Redefining Foreign Assistance and US-Japan Cooperation in Economic and Humanitarian and Development

Date February 21, 2002
Speaker Patrick CRONIN(Assistant Administrator, US Agency for International Development (USAID))James CLAD(Professor, Georgetown University)


The following is an excerpt of President George W. Bush's remarks to the Japanese Diet on February 19, 2002:

"...America and Japan have joined to oppose danger and aggression. We have also joined to bring aid and hope to those who struggle throughout the developing world. We are the world's two largest economies, and the two most generous contributors of economic and humanitarian aid. Japan's commitment to development is known and honored throughout the world. So is Japan's leading role in great international institutions -- the United Nations, the World Bank and the G-8, among others.

The challenges of development are often deep and difficult -- persistent poverty, widespread illiteracy, terrible disease. Money is necessary. Yet money alone will not solve these problems. Lasting help will come as we help to build honest government and effective law enforcement, quality schools and quality hospitals, and growing economies. Progress will require a long-term commitment, and we both must provide it.

In the months ahead, our nations will take part in two world summits focused on development. Japan and the United States should work to expand our partnerships with the private sectors, to reform international financial institutions, to improve access to education for boys and girls in Asia, and Africa, and in the Middle East. In all our efforts we must put resources where they do the most good -- with the people and the communities we are trying to help.

Our two countries have unique strengths, and a unique opportunity to combine them for the benefit of the world. In science, we're exploring new technologies to produce energy while protecting the environment. In medicine, we're exploring the human genome and nearing treatments and cures to extend lives and relieve suffering.

Japan is making these great contributions even in a time of economic uncertainty and transition that has caused some to question whether your nation can maintain these commitments and your leadership in the world. I have no such questions, and I'm confident that Japan's greatest era lies ahead..."

Patrick Cronin

For USAID, I handle policy & planning, as well as budget. I would invite you to take a look the speech (above) President Bush made in front of the Japanese Diet on February 19, 2002. US policy towards Afghanistan is moving toward development. We want to provide assistance to achieve better standards of living in developing countries.

But we must also expand the economic pie. This requires conflict management: you need peace to achieve economic development. The "house" of economic development, as I call it, also requires good governance. Lack of education and health will impede development. Agricultural assistance is needed because the economic activity of these countries is mostly in agriculture. This assistance includes trade capacity building.

These policies should attract trade and investment. In the past, the majority of the capital flowing to developing countries was foreign assistance. Now, however, the most is private capital. I would like to mention a few upcoming events that may interest those of you in the field of foreign assistance:

In June, the Food and Agriculture Organization (FAO) will host the World Food Summit. This meeting will give Japan and the US a chance to talk about ending world hunger-and mean it. Ending hunger is within our grasp.

Also in June, the G-8 Summit in Canada will focus on Africa, education, and strengthening global economic growth (as well as on fighting terrorism).

In September, the World Summit on Sustainable Development (or Rio+10) will be held in Johannesburg, South Africa. The meeting will look at social development, economic growth (and trade capacity), and environmental stewardship.

James Clad

Why did Dr. Cronin and I travel to Tokyo this week? We believe that there is a moment in history here that President Bush has caught. It is a chance for the US and Japan to really work together in a particularistic, focused way. Foreign assistance is an integral part. In their economic development experience, the Americans and Japanese have seen growing middle classes and growing economies.

In 2002, we would like to set the operating principles. This is not simply rhetoric. We have come to Tokyo to listen and ask, "How can we move forward?"

Both of our populations-yours in Japan and ours in America-are skeptical of official development assistance (ODA). Both populations are intolerant of bloated budgets. So we would like to maximize development assistance from multilateral development banks. We can talk about serious institutional change. But the discussion should not be defensive in nature. The issue is more than just aid; it is also the expansion of capital flows.

Questions and Answers

Q: Japan values the economic development of developing countries. This is our number one priority. We want to see jobs created. Second, we value the contributions of multilateral development banks. But we do have national interests, so we want the option of bilateral assistance too. Third, I would like to mention the role of the private sector. There was once optimism that the private sector could replace development agencies. But it was never realized. Private sector confidence in developing countries is not there. An important goal should be to restore the private sector's confidence by working with client governments.

