© 2018 Journal of International and Advanced Japanese Studies
Vol. 10, March 2018, pp. 169-185 (ONLINE)
Master’s and Doctoral Programs in International and Advanced
Japanese Studies
Graduate School of Humanities and Social Sciences,
University of Tsukuba

Research Note

Japan’s ODA Policy toward Central Asia and the Caucasus
An Analysis of Japanese Assistance to Economic Development in Kyrgyzstan andArmenia

Bobur NAZARMUHAMEDOV
University of Tsukuba, Graduate School of Humanities and Social Sciences, Ph.D. Student
Since the end of the Cold War, establishing partner relationships with other regions beyond
Southeast Asia, such as Central Asia and the Caucasus, has served as a primary goal for Japan inasserting its foreign policy. Japan has been active in the wider Central Eurasian region, namely, inArmenia and Kyrgyzstan, over the last two decades, mainly through provision of its official
development assistance (ODA) and implementation of international cooperation projects. Japan`sforeign aid allocation to these countries was primarily aimed at the achievement of balanced andsustainable economic growth as part of its ODA policy in the region. This paper aims to provide anextensive overview of bilateral relationships between Japan and the countries of Central Asia andthe South Caucasus in the context of formulation and implementation of Japanese ODA programs.
The paper starts by elaborating on the main features of Japan’s foreign aid policy towards the target
countries in the region and then outlines the main policy objectives behind Japan’s ODA allocation
towards Armenia and Kyrgyzstan. The discussion concerning Japanese engagement in the region
will be focused on Japan`s economic development practices and their impact on ODA recipient
countries.
Keywords: Japanese Foreign Policy, ODA, Economic Development, Armenia, Kyrgyzstan

Introduction
The official standpoint of Japan, as a donor country, is articulated in the ODA Charter provided
by the Japanese Ministry of Foreign Affairs of Japan, which declares a clear preference for Asian
countries. As stated in the Charter, Japan’s priority for the Asian region is justified by the notion that
“Asia [is] a region with [a] close relationship to Japan and which can have a major impact on Japan’s
stability and prosperity.”1 The top ten recipients of Japan’s ODA are thus located in Southeast Asia, andalmost 60% of Japan’s ODA is distributed to these countries (OECD 2017). The geographical preferenceof Japan for aid distribution has been the same for a quite long time but this tendency seem to befluctuating since the end of the Cold War (Nishigaki and Shimomura 1998).
Japan has been active in the Central Eurasian2 region, namely in Armenia and Kyrgyzstan, overthe last two decades, mainly through provision of its ODA and active participation of Japanese businesses
in pursuit of Japan’s economic interests (Dadabaev 2013). The priority area for Japanese aid allocationin respective countries is predominantly connected with the achievement of balanced and sustainable
1 Information from the website of Japanese Ministry of Foreign Affairs (MOFA).

http://www.mofa.go.jp/policy/oda/white/2007/ODA2007/html/honpen/hp304000000.htm; (Accessed on 13 December2017).
2 The term “Central Eurasia” is used in this study as a reference to the geographical area comprised of Central Asia andthe South Caucasus.

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economic growth. The majority of projects implemented under the established country assistance plan
deal with infrastructure development and provision of technical assistance, which lack prospects togenerate economic opportunities and value for local development (Dadabaev 2016). Only few projects,
such as educational grants and grants for agricultural producers, seem to have had an impact on local
economic revitalization (Dadabaev 2016, Yuasa 2007, Len 2005). The existing literature on the impact
of Japanese aid on economic growth and development in Central Eurasian countries suggests that, inmost cases, the development projects implemented by the Japan International Cooperation Agency(JICA) lack direct impact on local communities and beneficiaries since the majority of projects are
directed at the provision of humanitarian assistance or infrastructure development at the state level rather
than the support of local economic development in Armenia and Kyrgyzstan (Marat 2008, Kawato 2008,
Mangi 2011).
In recent years, the vast majority of academic works have stressed the importance of studying therelationship between aid allocation and its impact on the economic development of recipient countries.
For instance, early studies commissioned by Papanek (1972) found a positive correlation between foreign
aid and economic growth. Another scholar, such as Singh (1985), revealed that aid may have positiveand strong effects on growth even without state intervention, while scholars such as Snyder (1993)
pointed out the importance of country size in assessing the impact of aid on growth. On the other hand,
Burnside and Dollar (1997) came to the conclusion that aid may be effective, that is, contribute to growth
only in a good policy environment, which may maximize a donor’s efforts to bring a positive changethough collaboration with policy implementing agencies in developing countries. Later studies, however,question the real benefit coming through aid allocation and found that aid may also have a negative
impact on growth (Gallup, Sachs and Mellinger, 1999). One study conducted by Knack (2000) found outthat with large amounts of aid inflow, the institutional quality in developing countries diminishes, whileat the same time increasing rent-seeking and corruption attitudes, and therefore causing a negative impact
on growth. Consequently, the investigation of the relationship between Japanese foreign aid andeconomic growth in developing countries possesses conditionality based on geographic context, aid flow
and its type, and, from a methodological point of view, how it is being observed and the sources used
(Gallup, Sachs and Mellinger, 1999).
One of the main objectives of this study and contribution to the existing literature on Japanese
foreign aid topic is thus to review how the bilateral relationship between Japan and recipient countries,
in the form of aid inflow to Armenia and Kyrgyzstan, has impacted the economic development ofrecipient countries. The correlation between foreign aid attainment and economic development discourse
will focus on Japan’s efforts to encourage economic development prospects in recipient countries andidentify the deviations in Japan’s approach to stimulate this process.
In order to assess this process, this study is designed in a way to reveal what motivates Japan toallocate foreign aid and what was the impact on recipient countries from explanatory and descriptive
standpoints. Since the study strives to explore the process of relationship building between donor andrecipient countries, the case study approach will be applied. The descriptive nature of the study sought
to be important to form the contextual framework for the study and outline Japan’s ODA policy towards
Central Eurasian states. On the other hand, the explanatory standpoint enables discussion of the different
ways used by Japan to promote economic development and to understand the factors motivating Japanto undertake certain development policies in recipient countries.
This paper consists of four main parts. The first part aims to provide a brief explanation of Japan’s
foreign policy objectives in Central Eurasia. The second and third parts discuss development projects
implemented by Japan in recipient countries. The final part will provide a conclusion by summarizing
the main findings of the study and will prescribe an assessment of whether the formulated Japanese ODA
policy towards recipient countries contributed to economic advancement.
1. Japan’s ODA Scheme for Central Eurasia(1) Japan’s Engagement in Central Asia and the Caucasus Region
Japanese engagement in the wider Central Eurasian region started shortly after the post-Soviet states
gained their independence in 1991. This process was benchmarked by the establishment of diplomatic
relations between Japan and the newly independent republics of Central Asia and the South Caucasus in1992. Initially, Kyrgyzstan was one of the first out of five Central Asian states to attract the attention ofJapan, however, as collaboration between Japan and other Central Asian states has evolved, more
attention has been paid to other countries of Central Eurasia. For instance, despite the fact that Japanestablished its first diplomatic contact with Kyrgyzstan, Japanese embassies were first opened in170

