Revising Japanese funding4 October 2002
As the Japan Bank for International Cooperation plans to revise project guidelines and operational procedures, Tim Sharp reports on what impact this could have on future funding of hydro
CHANGING PERCEPTIONS in Japan of the purpose of infrastructure development are causing a groundswell of popular resentment against 'business as usual' activities. As a result both domestic and foreign projects including hydro power must now meet different criteria with the Japan Bank for International Co-operation (JBIC), the country's primary conduit for overseas aid, radically revising both project guidelines and operational procedures.
Among the major changes to the guidelines announced on 1 April 2002, and to come into force on 1 October 2003 are:
• Much greater emphasis on consultation with stakeholders, including project-affected communities, from early stages of project planning.
• Stronger provisions for timely information disclosure, including environmental impact assessments (EIA).
• All reviews must be conducted before final funding decisions are made.
• Funding can be suspended during a project if adverse unforeseen environmental/social impacts emerge if the failure is due to negligence during the review process.
• All alternatives to the project must be examined including a 'without project' scenario.
JBIC is using the intervening period to develop a compliance mechanism that will ensure that the new guidelines are followed. Significantly, its proposed introduction is creating considerable controversy.
The roots of the reform lie in widespread and intensifying public disillusion with central government-funded domestic public works projects including dams. The strength of this disillusion was dramatically demonstrated on 1 September 2002 when now nationally famous Nagano prefecture governor Yasuo Tanaka was resoundingly re-elected.
Tanaka had campaigned for his first equally solid victory on 15 October 2000 on promises to review public works projects in the centrally located prefecture. But when the promises caused the suspension one month later of work on the Asakawa dam that is supposed to provide flood protection for the prefectural capital, and then led in February 2001 to his famous 'no more dams' declaration that includes the Shimosuwa flood protection project as well, the conservative prefectural assembly with whom the governor must work became restive.
Matters came to a head when the 60-strong assembly, infuriated by Tanaka's continuing intransigence on the issue, passed 44-5 with 11 abstentions early July this year Japan's first no-confidence motion against a serving governor on policy issues in modern Japanese history.
But Tanaka merely accepted the assembly vote, ran for public re-election on precisely the same platform, and has now been dramatically re-elected. This time the assembly, most of whose members are accustomed to the subsidies and consequent political influence centrally planned public works allow, must change.
Nagano's 'people's victory' against the existing political system is very much in tune with the times. It will for example strongly boost determined NGO efforts in southern Kumamoto prefecture to block Kyushu's biggest dam, the long-planned 107m high Kawabe project on the Kuma river's largest tributary. In this case, female governor Yoshiko Shiotani reneged on an April 2000 election promise to require an EIA for the dam after coming under severe pressure and threats from pro-dam forces. Significantly, Tanaka visited Kumamoto at the end of March this year to support the NGOs.
Elsewhere, the Nagano vote will also bolster a January 2000 referendum in Tokushima prefecture that opposed construction of a major weir on Shikoku's Yoshino river. At that time, the Minister of Construction called the vote 'a mistaken exercise in democracy'. The Ministry continues to push for construction.
Much more important however is that the new ethos is now being applied by Japanese civic groups to the overseas development assistance (ODA) activities of the national government. Thus wherever they find local discontent with a hydro power or other public works project that has been funded by JBIC or foreign ministry grant aid, the Japanese groups assist local groups to make their case in person in Japan to the appropriate authorities.
At present, three entirely unrelated Japanese groups are assisting local activists in Indonesia, Philippines and Myanmar to take action in Japan against Japanese-funded hydro power projects in their countries. A Sri Lankan dispute is likely to follow the same path.
The furore surrounding Sumatra's Kotopanjang hydro power project is by far the most dramatic instance to date. Studied by JICA in the late 1980s, almost 90% funded by JBIC, and built by a consortium headed by Tokyo Electric Power Services Co (TEPSCO) for commissioning in 1997, the project was intended as a showcase of responsible development. As such, Indonesia was required to obtain the consent of the 4886 families to be resettled from 13 villages in the 12,400ha reservoir area and to take steps to preserve the environment.
