ODA objectives. While national interest implicitly guided Japan’s aid policy in the past, it is the first time that it has been explicitly stated in a government document and defended by the Ministry of Foreign Affairs and the Japan International Cooperation Agency.

Japan’s aid money is thus not just linked to the contribution of global peace but is now increasingly tied to the notion of the ‘prosperity of the Japanese people’. One means of creating prosperity is through linking Japanese business and contractors to the nation’s aid projects.

Commercial interest has clearly returned to its original salience in aid policy objectives in response to Japan’s long-term economic downturn, while Japanese companies are seeking profitable business opportunities overseas. With Japan’s new emphasis on ‘quality infrastructure’, ‘quality growth’ and ‘quality partnership’, aid money is now increasingly linked to Japanese technology, design and construction.

Although the details are not yet in the public arena, the Abe government has made a new commitment to India to construct a bullet train to run from India’s financial heart, Mumbai, to its commercial and port city of Ahmedabad, in Prime Minister Narendra Modi’s home state of Gujarat. This mega project, initially estimated to cost close to US$15 billion, is to be funded largely through Japan’s ODA budget.

Large ODA commitments in recent years to countries like Vietnam, Indonesia and India present significant business opportunities for Japanese companies. Within the top five recipients of Japan’s gross aid, these nations account for roughly one-third of the total ODA budget.

As in the early years of Japan’s aid program, large aid projects offer Japanese companies an entry to these emerging markets where the prospects for economic growth and market expansion are immense.

While Japan has redefined its aid orientation to serve its geostrategic and national interests, largely due to the changes in the global geostrategic environment in the wake of China’s rise, Tokyo also remains strongly committed to the conventional aid philosophy. It still puts significant financial and human resources into social and humanitarian issues confronting developing societies in Asia, Africa and elsewhere.

To this end, it has wholeheartedly participated in the United Nations Millennium Development Goals program and proudly boasts of its role in reducing poverty and improving health standards in developing countries. Tokyo has now also given its full support to the new UN 2030 agenda for Sustainable Development Goals, which has much bigger and wider coverage of global issues than the Millennium Development Goals did.

Purnendra Jain is Professor in the Department of Asian Studies, University of Adelaide, and a former president of the Asian Studies Association of Australia.