Bobur NAZARMUHAMEDOV, Japan’s ODA Policy toward Central Asia and the Caucasus

Tashkent, Almaty, and Dushanbe, and finally in 2003 in Bishkek. The most recent Japanese embassy was
opened in Yerevan in 2015.
In general, Japanese engagement in the Central Eurasian region can be analyzed within threemain periods: Starting from 1930 up until 1945, the countries of Soviet Central Asia were studied by anumber of Japanese scholars who examined specific characteristics related to economic and politicalconditions as well as nationality problems in respective countries. The main goal for accomplishing thesestudies was to reveal the shortcomings and weaknesses of Soviet governance and, by doing so, securing
the stability of the Japanese empire (Takeuchi 2000).
The second period of Japan’s interaction in the region is connected with the establishment of
independent Central Asian states in 1991 up until 2004. This phase symbolizes the recognition of newly
independent states by Japan and establishment of diplomatic relationships with them. Yet despite the factthat Japan maintained bilateral relationships with Central Eurasian states in the early 1990s, Japanesepolicy towards these countries remained unclear and fluctuating. According to Hook et al. (2001), during
the second phase, Japanese policy-makers did not undertake any assertive steps towards maintaining
closer interactions with Central Asian states and “were more eager for historical reasons to develop
relationships with Central Asian Republics” (Hook et al. 2001).
The third and contemporary phase of Japan’s engagement with the Central Eurasian region starts
with the introduction of the “Central Asia Plus Japan” concept in 2004. This process is also remarkablebecause, starting from 2004, the Central Asia and the Caucasus Division at the Japanese Ministry ofForeign affairs started to operate. The total ODA channeled into the region in 2014 constituted 290
million USD. Since then, Japan started to maintain full-fledged interactions with Central Eurasiancountries in three major areas, including: (1) diplomatic/political interaction; (2) trade, and investment;and (3) aid and assistance (Dadabaev 2016).
(2) Japan’s Strategic Interests and Foreign Policy in Central Eurasia
Japan’s interests in the region can be reviewed within three main objective lines. Japan built up its
framework for cooperation with the Central Eurasian states based on the main principles of ODA, whichwere associated primarily with the revitalization of Japan’s Silk Road narrative. For Japan, establishingpartner relationships with other Asian countries beyond China served as a primary target in asserting its
foreign policy objectives. The second main objective of Japan for engagement with Central Eurasianstates was connected with the provision of assistance for these newly independent countries byfacilitating their smooth transition from planned economies to market economies and, by doing so,
supporting their sustainable development. The final objective for collaboration with the countries ofCentral Eurasia was based on strategic interests of Japan related to the extraction and use of oil andnatural resources with the aim of diversification of its energy resources.
Given the fact that Japan’s territorial dispute with Russia suppressed Japan from utilizing theenergy potential of the Sakhalin and Kuril Islands, Japan needs to secure its energy consumption from
the Middle East (Tuman, Strand and Emmert 2009). In addition to these three main interests of Japan in
the region, the geographical location and proximity of these countries to China also plays a role in theconstruction of Japan’s foreign policy towards Central Eurasia. China’s aspiration to integrate thecountries of the region to its overall regional initiatives, such as through East Turkestan policy or “OneBelt, One Road” initiative, also motivates Japan to maintain its own influence through increased aid
delivery to the region (Muldavin 2000, Dadabaev 2016).
(3) Japan’s ODA Disbursements in Central Asia and the Caucasus
The interaction and implementation of Japan’s policy towards these countries started with theprovision of development assistance within human rights, democratic, and free-market economic
principles. The first batch of ODA donations to Central Asian states accounted for 2.57 million USD in
1993 and reached 108.48 million USD by 2008. The provision of ODA to Central Eurasian states wasgoverned by Japan’s Four Guidelines of ODA, along with the main principles of the ODA Charter (Hooket al. 2001).
The ODA provided by Japan within the framework of these principles is presented in Table 1.
Figure 1 displays the total ODA of Japan between 1992 and 2015.

