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Japan’s Changing ODA Diplomacy

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Tokyo Report | Diplomacy | East Asia

Japan’s Changing ODA Diplomacy

From ending aid to China to a new emphasis on health amid the pandemic, Japan’s Official Development Assistance is evolving.

Japan’s Changing ODA Diplomacy
Credit: Depositphotos

In March 2022, Japan’s Official Development Assistance (ODA) to China is scheduled to be completely terminated. Japan’s ODA to China began in December 1979, when former Prime Minister Ohira Masayoshi visited Beijing. In total, Japan’s ODA to China amounted to 3.65 trillion yen ($32.4 billion) in loan aid, while promoting 231 projects related to the establishment of basic infrastructure. Chinese Premier Zhou Enlai had decided to give up on pressing Japan for war reparations, stating in a meeting with then-Foreign Minister Miki Takeo in April 21, 1972, “It is true that Chinese people are the victims of Japanese militarism, but Japanese people are also actually the victims. We cannot accept the compensation because it is immoral.” In this sense, it can be argued that Japan’s ODA to China played an indispensable role in the bilateral reconciliation process in place of war reparations.

The termination of Japan’s ODA to China was announced by former Prime Minister Abe Shinzo in 2018. Now that China is the world’s second largest economy, dwarfing the Japanese economy, it seems only natural for Tokyo to terminate its ODA to China. Beijing itself is now a supplier of economic assistance and has promoted its Belt and Road Initiative (BRI) to build infrastructure overseas. At the same time, it is strategically imperative for Tokyo to end ODA to China in the middle of the China-U.S. economic and geopolitical competition in the Indo-Pacific. Sankei Shimbun reported the end of Japan’s ODA to China as the “end of a momentous foreign policy failure.” Japan’s economic assistance, especially grant aid for global health, has been redirected to Southeast Asia, South America, and Africa.

In essence, Japan’s ODA strategy has been embedded in its diplomatic vision, namely the Free and Open Indo-Pacific (FOIP) concept as pointed out by Japan Business Federation (Keidanren). Does the end of Japan’s ODA to China signify Japan’s foreign policy shift in its ODA diplomacy in the Indo-Pacific region? Or does Japan’s foreign policy undergo a paradigm shift in its ODA diplomacy for global health toward the post-COVID world?

Historically, Japan’s ODA policy was developed in the process of its post-war economic recovery and reintegration as a member state of the international community. Based on the recognition that the restrictions on trade after the Great Depression led to the prolonged recession that eventually caused World War II, the Bretton Woods Agreements were signed in July 1944. In this context, the International Monetary Fund (IMF), the General Agreement on Tariffs and Trade (GATT), and the International Bank for Reconstruction and Development (IBRD) were established with a view to stabilizing the world economy and making financial contributions to reconstruction of war-damaged countries as well as developing countries. Japan’s rapid economic growth in the post-war period owed to the financial assistance and free trade system of these international organizations.

In the process of its post-war economic recovery and reconstruction however, Japan stopped being an aid recipient, and started supporting developing countries in Asia in the middle of the Cold War. Japan signed the Colombo Plan in 1954, began its ODA diplomacy to countries mainly in the Asia-Pacific region, and eventually became the world’s largest ODA donor in 1989, surpassing the United States. From 1991 to 2000, Japan was the world’s largest ODA supplier. Since 2001, the United States has retaken the top spot, but Japan has remained one of the major ODA donors as a member state of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD).

Japan’s first ODA Charter was created based on a cabinet decision in June 1992. The philosophical elements of the charter are: 1) humanitarian considerations, 2) recognition of the interdependent relationships in the international community, 3) the necessity of conservation of the environment, and 4) the necessity of supporting self-help efforts by developing countries. The charter paid attention to environmental protection; the non-military purpose of aid and the military expenditure of recipients; and recipient states’ accomplishments in establishing a market-oriented economic system, democracy, human rights, and freedom. It needs to be noted that Japan’s ODA diplomacy was conditioned by its policy on war reparations as well as the political context of the Cold War.

Japan’s ODA Charter was revised in 2003 with a view to stipulating the significance of “national interests” in its ODA policy. The four basic philosophical elements were not changed, but the revised ODA Charter focused on 1) support for self-help efforts of developing countries, 2) importance of the human security concept, 3) assurances of fairness, 4) utilization of Japan’s experience and expertise, and 5) cooperation in the international community. Specifically, it raised the following priorities: poverty reduction, sustainable economic growth, peacebuilding, and the U.N. Millennium Development Goals (MDGs). Thus, although it stressed the significance of human security and international cooperation, the revision of Japan ODA Charter reflected realistic perspectives on Japan’s policy toward international cooperation based on the significance of national interests.

In March 2014, then-Foreign Minister Kishida Fumio announced an official plan to revise the ODA Charter, stating, “As we move into a new era, ODA that has built up a 60-year history must also evolve. In this light, I have decided this year to review and revise the ODA Charter.” In 2015, the Japanese government decided to change the name of the ODA Charter to the Development Cooperation Charter. The Development Cooperation Charter was drafted based on a cabinet decision of February 2015. The Development Cooperation Charter enables the Japanese government to provide foreign military forces with assistance for non-military purposes, such as humanitarian activities. The Japanese government explained that the revised Charter was not designed to contribute to the prolonging of any conflicts. At the same time, the Japanese government attempted to legitimatize its ODA diplomacy by featuring an animated character called “ODA-man.”

Writing for The Diplomat, Ankit Panda observed that Japan’s ODA policy is consistent with a “mercantile realist approach” to international affairs and that the revised Charter includes “non-combat military aid.” For example, as part of its ODA diplomacy Japan provided military bands of Papua New Guinea with musical instruments in 2017. Japan moreover provided life-saving equipment used by the Self-Defense Forces in rescue missions during natural disasters to the Philippine military.

In December 2021, Finance Minister Suzuki Shunichi and Foreign Minister Hayashi Yoshimasa decided to increase the amount of Japan’s ODA for Fiscal Year 2022, a budget move related to Japan’s FOIP vision. This decision was made and facilitated by the ruling Liberal Democratic Party (LDP) against opposition from the Ministry of Finance, which pointed out that there were still some remaining funds inside the Japan International Cooperation Agency (JICA).

Clearly, Japan’s ODA policy has been influenced and shaped by the changing international security environment. As a result of the COVID-19 pandemic, moreover, Japan’s ODA diplomacy has been faced with the necessity of further policy readjustment. It might be necessary for Japan’s ODA policy to prioritize economic assistance for global health, especially international cooperation for the current and future pandemics within the framework of the COVAX Facility, Gavi, and CEPI.

This summer, the Eighth Tokyo International Conference on African Development (TICAD 8) is supposed to be held in Tunisia. At this diplomatic event, the Kishida administration is expected to make a proactive contribution to international peace and global health in order to curb the spread of COVID-19, especially the Omicron variant, which is more transmissible compared to other variants. Japan’s ODA diplomacy, therefore, is undergoing a policy transformation to include further contributions to global health, as well as for the facilitation of the FOIP vision vis-à-vis China’s Belt and Road Initiative.