Foreign Aid & Sri Lanka's  Military Expenditure

Japan’s Cheque Book Diplomacy

Nadesan Satyendra, May 1992

At the meeting of 23 world leaders at the World Commission on Environment and Development in London on 24 April 1992, Dr. Saburo Okita, the former Japanese Foreign Minister declared that Japan would take over leadership in protecting the environment and aiding world development if President Bush failed to meet that responsibility. He added: 'We are not trying to overtake on military leadership - the US have that and will keep it - but if they do not wish to take on other responsibilities, we have agreed to do so.''

The aggressive stance taken by Japan on development aid and on the environment did not come as a surprise to informed Japan watchers. The fact is that Japan is rapidly emerging as the world's dominant economic power. Japanese who are 2.6% of the world's population and who live on 0.1% of its inhabitable area, produce 10% of world economic production.

Japanese economic success has also meant increasing economic muscle outside the country. Japan has increasingly become the lender and donor of first resort. Its financial institutions are now responsible for a third of all international credit. A single Japanese company, Nomura, was responsible for financing a third of the huge US national debt. Japanese overseas aid in 1989 totalled 9 billion US$ compared to US aid of a mere 7.7 billion US$. As a percentage of GNP, Japan's aid budget was more than double that of the US. That was in 1989 and Japan has aggressively increased its aid programme year by year.

Japan is the principal aid donor and trading partner throughout the Asian-Pacific third world. For instance, Japan is Burma's largest donor, accounting for 80% of all official government aid to the military regime.

In 1990, Japan was the largest single aid donor to Sri Lanka, accounting for around 35% of the total grant. More significantly, the Japanese contribution was more than four times that made by any other single country. The other substantial contributions, amounting to about 20% each, came from the World Bank and the Asian Development Bank.

Aid means big business for Japan. Japanese Overseas Develop-ment Assistance (ODA) effectively re cycles yen collected as taxes back to Japanese companies. Unlike other donor countries Japan has no agency with overall responsibility for aid. ODA de-cision making is spread across the Foreign Ministry, the Finance Ministry and the powerful Ministry of International Trade and In-dustry. This makes it easier for individual corporate clients to have access to ODA funds.

Not unnaturally Japan's profile in the UN has gone up several notches in recent times. On a recent visit to Japan, US Secretary of State James A.Baker warned Japan against relying on 'cheque book diplomacy' to protect its narrow interests. More recently, it appears that Japan has joined forces with the US on nuclear non proliferation and warned India of 'an aid cut off if India does not tame its nuclear ambitions'.

Early this year, it was reported that a key Japanese official in Colombo had asked the Sri Lanka government to give coverage to opposition parties in the state owned Rupavahini television. It was not without significance that Rupavahini itself was an outright gift from Japan. The statement of the same official that the privately owned Sri Lanka Island newspaper was the only independent newspaper in Sri Lanka was seen as a clear intrusion in local politics.

But, be that as it may, Japan is also seen as providing some leverage for Third World governments, such as Sri Lanka, when dealing with Euro-American pressures. An often expressed view is that 'Asians feel more comfortable with the Japanese and are hanging their hopes on them because they are not such sticklers for rules and laws.' The Japanese have tried to play this card to their best advantage - portraying themselves as an alternative to white global domination.

Coupled with its aid programme, the other major thrust of Japan's economic expansion is linked to its pollution abatement technologies. For instance, a major Japanese construction company is planning a second Panama Canal, the Kra Isthmus Canal to the Gulf of Thailand, a new Silk Road (a super highway across Asia to Europe), a bridge across the Straits of Gibraltar, a huge Central African Lake, and a global network of power stations. According to the promoters, these projects will not only save the earth but stimulate local economies.

Technological solutions to the ecological calamity are the centre piece of Japanese industrial and corporate policy. Not surprisingly, Japan which has built its prosperity on finding new 'techno fixes' , sees itself as taking a lead role in the ultimate 'techno fix' - how to handle pollution and protect the environment. Japanese business believes that these will be profitable areas for the growth industries of the coming decades.

The statement in London on April 24, focusing as it did, on aid and ecology, marked out the area for Japanese leadership: ex Foreign Minister Dr.Saburo Okita, almost patronisingly, left the 'military leadership' to the US. After all, it is money which makes the world go round.