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Table 1 Japan’s ODA in Central Asia and the Caucasus from 2006 to 2015 (in USD millions)
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Armenia

7.68

85.23

57.7

98.7

77.45

7.48

0.31

1.33

1.69

-5.31

Azerbaijan

4.06

11.36

-2.8

-2.03

-11.01105.75155.36

42.85

68.72

21.31

Georgia

11.63

7.01

2.42

12.31

6.48

4.97

30.66

45.07

57.39

39.72

Kazakhstan

24.87

43.31

37.9

37.13

-1.82

-20.73-15.93-6.32-36.75-33.23Kyrgyzstan

17.22

15.68

12.35

17.75

23.16

30.62

19.57

17.48

21.24

42.12

Tajikistan

8.04

9.43

8.06

26.24

43.42

35.59

32.98

26.66

23.55

17.82

Turkmenistan

0.62

-0.54

-1.54

-1.19

-0.94

-1.47

-2.21

-1.68

-1.6

-1.29

Uzbekistan

18.61

56.32

48.63

20.41

7.04

-1.79

-6.01

30.11

34.18

126.66

Source: Compiled from data made available by the Organization for Economic Cooperation and Development aid(ODA) disbursements to countries and regions [DAC2a]), available at
http://stats.oecd.org/viewhtml.aspx?datasetcode=TABLE2A&lang=en# (Accessed 13 December 2017).
Note: Negative figures indicate that outstanding loans remain after repayment by respective recipients.

Figure 1 Japanese Total ODA in Central Asia and the Caucasus between 1992 and 2015

Unit: USD millions
200.
150.
100.
50.
0.

-50.
199219931994199519961997199819992000200120022003200420052006200720082009201020112012201320142015

Armenia
Kyrgyzstan

Azerbaijan
Tajikistan

Georgia
Turkmenistan

Kazakhstan
Uzbekistan

Source: Compiled from data made available by the Organization for Economic Cooperation and Development. Available at
http://stats.oecd.org/viewhtml.aspx?datasetcode=TABLE2A&lang=en# (Accessed 13 December 2017).
Note: Negative figures indicate that outstanding loans remain after repayment by respective recipients.

(4) JICA as an ODA Policy Implementation Tool
Established in 1974, the Japan International Cooperation Agency (JICA) serves as a main
mechanism for the coordination and realization of Japan’s ODA policy in developing countries. The mainprinciples of JICA include: addressing the global agenda, reducing poverty through equitable growth,
improving governance, and achieving human security. 3 Based on these main principles, JICA
accomplishes aid coordination mission through provision of its support for the sustainable developmentof Central Eurasian states (see Figure 2).
JICA’s operations in ODA recipient countries are guided by preferences for certain sectors foraid distribution. Given the fact that Central Eurasian countries are considered to be landlocked and, thus,lack direct access to the sea for conducting their trade relationships, it is required from these countries toestablish alternative routes of transportation and telecommunication to reach other regions of the world
for attaining and sustaining their economic development. Acknowledging the importance of this3

“JICA- Mission Statement” available at: < http://www.jica.go.jp/english/about/>, (Accessed on 13 December 2017).

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Bobur NAZARMUHAMEDOV, Japan’s ODA Policy toward Central Asia and the Caucasus

conditionality for the achievement of Japan’s policy objectives in the region, JICA concluded that “in theabsence of adequate maintenance and management since independence, facilities have considerably
deteriorated and are in urgent need of rehabilitation.” 4 Therefore, one of the primary and biggest
installments of Japanese ODA in 1995 was directed towards the implementation of projects related toinfrastructure and transportation development in Kazakhstan. The total value of Japanese ODA grants
accounted was 50.9 billion JPY and was used for the realization of the Railway Transport Capacity
Development Project, the Irtysh River Bridge Construction Project, and the Astana Airport
Reconstruction Project.5
Another ODA disbursement of 2.3 billion JPY was provided to Kyrgyzstan in May 1999 for thedevelopment of the transportation sector in the country. According to a JICA project administrator, themain objective for the provision of this development aid was:“Considering the particular importance of the extensive rehabilitation andmodernization of the deteriorated transportation network for the country’s
development, JBIC has mainly provided support for the transportation sector. ODA
loan commitments have been provided for the Bishkek-Manas Airport
Modernization Project, which upgrades the Manas Airport in the capital of Bishkek
to function as an international airport; and the Bishkek-Osh Road Rehabilitation
Project to improve the condition of the main road linking the capital Bishkek withthe second largest city, Osh. JBIC has provided ODA loans totaling ¥25.7 billion to
Kyrgyz for six projects.”6

Similarly, in 1997, Japan provided 4.5 billion JPY for the Railway Transportation Modernization
Project in Turkmenistan and 15.6 billion JPY for the Telecommunication Network Expansion Project (II)and the Three Local Airports Modernization Project (II) in Uzbekistan. 7
The second biggest sector that attracts the most of Japanese ODA is the power sector. Due to theinherent Soviet period power-supply systems, Central Asian states possess power supply inefficiency
and, thus, is confronted with a need for infrastructure development to operationalize it.
Since establishing its relations with Central Eurasian states, Japan has signed many bilateral aid
agreements. According to one of these agreements, in 2006, the following policy areas were defined aspriority by Japan for cooperation with Uzbekistan: (1) Support for building human-resource development
systems needed for developing a market-oriented economy and industrial development; (2) support forrebuilding social sectors; (3) support for upgrading and improving economic infrastructure; and (4)promotion of intra-regional cooperation. 8 Based on these priority areas JICA also established aframework for the implementation of activities in order to promote poverty reduction through economic
growth and supporting regional cooperation through (1) developing a foundation including transport
infrastructure; (2) support for social sectors and, (3) the Central Asia Plus Japan Dialogue
implementation. 9 Likewise, the following four priority areas were set by Japan in 2009 for the bilateralrelationship between Japan and Tajikistan: (1) rural and industrial development; (2) transport and traffic;(3) border control; and (4) the upgrade of basic social services. 10

Japan International Cooperation Agency and Development Aid (JICA), Japan Development Assistance Report-2000,(Japan Bank for International Cooperation (JBIC), 2000), p. 38.
5 Ibid, p. 40.
6 Ibid.
7 Ibid, p. 49.
8 Japan International Cooperation Agency and Development Aid (JICA), Japan Development Assistance Report-2009,(Japan Bank for International Cooperation (JBIC), 2009), p. 43.
9 Ibid, p. 44.
10 Ibid.
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Figure 2. The Evolution of JICA Programs in Central Asia and the Caucasus

Unit: JPY millions
40.

