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Cablegate: Perspectives On the "New Jica", the World's

VZCZCXRO5072
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3093/01 3112259
ZNR UUUUU ZZH
R 062259Z NOV 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 8608
INFO RUEHFK/AMCONSUL FUKUOKA 0819
RUEHNAG/AMCONSUL NAGOYA 8869
RUEHNH/AMCONSUL NAHA 3180
RUEHOK/AMCONSUL OSAKA KOBE 4604
RUEHKSO/AMCONSUL SAPPORO 1391
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NSC WASHDC
RUEATRS/TREASURY DEPT WASHDC

UNCLAS SECTION 01 OF 02 TOKYO 003093

SIPDIS

STATE PASS USAID - KAREN TURNER (ODP)

E.O. 12958: N/A
TAGS: EAID ECON PREL JA
SUBJECT: PERSPECTIVES ON THE "NEW JICA", THE WORLD'S
LARGEST AID AGENCY

1. (SBU) SUMMARY: The reorganization of the Japan
International Cooperation Agency (JICA), which recently
announced its largest foreign assistance project loan to
date, has not slowed Japan's overseas development assistance
programs. The Japanese government expects the new JICA,
which consolidates the GOJ's ODA yen loans, grant aid and
technical assistance which were previously divided among the
Ministry of Foreign Affairs and the Japan Bank for
International Cooperation (JBIC), to streamline Japan's ODA
program. The new JICA is reportedly the world's largest
bilateral development organization in terms of the amount of
ODA it directly administers. Some analysts and senior
officials hail the reorganization as a way to make Japanese
aid more efficient and systematic amid declining ODA funds.
Others within JICA, however, report differences in
organizational culture will take time to smooth out,
something which may stymie large-scale operational reform in
the short-run. END SUMMARY.

------------------------------------
Toward More Efficient, Effective Aid
------------------------------------

2. (U) The Government of Japan officially consolidated its
aid organizations into the new JICA on October 1, an event
JICA President Sedako Ogata called a "major historic turning
point" for Japan's ODA. JICA, which previously administered
Japan's technical assistance program, absorbed the overseas
economic cooperation operations portfolio from the Japan Bank
for International Cooperation and the overseas development
grant-making function from Japan's Foreign Ministry. Under
the new scheme, JICA is responsible for USD 10.3 billion in
development funds, and, by the agency's own estimate, is now
the world's largest bilateral development organization.

3. (U) In the month since JICA's reorganization, analysts
have generally praised the merger and said it will enhance
the efficiency of Japan's ODA programs, despite the size of
the agency. Takushoku University President Toshio Watanabe,
an expert on Japan's development program who has chaired
MOFA's Advisory Council on International Cooperation, praised
the reorganization as a way to make Japan's ODA more
systematic. Media have noted the new JICA will now be able
to implement a comprehensive, country-by-country based ODA
program, as opposed to the previous framework in which MOFA,
JICA and JBIC each conducted their own research and each had
their own implementation strategy. Calling the
reorganization a "good first step", MOFA Director General for
International Cooperation Masato Kitera told emboffs the new
approach will enable the GOJ to keep "one set of eyes" on a
country's development aid from program formulation through
implementation and execution, and he fully anticipates JICA
will make Japan's ODA more effective. (NOTE: While MOFA will
continue to set Japan's broader development strategy and
coordinate the GOJ's participation in multilateral
development initiatives, the shift of overseas grant aid to
the new JICA removes MOFA from the direct administration of
foreign assistance. END NOTE.)

--------------------------
Working Level Perspectives
--------------------------

4. (SBU) The new JICA not only integrates the Japan-based
offices of JBIC, JICA and MOFA, but also integrates Japan's
in-the-field development programs. At the end of October,
JICA had 55 offices abroad and JBIC had 19; these 74 offices
reportedly will be consolidated into 56 offices. A JICA
Middle East and Europe Division official told emboff the
integration is already proceeding, including of interagency
communications. (Note: JICA officials were already handing
out business cards with the new JICA logo and contact
information at a reception shortly before the official
reorganization). The official said some differences in
organizational culture between the finance-oriented former
JBIC staff and the development-focused JICA technical
personnel may take time to resolve, but he did not anticipate
a negative impact on overseas development operations.

5. (SBU) An official in the international research office at
the Japan Finance Corporation, which retained JBIC's non-ODA
related finance functions, was more pessimistic about

TOKYO 00003093 002 OF 002


short-term efficiency gains. She told emboff former JICA and
JBIC elements have yet to "get used to working together" in a
single agency. The official described the new JBIC
immediately following the reorganization as full of confusion
and internal communication difficulties, and pointed to
other, more mundane things like separate cafeterias for JBIC
and JICA staff within the agency's headquarters as examples
of what needs to be addressed before the agency's parts are
fully integrated. The official said some within JBIC view
the spin-off of the ODA functions to JICA as an "unhappy
divorce" similar to the "unhappy marriage" that arose when
the then-Export-Import Bank of Japan and the Overseas
Economic Cooperation Fund merged to become JBIC in 1999. She
speculated morale may suffer as more senior JBIC staff who
went through the first integration now see the overseas
economic cooperation portfolio spun-off again and so question
the point of the reorganization.

6. (SBU) Comment. Unification of Japan's ODA functions under
a single decision-maker should result in more effective and
efficient development assistance at the planning and
disbursement levels. The new JBIC culture will take time to
develop, as any organizational merger of this size, and
requires management and staff to "buy into" the new larger
entity. There are differences over how quickly and well the
organizations will merge over the near term into the new
JICA, but the working-level perspectives suggest little
visible change in operations from an aid recipient or donor
coordination standpoint. End Comment.
SCHIEFFER

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