Patrick Cronin: If we cannot restore private sector confidence, millions will remain in poverty. I have seen firsthand infrastructure and trade capacity building in places like Mozambique. I have seen reasons for hope in places like Uganda, where the people are restoring agricultural productivity. First of all, we need to do a better job of rewarding those who make good choices. Second, it is clear that failing states will have an effect on US policy, especially after 9/11: More resources will be devoted to Afghanistan and Pakistan. President Bush is putting a premium on education in these countries, as he is doing at home. There will be more energy put into building government institutions and on democratization in these places. Conflict in general has received new attention; we should think ahead-to the root causes. Another element in dealing with failing states is learning how to work around bad institutions. Finally, we will focus on civil society: working with NGOs, non-profit organizations, and the media.

Q: What is a "failed state"? Are Iran, Iraq, and North Korea failed states?

Patrick Cronin: Iran does not belong do the failing state category. The central criterion is: Which countries are building good institutions? If a state becomes a sanctuary for terrorists, it is an indicator of a failing government. Do they have fair elections? Is there rampant corruption? These are ways of determining whether or not states are failing. A freer press is part of building a civil society.

Q: What is the goal of foreign assistance? Each country has its own way to achieve its goals. We must respect the cultures and traditions of other countries.

Patrick Cronin: I mainly agree.

Q: US-Japan cooperation in Afghanistan can be a case study. I was concerned about anti-terror scenarios. If there were an attack on Iraq, however, public opinion would focus on Iraq rather than on helping Afghanistan.

Patrick Cronin: September 11 was not a passing phenomenon. The US now has an enormous responsibility. The root sources of terror are different from the factors involving Iraq. A regime change in Iraq will have economic implications; it could draw resources away from Afghanistan. Iraq is a weapons-of-mass-destruction problem. Bush is pushing North Korea to make better choices. The status quo is dangerous. Sometimes you have to speak forthrightly. It may cause anxiety, but the anxiety already exists.

Q: Is the US seeking a regime change in North Korea?

Patrick Cronin: We are seeking reform, especially in the agricultural sector. Mr. Bush supports South Korea's "sunshine policy." Agricultural reform requires greater access and monitoring. We need access to the people who need the food.

Q: What about having North Korea join the international financial institutions?

James Clad: North Koreans are uncertain themselves. It has been difficult to get North Korea to reach a consensus.

Q: You have to expect a backlash from a failing nation. They might not see themselves as failing. How do you cope with these sensitivities?

Patrick Cronin: Good government and institutions are the building blocks. That is reality. We do not need to agonize about whether or not North Korea has a good government when its people are starving. You have general goals and specific targets. Countries have to be working toward benchmarks to receive resources.

James Clad: If you get the resources, you have to use them properly. This is not about moral relativism.

Patrick Cronin: There is a domestic political process involved in getting the aid before you can actually give it. You need to set conditionalities to convince the American people to spend the money on foreign assistance.

James Clad: Connection to the world economy tends to lead to an improvement of livelihood.

Patrick Cronin: Keep in mind that USAID strategies are formulated in the actual recipient countries, on the ground.

Q: There are failing parts of states too. Do you have the capacity to do programs at the sub regional level?

Patrick Cronin: In sub-Saharan Africa, our programs are becoming more regional because poverty is not just about one country. You have to look at the specific area. We do both: regional and sub regional.

James Clad: The multiplier effect of cross-border development is enormous.

Patrick Cronin: USAID has three general areas for policy: health, economy, and democracy. Field strategies are formulated with a regional context in mind.

Q: How does the US work with multilateral development banks? Can you explain the phrase "quality growth"?

Patrick Cronin: The Treasury Department works with the development banks. "Quality" means, for example, an inclusive and tolerant education. Sustainability is one element of quality, as well. When you talk about quality healthcare, it is providing the services that people need (or else they will go to the madrasses).

James Clad: The agenda is to regain systems that have been lost. Pakistan's educational system, for example, was secular during the 1950s. Female participation in education in Afghanistan was real during the 1970s.

Q: In the area of foreign assistance, do you envision a division of labor between the US and Japan?

Patrick Cronin: The first step is to listen to what people in Japan have to say. We need to work on strategies toward those priorities. A division of labor would take advantage of complementarities.

James Clad: We see a real opportunity. We are closer to identifying the principal ideas.

*This summary was compiled by RIETI Editorial staff.