30.

35.71

28.54

28.36624.32419.94820.

19.77717.85715.501

10.

0.
2008
2009
2010
2011
2012
2013
2014
2015
Source: Compiled from the data extracted from JICA Annual Reports (2007-2016), available at https://goo.gl/TNhxGY(accessed on 13 December 2017)

As stated earlier, starting from 1992, Japan has been using its development aid towards thecountries of Central Asia and the Caucasus in order to establish a closer relationship with the countriesof the region (Takamine 2005). Despite the fact that the strengthening of the relationship between Japanand the countries of the region was followed by the delivery of enormous foreign aid to the region,
Japanese foreign policy during this period can treated as passive and unclear. From 1997 to 2004, theregion witnessed a new phase of Japanese foreign policy orchestrated by then-Japanese Prime Minister
Ryutaro Hashimoto known as “Hashimoto Doctrine” (Hook et al. 2001). The main attribute of this period
and the objective of this doctrine was to further Japan’s relationship with the Association of Southeast
Asian Nations (ASEAN) countries and using this partnership for addressing global pressing issues. With
the outbreak of the East Asian financial and economic crisis in 1997, Japan’s aspiration for regional
cooperation and a leadership role was once again manifested. According to a study by the Japanese
Ministry of Foreign Affairs, Japan’s policy aimed at practicing a more enhanced bilateral relationshipwith other countries of the Asian region from mid-1997 onwards implies that “although Japan wascertainly not abandoning its attachment to the bilateral norm and bilateral relationship with the U.S.,
these were beginning to be challenged in the midst of Japanese policy-making agents by the resurgent
norms of Asianism and internationalism” (Hook et al. 2001, p. 224).
If we analyze the trajectory of development assistance provided to Central Asian countries byJapan between 1997 and 2004, we may observe that the total value of Japanese foreign aid to the region
was reduced in 1997 owing to the implementation of the Hashimoto Doctrine, as shown in Figure 1. Yet,as depicted in Figure 3, after the 9/11 attack in 2001, the development assistance disbursement wasincreased once again. The main reason for the increase in the total value of Japanese foreign aid
disbursements to the Central Asian region was based on Japan’s goal of maintaining peace and stability
in the wider Asian region. It was important for Japan to secure its region (ASEAN) from the transmission
and expansion of terrorism from the side of Afghanistan, and thus, Japan used foreign aid to prevent thedevelopment of such scenarios in Central Asia.

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Bobur NAZARMUHAMEDOV, Japan’s ODA Policy toward Central Asia and the Caucasus

Figure 3. Total Value of JICA Programs in Central Asia and the Caucasus
Unit: JPY millions
2015

2014
2013
2012
2011

2010
2009
2008
0
UzbekistanAzerbaijan
Georgia
Kyrgyzstan
Tajikistan
Armenia
Kazakhstan
Turkmenistan

5,000
2008
4,587
377
80
1,641
6,517
8,514
6,772
52

10,000

2009
2,551
121
135
1,028
1,229
10,2524,439
193

15,000
2010
2,047
7,731
659
1,852
688
4,124
2,617
60

20,000
2011
1,946
6,163
1,251
1,193
3,307
223
1,372
26

25,0002012
3,717
11,075
3,256
1,260
2,501
189
2,305
21

30,000
2013
2,708
5,289
3,909
1,503
847
297
3,280
24

35,000
2014
8,184
7,261
5,147
4,218
3,112
227
197
21

40,0002015
18,931
6,015
4,086
3,966
1,893
552
229
36

Source: Compiled from the data extracted from JICA Annual Reports (2007-2016) available at https://goo.gl/TN hxGY
(Accessed on 13 December 2017)

Since 2004, Japan has shown an increased interest in the region and been practicing morecomprehensive cooperation with the countries of Central Asia and South Caucasus. The introduction andimplementation of the “Central Asia Plus Japan” Initiative marked the new phase of cooperation between
Japan and the countries of the region. The nature of cooperation between Japan and Central Eurasiancountries since 2004 can be reviewed from a multi-approach perspective which is not limited to thedelivery of development aid but also represents an enhanced interaction in different areas of mutualinterest.11
For Japan, which had been pursuing the goal of raising its role and position in international arena,practicing a more balanced mode of interaction with the countries of Central Eurasia, was important. In
reviewing Japan’s post-Cold war efforts, one may acknowledge that, after the U.S, Japan had been
providing the largest portion of foreign aid to the region. Given the fact that maintaining regional security
11 “Central Asia and Caucasus’, JICA Report, available at:<http://www.jica.go.jp/english/publications/reports/annual/2010/pdf/22.pdf>, (accessed on 13 December 2017), p. 43.