On 5 September 2002 , however, and with the assistance of the 150-strong Kyoto-based Assistance Body for [Kotopanjang] Dam Victims (ABV), 15 representatives of 3861 Indonesians sued JICA, JBIC and TEPSCO in Tokyo District Court for US$42,430 each in compensation. The suit alleges that promised rubber plantations have not been provided and that resettled communities have no clean water. Other grievances include little or no compensation for vacated land and no funds to relocate village cemeteries.
However, 'compensation is not the main thing', ABV lawyer Fumio Asano asserts. '[The victims] would like Japan to take measures to help them regain the lifestyle they had before they had to resettle.'
ABV chairman Kazuo Sumi, a professor of international law who participated in the dam's feasibility study, feels: 'It's my moral responsibility as a Japanese citizen to help [the victims]. When I went to Kotopanjang 10 years later I witnessed how bad the condition of the resettled people was.'
Lead ABV lawyer Akihiko Oguchi says ABV will soon also file a taxpayers' suit against the Japanese government that will allege misuse of public funds to implement the project. ABV member Yoshinori Murai, eyeing alleged misuse of ODA funds elsewhere, particularly in the Philippines, expects 'more suits to follow'. Kotopanjang represents the first legal challenge to Japanese ODA.
To their credit, the Japanese government has already asked Indonesia to fulfill its promises to the resettled villagers but this may now be too late. Adhel Yusirman, an Indonesian lawyer who accompanied the plaintiffs to Tokyo, said they will file another lawsuit in Indonesia in October 2002. Meanwhile the Japanese defendants are 'consulting with each other on what possible response [we] can make', says JBIC.
The other protests are in comparison very small scale, at least so far. A group of 100 opposition members in the Diet have called on JBIC to suspend (all but complete) loan payments to the San Roque multi-purpose project in the Philippines. The Diet will also consider an upcoming Philippine congressional study of the entire project for possible contract and human rights violations.
In Myanmar, the Japanese NGO Mekong Watch has helped Karenni and other Burmese minority group representatives to lobby the Foreign Ministry and Diet directly to withhold ODA from Myanmar 'until a clear time frame for dialogue [with San Suu Kyi] has been established'. As for Baluchaung 2 rehabilitation, for which the Foreign Ministry has already agreed a US$28M grant, the representatives want 'independent monitoring for forced labour and other human rights abuses' around the project, the results of which would determine the release of further tranches of the grant.
In Sri Lanka, local NGOs protesting the recently JBIC-funded Upper Kotmale project have been heartened that Japan's Rainbow and Green Group have put it on their agenda - the main point of all these developments being the very diverse activism within Japan against its own ODA wherever that is perceived to be poorly implemented. This groundswell of criticism against badly executed projects is already prompting significant response. In particular, JBIC announced on 1 April 2002 a new set of environmental guidelines for project implementation that will come into effect on 1 October 2003.
All of the changes listed above, together with the proposed compliance mechanism that is currently being negotiated, would bring Japanese hydro power-related ODA much closer to World Commission on Dams (WCD) guidelines than at present. Not surprisingly, the compliance mechanism is encountering heated opposition, particularly from the conservative business/political lobby that has just been defeated in Nagano prefecture.
The lobby's core contention has been to query the need for a compliance mechanism at all. In its view, the present process is adequate, the new mechanism will be time-consuming and therefore costly, other bilateral ODA programmes don't have one, and Japan should not take the lead. On the other hand, Japan's Finance Ministry, together with civic groups, is clearly supportive. It has already made it clear that it wants to be able to request a halt to projects and/or disbursement of their funds if they are to be inspected under the mechanism.
Major changes are therefore under way in how Japan implements hydro power and other public works projects, whether domestically or as ODA. The outcome of all this should produce more carefully designed and better-implemented projects - on pain of being taken to court in Japan by the Japanese-empowered 'victims'.
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