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Aid Cut to Hit Health Campaigns

International campaigns against AIDS, tuberculosis and malaria are headed for cuts in funding assistance, now that Japan is reducing its Overseas Development Assistance (ODA) budget in the wake of the disaster that hit the country in March.\n

Avatar of Alessia Valenza

18th June 2011 12:15

Alessia Valenza | ILGA Asia

These global programmes – which are part of the Millennium Development Goal of fighting infectious diseases, one of eight anti-poverty targets governments around the world have committed to meet before 2015 – could suffer reductions of as much as 200 million dollars, aid groups say.

In a bid to appease criticism, Foreign Minister Takeaki Matsumoto recently explained to the press that the ODA reduction will be for only one year.

Japan’s 2011 ODA budget stood at 7.2 billion dollars, less than 0.18 percent of GDP. But in April, the cabinet agreed to an almost 10 percent slash – 600 million dollars – in the budget for fiscal year 2011.

Matsumoto called the cut "regrettable," but clarified that Tokyo would mainly cut spending for yen loans and contributions to multilateral funds in order to minimise the impact on the massive recovery plans after the Mar. 11 earthquake and tsunami that hit Tohoku.

"Japan’s ODA is a vital pillar of its diplomacy and an engine in Asian economic growth," said Professor Takeshi Inoguchi, a leading international relations expert. "The new cuts will mean a lower profile for Japan on the international stage."

Inoguchi told IPS he does not support the move, which he said is detrimental to Japan’s national interests in the long run.

Indeed, the huge outpouring of aid to Japan from countries that included small and developing nations was viewed here as a potent example of the international respect the country has gained by being a leading donor.

Another concern Inoguchi cited is the consequence of a fading Japanese impact in a rapidly changing Asia where the rise of China, now the world’s second largest economy, and India will steer the future of the region.

"In the fast changing geopolitical world that is seeing newcomers such as China’s influence in the region, the decision to keep slashing the ODA budget to support Tohoku recovery does not make much sense," he said.

Japan has been the top donor in Asia for the past two decades and, through ODA, has played a leadership role in the region by supporting better infrastructure, technology transfer that paved the way for international investment in developing countries, and growth and poverty reduction.

Japan used to be second only to the U.S. as the largest aid donor for countries like China and Indonesia. And for the past two years, India has been among the largest recipients, with yen loans, grants and technology assistance extended to develop local industries and infrastructure.

But Japan’s position has slowly eroded, and last year it fell to fifth place among countries belonging to the Organisation for Economic Co-operation and Development (OECD) that are also aid givers. Japan’s 2010 White Paper on ODA by the Foreign Ministry explains domestic economic concerns and lack of public support as the primary causes.

The document that outlines national policy on aid pointed to several new steps that have been established in the ODA framework, including a results-based approach and the promotion of a public- private partnership to facilitate higher impact in aid recipient countries.

Mari Nakamura, economist at the Institute of Developing Economies, explained to IPS that the new approach involved working closely with Japanese firms that boast high-level technology and management expertise.

"Japan is revising its old strategy, to focus on bringing aid to developing countries with its private sector. Japanese ODA will back companies that want to work on development," she explained.

New trends in this strategy, according to Nakamura, are the new research into such sectors as micro finance, social business and education as important pillars for future aid projects. Japanese companies’ environment expertise will also be tapped.

For example, Sony Corporation is planning to sell low-priced portable power generators in developing countries. while Ajinomoto, a leading food company, has started research work in Ghana on producing nutritional baby foods to be marketed locally.

Professor Koichi Ishimaya, who teaches finance journalism at Waseda University, views the move to revise and reduce ODA as a necessary evil given the economic demands on the country as it embarks on massive recovery. Japan’s first supplementary budget of 40 billion dollars was passed in May.

"We have to balance our domestic budget," he insisted, pointing to the latest Finance Ministry release that showed the current accounts surplus falling almost 70 percent. But aid groups continue to lobby against wider cuts, which are expected to reduce Japan’s contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

Most analysts say the cuts will be temporary, given Japan’s resilience and likelihood of returning to stronger growth after a crisis, as was the pattern after its defeat in World War II in 1945.