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Volume 10 ONLINE / March 2018is vital for the realization of Japan’s strategic interests in the region, including access to natural andenergy resources, Japan considers the military presence of Russia and the U.S. as crucial condition forpracticing and sustaining a fully-fledged interaction with the countries of the region. Even though, Japan
has strategic interests in the region, its efforts to support the democratic development and economictransition to a market economy of the countries of the region cannot be downplayed.
2. Japan’s Development Assistance Program for Armenia(1) Japan’s ODA Policy towards Armenia
Japan’s engagement with Armenia started in the 1980s, when Armenia was part of the former Soviet
Union. The initial assistance policy of Japan was formulated in the form of disaster relief after the Spitak
earthquake in 1988. Japan sent disaster relief teams to Armenia three times in order to provide urgent
rehabilitation and reconstruction support for the construction of equipment to remove the debris after theearthquake. Since 1991, after Armenia gained its independence, Japan has continued provision of its
technical and humanitarian aid to refugees within the framework of its emergency disaster relief program.
In addition, a number of Armenian officials were able to participate in technical training programs inJapan since then. Diplomatic relations between the governments of Japan and Armenia was establishedin 1992, and the first batch of Japanese ODA assistance was received by Armenia in 1994. A technicalcooperation agreement between the two countries was signed in June 2005 with the aim of strengthening
the economic cooperation between two countries. Based on the Country Assistance Policy formulated by
Japan in 2012, two areas were outlined as priority areas, including: (1) the development of economic
infrastructure and regional development, and (2) strengthening of disaster prevention measures. Alongwith these main policy objectives, achieving balanced and sustainable economic growth serves as a basic
framework for policy implementation in Armenia12.
The initial phase of cooperation between Japan and Armenia in the 1990s entailed the provisionof technical support by nature and was based primarily on the implementation of ODA projects in the
agricultural sector. One of the first ODA programs that was introduced in 1997 was related to the foodproduction development program. According to Armenian Agriculture Minister Zaven Gevorkian, theJapanese government was very supportive in the refining process of the agricultural sector throughprovision of funding to address existing problems in the sector. For instance, in the 1997-2000 period,
Japan allocated a 420 million JPY grant to the government of Armenia in order to support programs
facilitating the development of the country’s agrarian sector. Under this program, the received funding
was used by Armenia to buy agricultural machinery, equipment, as well as agricultural fertilizers.
Since 1998, Japan has provided technical and expert support to reform the country’s energy
sector. Notably, a 40 million USD credit was received by Armenia and was used to build new capacities
and modernize existing infrastructure in the energy sector. The Armenian government was obliged to
repay the credit within 20 years with a 10-year grace period.
Along with the provision of technical support, under the established country assistance policy,
the Armenian government also received two grants designed to advance the country’s cultural andhealthcare sectors. The Japanese government allocated 500,000 USD grant for the purpose ofstrengthening the operational productivity of the Armenian Philanthropic Orchestra by enabling them topurchase musical instruments and build new recording studio. Most recently, Japan’s aid was delivered
to the development of economic infrastructure, as shown in Figure 4. For the details of the different typesof assistance provided by Japan to Armenia, refer to Table 2.

12 Information from the website of Japanese Ministry of Foreign Affairs (MOFA). http://www.ru.emb-japan.go.jp/ARMENIA/20130613.html; Accessed on 13 December 2017.

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Bobur NAZARMUHAMEDOV, Japan’s ODA Policy toward Central Asia and the Caucasus

Table 2. Performance of Japan’s Assistance to Armenia by Type of Assistance (in JPY hundred
million)Aid Schemes

2005

2006

ODA Loans--

Grant Aid

1.36

Technical
Cooperation

2007

2008

2009

2010

2011

2012

2013

Total
Amount-104.91

-

-

-

-

-

104.91

0.09

2.12

9.71

2.23

0.36

0.09

0.26

0.33

16.55

3.81

1.59

2.03

1.98

1.1

2.68

2.22

1.5

1.61

18.52

Acceptance ofTechnical Training
Participants(persons)

62

47

44

37

41

46

40

36

35

388

Dispatch of Experts(persons)

9

13

3

1

1

6

10

11

10

64

(Unit: JPY hundred million for ODA loans, grant aid and technical cooperation, and the number of people accepted underTechnical Training Participants and Dispatch of Experts program. “-” indicates “not applicable”)
Source: ODA Data Book and the attachment (reference data) of the Annual Report of JICA (2014). The performance oftechnical cooperation between FY2005 and 2012 includes the technical cooperation of all Japanese organizations, whilethat in FY2013 includes only the technical cooperation provided by JICA. The figures in the table are total (gross) amountsof disbursement.

The cooperation in the economic sphere started only after the establishment of the JapaneseArmenian economic committee in August 2000. The first joint session of the Japanese-Armenian
Economic Committee was held in Tokyo in June 2001. Among the major topics discussed during thesession, collaboration in the areas of high technology, the processing industry, and tourism were given ahigher importance. As a result of the joint meeting, the two parties agreed to enhance bilateral trade andeconomic relations under the established legal framework on Avoidance of Double Taxation on Income
and Property, and on Mutual Protection and Stimulation of Investment. This meeting was also remarkablesince it enabled both parties to acknowledge the passive level of bilateral cooperation due to the absenceof country representation in the respective countries.
The official visit of the Armenian President Robert Kocharian to Japan in 2001 served as thefoundation for the new level of bilateral relationship between the two countries. Although this visit canbe treated as formal in nature, the agenda of the visit was pertinent to the discussion of economic
interaction between two countries. During his visit to Japan, Robert Kocharian met with the Economy,
Trade and Industry Minister Takeo Hiranuma and stated that Tokyo serves as one of the main aid
providers to Armenia and expressed his motivation to make a transition from aid recipient to a fullyfledged partner of Japan in the region. Stressing the need for enhanced bilateral economic relationshipbetween the states, the president admitted that the Armenian government is “extremely interested inJapanese private investment in Armenia” and expressed his willingness to further the development ofsmall- and medium-sized businesses in the country. 13 At the end of the meeting, an interstate agreement,
including a two-year program to develop Armenia’s mining industry with the support of JICA, wasachieved.
Another turning point of the joint meeting between Japan and Armenia was the discussion aroundthe potential of Silk Route re-opening. The two parties agreed on mutual collaboration in therevitalization process of the Silk Route and, in the course of negotiations, the Japanese Bank forInternational Cooperation pledged to provide financial assistance for the modernization of the Zvartnots
Airport in Erevan.
13 Irina Komissina, “Yaponiya

