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Inter Press Service : February 4, 1999
By Abid Aslam

Grassroots Groups Vie With Japanese Bureaucrats

Environmental and human rights groups around the globe are competing with Japanese bureaucrats to shape what will be the single largest public financier of infrastructure projects in the developing world.

The Japanese cabinet Feb. 9 will consider a draft charter for the new super-agency to be formed later this year through merging the Export-Import Bank of Japan (JEXIM) and the Japanese Overseas Economic Cooperation Fund (OECF). The new institution will command an annual budget exceeding 27 billion dollars, making it the world's largest source of public financing for dams, industry, and transportation facilities in low-income countries.

The merger falls under government reform plans approved in 1995. Because both JEXIM and OECF provide overseas loans and private-sector financing, their consolidation is expected to yield budget savings by eliminating duplication in staffing and operations. Trouble is, ''the draft Articles of Incorporation contain not one word about human rights and the environment,'' says Ikuko Matsumoto, aid reform project coordinator at the non-governmental organisation (NGO) Friends of the Earth-Japan. ''We want them to include environmental and human rights protections in the mission of the new institution.''

Grassroots groups from as far afield as the United States and Finland, and closer to Japan from the Philippines and Sri Lanka, plan to submit an open letter to Prime Minister Keizo Obuchi before next week's cabinet meeting calling for the new agency to adopt ''stringent'' safeguards for people and the planet.

The letter highlights a dam project in the Philippines which, NGOs say, ''demonstrates the problems inherent in the current approach taken by JEXIM.''

''We are concerned that both JEXIM and the OECF lack basic standards for transparency and access to information and have very weak social and environmental policies,'' the groups say in a draft sign-on letter being circulated on the Internet.

Japanese NGOs have been lobbying Liberal Democrats in the Diet, Japan's parliament, to pressure civil servants charged with drawing up the new agency's charter. ''The national bureaucrats know the demands of the NGOs and the Diet members with whom we work but we have had no direct response from them,'' says Matsumoto.

''We are hoping at least for a delay (of next week's Cabinet discussion) to allow time for negotiations with Diet members which can result in an improved document,'' she added in a telephone interview.

''Friends of the Earth-Japan's effort has not received much media attention even in Japan. That is why this international appeal is in support of their campaign,'' says Aviva Imhof, Southeast Asia campaigns director at the California-based International Rivers Network.

International groups also want JEXIM to withdraw its support for the San Roque Multipurpose Hydropower and Irrigation Project, in the Philippines' mountainous Cordillera region.

According to Imhof, the bank has approved 302 million dollars in loans to the San Roque Power Corporation, reportedly jointly owned by Japan's Marubeni company and the New York-based firm Sithe Energies. It is considering lending an additional 400 million dollars to the state-owned National Power Corporation.

The region's Ibaloy indigenous people for years have battled the project, which threatens lands and livelihoods in a part of the country already prone to deforestation and floods from the Ambuklan and Binga dams. Both structures trap silt from heavy logging and mining operations along the Agno river.

Many families now facing upheaval were relocated without compensation when the two upstream dams were built, according to NGOs. This, they add, points to the need for JEXIM and its successor to adopt project assessment regulations and grievance mechanisms similar to the World Bank's quasi-independent Inspection Panel. Established in 1993, the watchdog's future now is in limbo.

Project officials and the Cordillera Peoples' Alliance dispute the number of families who will be forced to relocate to make way for the San Roque project. Officials say only three families will have to move because their homes will be flooded; the NGO puts the figure at 925 and says promises of improved housing, new agricultural lands and financial assistance already have been broken.

San Roque village, after which the project is named, last year was cleared of its 160 families. ''They were promised material improvements but now they are finding that their situation actually is worse and their problems have been played down by the Japanese and Filipino authorities,'' says Imhof.

From the perspective of the governments and project backers, however, local sacrifices must be balanced against ambitions of national development. The new dam would power nearby mining operations and a planned industrial zone, considered essential to drive economic growth and draw foreign investment.

JEXIM was founded in 1950 and took its current name two years later, when it added import financing to its principal function of subsidising Japanese exports. It provided its first direct loan to a foreign country in 1958 and in 1989 added equity investments to its portfolio to encourage Japanese investment abroad. It also provides guarantees to Japanese corporations so they can fund their overseas business by borrowing from domestic and offshore financial institutions. As of March 31, 1998, it reported having some 7.5 billion dollars in subscribed capital from the Japanese government.

The OECF, established in 1961, mainly offers long-term, low- interest loans to developing countries, usually in exchange for procurement of Japanese goods and services. Such loans account for 40 percent of Japan's official development assistance (ODA), according to the agency. It also provides private sector investment financing for Japanese corporations undertaking projects in poor countries, mostly in Asia.

Between 1966 and 1995, only 7.4 percent of the OECF's private sector financing went to 'social' projects in water and sewerage, health, education, and tourism. Nearly 84 percent funded dams, gas fields, transportation, telecommunications, irrigation, agriculture, logging, mining, and manufacturing.

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