Japan may be replaced by Germany as the world’s second-largest aid donor in 2006, only five years after losing to the United States its long-held status as No. 1, according to a Foreign Ministry document obtained Tuesday by The Japan Times.

The document, a position paper, is a desperate bid by the Foreign Ministry to counter the Finance Ministry’s plan to trim the official development assistance budget for fiscal 2003 by 10 percent, as it did for fiscal 2002.

The prediction that Japan’s ODA ranking will fall, which could dilute some of the government’s diplomatic might, comes ahead of an annual summit of top leaders from the Group of Eight countries in Canada later this month and the World Summit on Sustainable Development in South Africa from the end of August through early September.

Assistance for developing countries, especially impoverished African states, is expected to be high on the agendas of the two high-profile international conferences.

African ambassadors to Japan are expected to meet with Prime Minister Junichiro Koizumi at his official residence later this week and ask him not to slash Japan’s ODA budget despite Japan’s severe fiscal condition.

The G8 comprises the U.S., Canada, Britain, Germany, France, Italy, Japan and Russia.

In 2001, Japan was replaced by the U.S. as the world’s largest aid donor for the first time in 11 years, dealing a significant setback to Japan’s international clout — and national pride.

The U.S. provided $10.8 billion in ODA to developing countries in 2001, up 9.3 percent, while Japan extended $9.6 billion in ODA, down 28.4 percent, drawn down by the exchange rate as well as the budget reduction. Germany came in a distant third, with ODA spending of $4.8 billion.

The U.S. administration of President George W. Bush announced in March that it will provide an additional $5 billion in ODA over the next three years. The 15-nation European Union also announced in March that it will increase member countries’ ODA spending in terms of a ratio to gross domestic product to an average of 0.39 percent by 2006 from the current 0.33 percent.

In the position paper, the Foreign Ministry estimates the amounts of ODA money to be extended annually by major aid donors between 2003 and 2006, assuming that each donor will have zero economic growth and that currency exchange rates will remain unchanged.

According to the estimates, if Japan continues to cut its ODA budget by 10 percent annually, it will slip into the third place — after the U.S. and Germany — in 2006.

Under the assumptions, the U.S. would provide $15.8 billion in ODA that year, followed by Germany with $5.9 billion and Japan with $5.6 billion. France would be a close fourth, at $5.5 billion, and Britain would rank fifth, at $4.8 billion.

Japan’s already low ODA level will fall even further from the current 0.23 percent of GDP to 0.14 percent in 2006. That compares with 0.44 percent for France, 0.33 percent for both Germany and Britain, and 0.16 percent for the U.S., according to the estimates.

“Since the Sept. 11 terrorist attacks in New York and Washington, the U.S. and the EU have recognized anew the importance of addressing such issues as poverty, which can be a hotbed of terrorism, and the development of developing countries,” the paper says. “They have overcome the aid-fatigue they suffered in the 1990s and announced plans to sharply increase their ODA spending.

“For Japan, ODA is the most important tool for contributing to the resolution of various international problems. Such Japanese contributions have won a lot of praise in the international community.

“But if Japan continues to cut back on its ODA spending, it will suffer serious damage internationally.”

While acknowledging the need to further improve Japan’s ODA by making it more effective and its use more transparent, the position paper argues that Japan should maintain ODA spending “commensurate with its economic power and international responsibilities.”

“ODA accounts for a tiny 1.1 percent of the fiscal 2002 general account budget,” the Foreign Ministry says in the paper. “Therefore, even if ODA is cut by 10 percent, it will have only a limited effect of curtailing the overall budget.”

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