i Kavkaz: Soedinit li ih Velikiy Shelkoviy put,” Central Asia & Central Caucasus Press
AB; http://www.ca-c.org/journal/2002/journal_rus/cac-03/03.komru.shtml (Accessed on 13 December 2017).

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Figure 4. Bilateral ODA Disbursement to Armenia by Sector (2014-15)

Sectors

1%

2%

1%

0%

Economic infrastructure &services
Production

4%
7%

Other social infrastructure &services
Education
13%
Multisector
54%

Healthcare & Population
Humanitarian aid

18%
Other & unspecified
Programme assistanceSource: OECD, 2017. https://goo.gl/7r9dP2; (Accessed on 13 December 2017).

As one may judge based on the above-mentioned timeline of events, the development of therelationship with Japan has become one of the priority directions of Armenian foreign policy in the courseof bilateral cooperation. The press secretary for the Armenian president, V. Gabrielian, noted thatmaintaining mutually-beneficial cooperation in political and economic spheres with Japan is importantfor Armenia in order to support private sector development and advance the country’s economic capacity
by attracting the necessary financial resources from donor countries like Japan. 14(2) Japan’s Development Assistance Projects in Armenia
The geographical landscape of Armenia makes it difficult for village populations residing in themountainous areas to reach the city center, and thus significantly impacts the agricultural productivity.
This also results in the accumulation of more than 60% of the Armenian GDP in the capital city of
Yerevan. Taking into account this conditionality, the government of Japan has been assisting Armenia innarrowing down the proximity between urban and rural areas and boosting overall rural economic
development processes through the provision of grants aimed at infrastructure building. The projects
implemented in infrastructure and capacity building sectors, including construction of power distribution
networks, formed the basis for sustainable economic development and contributed to raising people’s
living standards. According to the Rolling Plan designed in April 2015, the Japanese government assured
to implement: (1) the “Supporting Energy Sector Program;” (2) “Promoting Private Sector Development
and Strengthening Basic Economic Structure,” and (3) the “Rural Development Program.” Among theplanned projects, two ODA loan projects including the “Power Transmission and Distribution Network
Improvement Project” and the “Yerevan Combined Co-Generation Power Plant Project” 15 possess
importance for the advancement of the country’s energy capacity and raising the productivity of power
distribution networks. In addition to the implementation of projects in the power sector, the Japanese
government has been also supporting small and medium-sized enterprises (SMEs) and local industries’
development through the implementation of technical cooperation projects such as the One Village, One
14

Supra n.11.

15 Ministry of Foreign Affairs of Japan (MOFA), ODA by Region: Central Asia and the Caucasus, Rolling

Plan for theRepublic of Armenia, 2014 ed., http://www.mofa.go.jp/policy/oda/page_000010.html#armenia (Accessed 13 December2017).

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Product (OVOP) Project.
It is apparent that due to the geographical location of Armenia, predominantly in the mountainous
area, the occurrence of natural disasters such as earthquakes and landslides are quite often in the country.
In this connection, Japan has been assisting Armenia to improve its disaster risk reduction measures bytransmitting and sharing Japanese technologies during the prevention, emergency and reconstruction
stages. The “Strengthening Regional Measures for Disaster Prevention Program” was designed to scale
up these efforts and was included in the Rolling Plan for Armenia. In order to formulate the humanresources development and disaster risk reduction capacity of Armenia, a number of technicalcooperation projects, including the “Study on Landslide Disaster Management,” the “Project for Seismic
Risk Assessment and Risk-Management Planning,” “Development of Communities Affected byLandslides,” and the “Landslide Disaster Management Project” have been implemented. 16
In addition to the above-mentioned projects in the main policy areas, a number of projects
directed at the improvement of services in the educational and healthcare sectors are being integrated
into the current Rolling Plan for Armenia. According to this plan, technical cooperation projects dealing
with the construction of health centers and provision of materials and equipment to rural schools havebeen also implemented.17
3. Japan’s Development Assistance Program for Kyrgyzstan(1) Japan’s ODA Policy towards Kyrgyzstan
As mentioned earlier, in the first half of the 1990s, Kyrgyzstan, out of the five Central Asian
countries, drew the most attention of the Japanese government, which was manifested by the JapaneseForeign Minister’s visit to the country in 1992 (Kawato 2008). Japanese interest in Kyrgyzstan wasjustified by its small-sized economy and lack of natural resources to uplift its development and, thus, it
was assumed that Japan could play a significant role through provision of ODA to have a positive effecton the country’s further economic development. However, over the course of bilateral interaction
between the two states, Japanese interest in Kyrgyzstan has slowed down since the Kyrgyz side was notready for the implementation of Japan’s large-scale assistance projects and, therefore, Japan shifted its
priority orientation towards Kazakhstan and Uzbekistan (Kawato 2008).
Despite the fact that Kyrgyzstan is not in the top five Japanese ODA recipient countries, Japan
serves as one of the influential donors to the country, providing its support for: “(1) enhancement oftransport infrastructure; (2) agricultural development; (3) social development; (4) human resource
development in an open market environment; and (5) greater access to basic human needs, including
human security.”18
Japanese efforts to provide assistance for the country’s socioeconomic development was
supplemented by the provision of foreign aid in the form of credits and grants. The total value of Japanese
ODA to Kyrgyzstan from 1992 to 2005 was accounted at around 389 million USD.19 The major portionof this funding was channeled for infrastructure development projects, including the realization of two
big projects such as the Bishkek-Manas International Airport Modernization Project (5.454 billion JPY),
Bishkek-Osh Road Rehabilitation Project (total 8.266 billion JPY).20 Along with the realization of largescale projects in the transportation field, Japanese ODA was also used for the overall improvement of theefficiency and maintenance of the country’s transportation sector through procurement of equipment andmodernization efforts, as illustrated in Figure 5.21 The second most important direction of Japanese ODA
is connected with the provision of funding for the reformation and advancement of Kyrgyzstan’s financial
sector. Japan has been actively supporting the process of improvement in the country’s payment system
16 Information from the website of Japan International Cooperation Agency.

