Last September the Japanese government was stunned by a lawsuit filed with the Tokyo District Court by 3,861 residents of Indonesia's Sumatra Island. The plaintiffs said their life had been disrupted by a dam for hydroelectric power and flood control built with Japan's official development assistance. Each resident sought 5 million yen in damages.

The plaintiffs also demanded that the Japanese government and the state-run Japan Bank for International Cooperation urge the Indonesian government and the local power utility to remove the dam and restore the natural environment. It was the first lawsuit filed by foreign nationals holding the Japanese government responsible for ODA-related problems.

Last month the Indonesian Environmental Forum, or WALHI, filed another suit in Tokyo against the dam on behalf of 4,535 residents in the same area as well as endangered animals such as elephants, tigers and tapirs. The plaintiffs said they filed the suits because:

* Compensation paid to displaced residents was unjustifiably low -- less than 10 percent of the amount they had demanded. Many residents had yet to receive any compensation.

* In an area set aside for displaced people, no measures had been taken to guarantee a proper living environment. Few rubber plants had been planted and few wells were usable.

* Power output through the dam was only 17 megawatts, much lower than the originally proposed 114 megawatts. The dam project was said to be slipshod.

The plaintiffs also alleged the Japanese government continued to fund the project even though the Suharto regime suppressed resident opposition to the project, forced resident relocations and contributed to the destruction of the natural and living environment.

In 1998, President Suharto resigned following a 32-year rule marred by nepotism and corruption. As Indonesia's largest aid provider, though, Japan helped prolong the life of the Suharto regime. Japan's ODA guidelines say aid should be aimed at improving the efficiency and fairness of resource distribution and at securing good governance. But no Japanese government leader ever expressed regret over aiding the Suharto regime, a typical example of bad governance.

The 2002 ODA white paper, recently published by the Foreign Ministry, did not mention the lawsuits against Kotopanjang Dam, which is perhaps the worst problem in the history of Japanese ODA. Instead, the report said Indonesians were now grateful for Japanese aid a quarter century after then-Prime Minister Kakuei Tanaka's visit sparked large-scale anti-Japanese demonstrations in Jakarta. It did mention what it called a spontaneous expression of gratitude by Indonesians at a ceremony marking the completion of Japanese-funded renovation of an orphanage grade school. This event was insignificant compared to the antidam lawsuits filed by some 8,000 Indonesians.

In a chapter on ODA reform, the report gave detailed explanations of the ODA strategy council established on the recommendations of the second ODA reform council and the Foreign Ministry reform council, listing 15 specific reform objectives. Yet the report contained few new elements, as a series of ODA reform plans have been published almost every year on ways of preventing scandals and securing ODA budgets.

Generally speaking, reports published by government advisory councils tend to avoid calling for drastic reforms.

In an interim report published in May 2002, the Foreign Ministry reform council proposed the establishment of a single foreign-aid agency to unify aid functions of various government agencies. The final report released two months later backtracked from the interim report. It failed to mention a "foreign-aid agency," instead stating vaguely that studies should be launched on a more desirable aid framework "with a single organization in mind." The shift was apparently a result of the Foreign Ministry's leeriness about losing control of foreign aid, a powerful leverage it uses in diplomatic negotiations.

The establishment of the ODA strategy council, representing experts from various walks of life, has been touted as a specific means of reform through public participation, although the panel excludes ODA critics; hence its ability to assess ODA problems is in doubt.

The immediate task for the council reportedly is to review ODA guidelines, which were compiled by the Foreign Ministry with the purported intention of blocking Diet moves to enact legislation for promoting international development aid. The guidelines present a number of ostentatious objectives but lack enforcement power. Aid experts have scoffed at the guidelines as nothing but a mantra.

The guidelines could be changed in some ways but are likely to remain vague. To stop aid to regimes of bad governance, a basic law should be established to require foreign-aid approval and review by the Diet.

Foreign-aid management is likely to arrive at a crossroads in October when the Japan International Cooperation Agency becomes an independent public corporation. JICA, which implements Japanese technical aid, is currently under the joint supervision of the foreign minister, the economy and trade minister, and the agriculture and fisheries minister. Critics say the responsibilities of each minister are unclear. Ministries have their own arrangements regarding the budget, personnel appointments and aid projects. Thus it is impossible to focus on aid projects country by country. This type of aid administration also invites distrust from recipient countries and allows bad regimes to exploit Japanese aid.

The JICA labor union has proposed to Foreign Minister Yoriko Kawaguchi that ministries' special interests in the organization be nullified, once it becomes an independent public corporation, and that the traditional practice of appointing retired bureaucrats as its executives be replaced by a public recruitment system. This proposal should be realized to make foreign aid more efficient and transparent.