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NGOs' goal: improve impact of Japan's development spending
Bamboo huts, rice fields and garden plots dot both sides of the road leading into a lush emerald village several hours north of Manila, Philippines. A large sign on the bridge spanning the Agno River reads in English, “Vegetable bowl of the Pangasinan province.”
But the snapshot of rural Asian serenity is deceiving, river residents say, because their daily lives are filled with anxiety. Many Filipinos lost their land, their sources of income and the natural resource base that supported their tribal way of life after the San Roque Dam was built nearby.
“Few Japanese people know their tax money is funding developments — dams, pipelines, mining — that clearly have negative impacts on the people and environment in developing countries,” said Naomi Kanzaki, project coordinator of the Development, Finance and Environment Program of Friends of the Earth-Japan (FOE-Japan).
She said the $1.2-billion San Roque Dam project, which FOE-Japan has monitored since 1998, is just one of many large developments around the globe financed by Japanese taxpayers.
In fact, Japan is a major world player in guiding how public international financial institutions (IFIs) spend development funds. It ranks second behind the U.S. in the number of votes it has at the World Bank, and is tied with the U.S. for largest voting shares in the Asian Development Bank (ADB).
Japan’s influence is illustrated by comparing the loan commitments of the World Bank — $20 billion in 2004 — with those of the Japan Bank for International Cooperation (JBIC) — $15 billion in 2004 (the latest figures available).
Japan’s interest in international development projects also stems from its increasing oil and gas needs. Consequently, Japan is supporting the largest integrated oil and gas development project in the world, Sakhalin II in Russia. The $20-billion project, located in the Russian Far East, is a joint effort between the Royal Dutch Shell oil company, the European Bank for Reconstruction and Development, and JBIC.
Despite local and international concerns about the pipeline’s route crossing environmentally sensitive areas that are vital to the Sakhalin Island’s fishing industry, the project is moving forward.
“Geographically, it’s close and we need energy to live,” said FOE-Japan’s Shoko Murakami. “So Japanese officials see this as an answer to our energy needs, even if it is not a good answer.”
The staff of FOE-Japan and two other Tokyo-based nonprofit groups — Mekong Watch and Japan Center for a Sustainable Environment and Society (JACSES) — are the principal providers of direct support and technical assistance to grassroots groups in communities being impacted by Japanese public-funded projects. In addition, FOE-Japan and Mekong Watch regularly assign staff to work in the field alongside local groups.
These three Japan-based non-governmental organizations (NGOs), all Mott Foundation grantees, help bridge the information gap between project financiers in Tokyo and the people many miles away who are impacted by their decisions. They also help ensure that the environmental and social concerns related to JBIC-funded projects are brought to the attention of the Japanese government.
Together, the NGOs have worked to create rigorous guidelines that would give Japanese IFIs the same level of transparency and accountability as the standards used by the World Bank. In 2002, they successfully advocated for adoption of JBIC Environmental and Social Guidelines, which were implemented in 2003.
The JBIC guidelines divide Japanese-funded projects into several stages: screening, environmental review and monitoring. During these stages the lender uses a variety of approaches — on-site visits, environmental impact assessment (EIA) reports, and stakeholders’ input — to assess projects.
The guidelines vary for the type of developments (e.g., hydropower, mining and forestry) undertaken. But they typically mandate ongoing oversight of a project’s impact on the natural environment in such areas as ecosystems, topography, and the quality of air, water and soil.
The guidelines also require reviewing a project’s impact on the social environment, including whether there will be forced relocation of residents, damage to historic and cultural heritage sites, harm to residents’ livelihood, adequate compensation for economic losses, and other matters.
Several environmental and social factors were ignored in the Philippines, where the local people — mostly indigenous, rural and poor — were adversely affected by the construction and commercial operation of the San Roque Dam.
Many Filipinos began questioning the public benefits of the project after initial land surveying began almost a decade ago. Since then, small grassroots groups joined with national NGOs to oppose the project.
With FOE-Japan’s financial support and on-the-ground guidance, they sent local representatives to Tokyo four times to meet with JBIC officials. Once there, they gave firsthand accounts of how the project negatively impacted the Filipino people and the Agno River ecosystem.
Despite local opposition, the dam was built and became operational in 2003.
For opponents, however, the years of battling were not in vain, because several changes they sought are now included as standard practice for JBIC-funded projects.
For example, stakeholders are included in discussions with lenders before funding decisions are made, not after they are well under way like in the San Roque case.
In addition, printed information regarding major JBIC-funded developments must be disseminated in the language of the local people. Also, the JBIC agreed to post information on its Web site in both English and Japanese about possible projects. Because English is more universally understood, people potentially affected by JBIC-funded projects in other countries – India, Cambodia, Kenya — can either read the material themselves or get it translated more easily.
While these policy changes are important, they do not go far enough, said Kanzaki of FOE-Japan.
“Japan is a unique country, a rich country compared to the rest of the world,” she said. “We want to do what we can to make sure Japan uses its development money responsibly.”
The JBIC is a public finance agency that handles Japan’s Export Credit Agencies (ECAs) and Official Development Assistance (ODA).