https://www.jica.go.jp/armenia/english/activities/index.html; (Accessed on 13 December 2017).
17 Ministry of Foreign Affairs of Japan (MOFA), ODA by Region: Central Asia and the Caucasus, Rolling Plan for theRepublic of Armenia, 2014 ed., http://www.mofa.go.jp/policy/oda/page_000010.html#armenia; (Accessed on 13
December 2017).
18 Erica Marat, “Kyrgyzstan: Japan’s Prime Partner in Central Asia?” in Christopher Len, Tomohiko Uyama and Tetsuya
Hirose (eds.) Japan’s Silk Road Diplomacy: Paving a Road Ahead, Washington, DC: Johns Hopkins University, 2008),
87.
19 Japanese embassy in Kyrgyz Republic, “Japanese-Kyrgyz relationships,” Bishkek; <http://www.kg.embjapan.go.jp/relation_r.htm>; (Accessed on 13 December 2017).
20 Ibid.
21 Central Asia and ODA Loans. Japan Bank for International Cooperation. 2008. p.5.

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through setting a master plan and implementing a banking settlement reporting system (3.44 billion
USD).22
During the period of 1993 and 1997, Kyrgyzstan received 200 million USD aid from Japan. Mostof this funding was channeled for industrial development of the Kyrgyz Republic. The projects
accomplished in this field were related to mining, including increasing the country’s potential for oil andgold and uranium mining, in the first place. 23 By 2001, Japan had become the number-one donor of ODA
disbursements for Kazakhstan, Kyrgyzstan, and Uzbekistan, and organized several in-house consultation
meetings of donors for Tajikistan in Tokyo (Kawato 2008).
Figure 5. Bilateral ODA to Kyrgyzstan by Sector, 2014-2015

Sectors
1%

1%

Other social infrastructure &services

6%

Economic infrastructure &services

7%

Production
7%
Education
Healthcare & Population

7%

51%
Humanitarian aid

7%
Multisector
13%

Programme assistance
Other & unspecified

Source: OECD, 2017. https://goo.gl/YWKZ8Z; (Accessed on 13 December 2017).

Economic cooperation between the two countries is regulated by the Kyrgyz-Japanese Economic
Committee. The committee was set up to promote joint trade and bilateral business partnership activities.
According to the joint meeting of the committee held in September 1997, both parties agreed to regulate
the foreign direct investment process through facilitating the interaction between Japanese and Kyrgyz
state structures and private companies. As a result of bilateral business development, Kyrgyzstan wasable to absorb Japanese technological advancement products such as, cars, equipment for different fields
of industry, and electronics. In return, Japan imported precious metal and various types of chemicals
from Kyrgyzstan. 24
Japanese engagement with Kyrgyzstan went beyond established official channels ofcommunication conducted by JICA, the Japanese Ministry of Foreign Affairs, and the Japan Bank forInternational Cooperation. Japan has been also actively using multilateral institutions such as the WorldBank and Asian Development Bank for the delivery of its development assistance. The assistance
22 “Kyrgyz and Japanese FMs discuss prospects for bilateral cooperation,”

Kabar, 30 March 2017, available at
http://kabar.kg/eng/news/kyrgyz-and-japanese-fms-discuss-prospects-for-bilateral-cooperation/; (Accessed on 13
December 2017).
23 Esen Usubaliev,“Japanese Politics in Central Asia in View of Another Possible Center of Power,” Central Asia &Central Caucasus Press AB, http://www.ca-c.org/journal/2001/journal_eng/cac-05/16.usuben.shtml; (Accessed on 13
December 2017).
24 Information from the website of Japanese embassy in Bishkek. http://www.kg.emb-japan.go.jp/relation_r.htm;(Accessed on 13 December 2017).

