MANILA/CANBERRA — Following Shinzo Abe’s resignation as Japan’s prime minister, Yoshihide Suga, who served as Abe’s chief cabinet secretary, was elected new prime minister on Wednesday. But his election is not expected to dramatically affect Japan’s foreign aid policies, which underwent considerable changes during Abe’s term in office.
As the country’s longest serving prime minister — seven years and eight months in total — Abe set Japan on a foreign policy path that embraced multilateralism and allowed Japan to play a more influential role in global politics. He saw foreign aid as instrumental in putting Japan on the diplomatic map, particularly in Asia, where he was able to capitalize on the need for quality infrastructure as a response to China’s growing influence.
China’s rise as a major player had a significant influence on Japanese development cooperation during Abe’s leadership, according to Saori Katada, professor of international relations at the University of Southern California who has published extensively on Japanese foreign policy, including aid.
China doesn’t adhere to the traditional rules on development assistance, and Chinese aid is not always concessional in nature, Katada said.
“So once China became a major [aid] player, Japan kind of reverted [and looked at] foreign aid and development cooperation ... in a wider manner,” she explained.
In 2015, Japan revised its official development charter to place an emphasis on “quality growth” — closely connected to poverty eradication — and on the concept of ‘“win-win” — linking world prosperity and stability to satisfying Japan’s national interest.
The emphasis on quality has become a means for Japan to counterbalance China’s growing role in infrastructure financing in the region and beyond, and helps characterize Japanese infrastructure investments. In 2019, Abe succeeded in including “quality infrastructure” in the G-20 declaration in Osaka.
“Now the platform has shifted — that infrastructure is also important. And Japan is much [better] at that. Much, much better at that than poverty reduction.”— Saori Katada, professor of international relations, University of Southern California
But Japanese aid reaches beyond just infrastructure. Development experts have come to associate the importance of Japanese aid in areas ranging from global health to countries’ capacity building through technical cooperation. Experts and observers expect Suga to continue the aid policies and directions set by Abe now that he is in office.
Geopolitics of aid
“When China started this Belt and Road initiative, and started with the Asian Infrastructure Investment Bank, Japan really kind of put this big balloon up in saying that ‘no, no, no, let's do quality infrastructure instead of just the cheap and kind of flimsy [because] that's not going to go forward really well,” Katada said, although now both governments have started discussions to cooperate on infrastructure projects.
Rahul Malhotra, head of division for reviews, results, evaluations, and development innovation at the Organisation for Economic Co-operation and Development, described this as a positive aspect of Japanese development cooperation under Abe.
“There are geopolitics involved in the rise of China … I would say that the positive aspects in relation to that is that Japan has not really lowered its standards, or even its transparency in relation to how it does development cooperation,” he told Devex.
An emphasis on health
Abe has also placed importance on health, particularly universal health coverage, and pushed for its inclusion in the global political agenda, including at the G-7 and G-20. In 2017, Abe pledged $2.9 billion for UHC.
“I think that without [Abe’s] political leadership, we would probably not have had this very strong commitment of the U.N. High-level Meeting we had on universal health coverage,” Ilona Kickbusch, chair of the International Advisory Board at the Global Health Centre, Graduate Institute of International and Development Studies in Geneva, told Devex.
“Abe has frequently said that the introduction of social health insurance brought UHC to Japan and they want to share this experience internationally,” she added.
Future of Japanese aid
Japan’s net ODA in 2013 was $11.8 billion, reaching an ODA-to-GNI ratio of 0.23%, a slight improvement from 2012’s 0.17%. But 2019 preliminary figures of Japanese ODA show little increase in the ratio, at 0.29%, and significantly far from the U.N. target of 0.7%.
“Clearly ODA volume is not as high as we would like it to be, particularly as [Japan is] the fourth largest economy in the world [and has been] through a period of sustained economic growth,” OECD’s Malhotra said.
Japanese development cooperation has received steady support during Abe’s term in office. A public poll on Japanese development cooperation in 2019 showed 33% of respondents believe Japan should more actively promote development cooperation, while 49.5% believe Japan’s current level of development cooperation is appropriate.
While internationally Japan can be seen to be contributing more to development assistance, it is also currently the leading funder supporting climate mitigation and adaptation projects.
In 2018, the latest year for OECD climate financing statistics, Japan delivered $9.6 billion to projects with a climate objective — 53% of its bilateral development assistance. While the 2018 total is a drop from its peak of $9.8 billion in 2015, climate-related financing has seen a dramatic increase under Abe — the 2018 total is a 175% increase on the $3.5 billion allocated in 2011, prior to Abe becoming Japan’s prime minister.
The majority of these funds, however, have climate as a significant rather than principal objective — and Japan has received criticism for its coal financing which the government has said it would respond to by tightening overseas financing criteria for coal-fired power plants.
The latest OECD data on climate financing from bilateral donors ends with the 2018 calendar year. While providing important insights, combining this data with policies and politics shows the trends in climate financing from leading donors.
The 2020 OECD-Development Assistance Committee peer review recommendations for Japanese ODA are expected to come out in the third week of October, which will show continued commendation on their work in disaster risk reduction, as well as in advancing the agenda of quality infrastructure and in its engagement with African countries through the Tokyo International Conference of Africa's Development.
Japan also still holds true to the principle of reliance in its engagement with partner countries and puts importance on technical cooperation, provides core funding to the multilateral system, and continues to channel a large percentage of its development cooperation spending directly in its partner countries. Grants continue to cover the bulk of Japanese ODA to sub-Saharan Africa, with 33.29% of its $827.3 million grants to the region disbursed to the social sectors in 2018, according to OECD data shared with Devex.
Japan has increased bilateral aid to least developed countries from 23% in 2014 to 31% in 2018, although this is still below the 0.15% to 0.20% ODA to GNI target for least developed countries that donors such as Japan committed to under the Istanbul Programme of Action, according to OECD.
Japan SDGs Promotion Headquarters, established in 2016 and headed by Abe, is a positive example of Japan’s efforts to step up to the 2030 Agenda, including on development, as a whole-of-government agenda. But Japan could do more to improve policy coherence, and to focus its efforts and measure the impact of its work on poverty reduction.
“Abe has frequently said that the introduction of social health insurance brought UHC to Japan and they want to share this experience internationally.— Ilona Kickbusch, chair of the International Advisory Board at the Global Health Centre, Graduate Institute of International and Development Studies in Geneva
“[Japan is] actually complying with the DAC recommendation on untying aid to LDCs. But we do find that a lot of the contracts are going to Japanese contractors more broadly. And so we're encouraging Japan to keep an eye on that, keep monitoring it and keep … opening up its procurement processes as much as possible,” said Malhotra.
Calls for Japan to focus on poverty reduction is not new, but the country may not feel as pressured to do so, given the demand for infrastructure financing today, particularly in Asia, USC’s Katada said.
“If [poverty reduction is] the overall foreign aid objective, Japan is failing quite badly,” she said.
“Because now the platform has shifted — that infrastructure is also important. And Japan is much [better] at that. Much, much better at that than poverty reduction,” she added.
Under the leadership of Suga, based on public demand, Japanese foreign policy and development assistance is not expected to change.
“People are not looking for a big change, but a continuation of the current status.”