The ECAs provide government-backed loans and insurance to home-grown private corporations that plan to do business abroad, usually in developing countries. Collectively, ECAs are the largest sources of public financial support for corporate investments in international infrastructure projects.
Meanwhile, ODA provides financing in two ways, either by giving funds directly to other governments or by providing financing that is channeled to developing countries through multilateral development banks or United Nations' agencies.
“Often times the JBIC calls these ‘poverty alleviation projects,’ but actually they are leading to more poverty, not less,” said Satoru Matsumoto, Mekong Watch’s director.
He and Mekong Watch’s staff often travel throughout the Mekong region in Southeast Asia, and they have observed how lives, livelihoods and ecosystems have been changed for the worse by IFI-funded projects in the six Mekong countries of Burma (also called Myanmar), Cambodia, China, Laos, Thailand and Vietnam.
One of the most well-known projects is the $750-million Klong Dan wastewater management project in the Samut Prakarn province of Thailand, which was funded by the Thai government, ADB and JBIC.
While it was the first time the ADB implemented a formal inspection plan that allowed people affected by the development to provide input about whether all ADB policies were upheld, neither environmental nor social assessment studies were completed for the project. Also, there was concern that the development would contribute to increased pollution in the Gulf of Thailand.
The project, approved in 1998 but halted since 2003, never has been canceled officially. But it was plagued with problems from the start — lawsuits, charges of political corruption, cost overruns, protests from local residents about their lack of opportunity to provide early input, and the project’s negative environmental and social impacts.
Even Prinya Nutalaya, Thai’s vice minister for natural resources and environment, criticized the project in 2004, saying, “The Klong Dan project clearly illustrates that a lack of adequate public participation and information is at least highly correlated with, if not an invitation to, the potential for corruption and mismanagement of public projects.”
The three Japanese NGO partners agree. They said it is critical that the nonprofit sector assume the watchdog role for large public development projects, especially with the tremendous growth in Asian economies in recent years and Japan’s willingness to provide funding for much of it.
But Japan’s nonprofit sector is still quite small when compared with the country’s overall economy. Consequently, the three NGOs have divided the tasks based on each organization’s strengths.
Staff members of the Japan Center for a Sustainable Environment and Society (JACSES) knew that implementing only visible strategies used by NGOs in the West, such as national protests and advertising campaigns, would not be enough in their more formal society. So the nonprofit focused its energy on working from the top down to change policies and procedures.
It scored a major victory when the Ministry of Finance, which oversees the JBIC, agreed to host ongoing quarterly meetings with NGOs to discuss development projects.
“It is a genuine dialogue, and it’s very important for all of us,” said Yuki Tanabe, who works in JACSES Sustainable Development and Aid Program.
“Yes, we talk about current projects, but we’re also there to have a chance to improve how future JBIC money is given out and to see that it is used effectively.”
During the regular quarterly meetings, NGO staff members share concerns they have heard from people living near JBIC-funded projects. Often times, Tanabe said, local residents are afraid they might create problems for themselves if they ask project proponents too many questions or try to discuss negative factors related to the development. But community members trust NGO leaders to deliver their messages to public leaders in positions of power.
While JACSES concentrates on keeping the doors of communication open between the general public and government officials at the highest levels, FOE-Japan staff members work broadly with projects on several continents. They analyze development data generated by public and private sources, such as environmental reports.
In addition, FOE-Japan conducts its own research and shares the findings with public lenders, private banks and corporations, and local and national government leaders, including members of the Diet — Japan’s national parliament.
“One of the reasons JBIC keeps funding these types of destructive projects is because they get a beautiful report sent to Tokyo from the borrowers saying how good their projects are. They don’t hear what is actually happening to the local people or details about the adverse environmental impact of these projects,” said FOE-Japan board member Ikuko Matsumoto.
“The reality of the local context is that borrowers can easily ignore the local voices. But when there’s involvement from international NGOs like us, we can create a way for the local people to be heard, and that gets them some room to negotiate.”
Mekong Watch combines its on-the-ground research in the Mekong region with an advocacy role in Tokyo to become the eyes, ears and mouthpiece for residents. With staff also working in Thailand and China, Mekong Watch investigates specific projects, conducts environmental field research and surveys affected people.
One of the strengths of having people on the ground in various countries is the ability to spot future regional trends, said Mekong Watch’s Matsumoto. For example, there is an increased interest from India and China in financial lending to projects in the region. Both nations now have public IFIs and private banks willing to fund Mekong region projects that the JBIC and World Bank have rejected because of their potential for social and environmental damage.
“There is a balancing act here. If the pressure on the JBIC is too great to not fund a project, we have to worry that another government, like China or India, will come in and fund it with much lower guidelines or none at all,” Matsumoto said.
“We need to work with Chinese civil society organizations to establish strategies together so all our work is more effective in the region.”
The NGO leaders agree that the challenges remaining are many, but they point to the successes, which give them hope to keep working for reform of Japanese IFIs. In addition to the gains mentioned earlier, Tanabe’s voice picks up when he talks about one project.
“We created the JBIC Watch Web site as an informational tool,” he said, pausing to smile broadly before continuing.
“I have heard that some Japanese officials are looking at it regularly, so we must be doing something right.”