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provided through these channels represents Japanese capacity-building efforts accomplished in the formof human resources development training, Japanese classes, seminars for Kyrgyz entrepreneurs inbusiness development, and tourism promotion. These capacity-building and technical cooperation
projects are being organized and coordinated by the Japanese Center for Human Resources Development
established under the Kyrgyz National University.
The official visit of Kyrgyzstan’s President, Almazbek Atambaev to Japan in 2013 hascontributed to the advancement of the bilateral relationship between two states. Within the framework of
his visit, Atambaev met with Prime Minister Shinzo Abe to discuss and exchange views on bilateralrelations between two countries as well as issues pertinent to regional and international stability. As aresult of this visit, the two parties signed the “Memorandum of Cooperation between the Ministry of
Economic Affairs of the Kyrgyz Republic and the Ministry of Economy, Trade and Industry of Japan:
Memorandum on Cooperation in the Field of Education between the Ministry of Education and Scienceof the Kyrgyz Republic and the Ministry of Education, Culture, Sports, Science and Technology ofJapan.”25(2) Japan’s Development Assistance Projects in Kyrgyzstan
Since establishment of bilateral relationship between Japan and Kyrgyzstan, Japan has been
providing substantial assistance for the Kyrgyz government to achieve democratic governance andtransition into a market economy while stressing the need for the preservation of human security
throughout the transition process. For example, Japan has been supporting the Kyrgyzstan’s transition
into a market economy by allocating its loan aid for the improvement of transportation infrastructure anddelivered grant aid for the improvement of the technical capacity of major medical facilities throughprovision of necessary medical equipment. The country assistance policy was formulated by Japan taking
into account the country’s economic weakness and, thus, increasing the country’s economic potential
was set as a top priority. Japan’s development assistance policy was sought to serve as the “catalyst” forpromoting self-help efforts toward achievement of economic development and was accomplished in linewith the Country Development Strategy (CDS) of the Kyrgyz Republic.
(3) Japan`s Contribution to the Development of Transportation Infrastructure
The geographical location of the Kyrgyz Republic at the intersection between East and West had
been playing an important role for Kyrgyzstan to accomplish its commercial transactions and productchanneling over the time. However, given the fact that Kyrgyzstan is landlocked and predominantly
consists of mountainous areas with no direct access to the sea and Europe, the development oftransportation infrastructure serves as an important condition for accomplishing its economic activities.
Besides, since the Soviet times, overall road conditions in the country have worsened, making it difficult
for rural people to reach the country’s remote areas at times when disasters occur or during the winterperiod. Proper transportation facilities as such are being considered by Japan to enable Kyrgyzstan toposition itself as a regional distribution hub and gateway for the Central Asian region by connecting theeast-west and north-south routes.
Japanese efforts to support the transportation infrastructure development were formulated taking
into account Kyrgyzstan’s potential to facilitate regional cooperation and economic interaction withneighboring countries. Besides, the development of infrastructure was deemed by Japan as not only
facilitating intra-regional trade with neighboring counties, such as China, but would also “stimulate thedevelopment of other areas of the economy, including mining and manufacturing, tourism, agriculture,and could serve as a precondition for enhanced intra-regional cooperation in each of these sectors.”26
Taking into account the importance of this conditionality, Japanese ODA policy for Kyrgyzstan
was concentrated “on the implementation of projects and programs aimed at the construction of road andbridges, provision of construction equipment for road reconstruction, and strengthening of roadmaintenance systems.” 27 More specifically, Japan has been providing yen loans to the Kyrgyz
government for the construction of main automobile roads and railroads. Along with bilateral aid, Japan
has been also collaborating with other donors and the Kyrgyz government to implement projects
25 “Kyrgyzstan i Yaponiya podpisali ryad dokumentov o sotrudnichestve,” Vecherniy Bishkek, 27 February 2013.

Available at http://www.vb.kg/218344; (Accessed on 13 December 2017).
26 MOFA, Japan Country Assistance Policy for Kyrgyzstan 2009;http://www.mofa.go.jp/policy/oda/assistance/pdfs/e_Kyrgyz2009.pdf ; (Accessed on 13 December 2017).
27 Supra n. 25.

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contributing to “the improvement of systems for promoting the efficiency of road administration,
standardization of customs procedures, promotion of intra-regional distribution, and development of
human resources for these areas.”28(4) Japan`s Contribution to the Development of Agricultural Sector
Although the agricultural sector of Kyrgyzstan is not internationally competitive andencompasses only 3% of the country’s landscape, it employs about 60% of the country’s labor force andmore than 35% of country’s GDP is generated from the sector29. In addition, some farm products areexported to the neighboring countries of Central Asia. However, after the collapse of the Soviet Unionand the disintegration of large-scale collective farms, the availability of unharvested crops and farmequipment to cultivate them has also become one of the major problems in the sector.
The development of the agricultural sector is sought by Japan to contribute to the country’s
industrial development since it is closely connected with other supporting industries, such as lightindustry, the food processing industry, and the handicrafts industry30. For instance, the advancement of
the food processing industry is believed to facilitate the marketing of value-added agricultural products
and thus contribute to the development of agriculture overall.
The Japanese government’s support for the development of the agricultural sector of Kyrgyzstan
was thus focused on infrastructure development through the provision of farming equipment, thedevelopment of irrigation, and the construction of the necessary processing facilities31. These efforts
were accomplished in order to stimulate Kyrgyzstan’s niche market so that the country can enhance its
capacity to produce specialty goods and raise its competitiveness in relation to neighboring markets
specializing on grain production. Alternatively, Japan has been also implementing capacity building andhuman resource development programs facilitating the improvement of the agricultural technique andfarmers’ agricultural practices.
(5) Japan`s Contribution to Local Development
The dissolution of the Soviet Union left not only Kyrgyzstan’s industry in a vulnerable situation
but also resulted in the bankruptcy of a number of factories and collective farms which used to be themain source of income for the vast majority of country’s population. This process has further led to theoverall stagnation of country’s rural economy while also creating severe poverty, possessing a significant
threat for human security. In addition, poor and inherent infrastructure in the fields of transportation,communications, healthcare and education has also contributed to the slowing down of the regional
economic processes by eliminating the revitalization prospect32. The southern region of Kyrgyzstan had
become the hub for radical Islamic groups and joined Afghanistan’s drug trafficking route. Occurrenceof this situation created an alarming prospect for the country’s national security with substantial threat
beyond the regional boundaries of the country and threatening the overall stability of the region. Thus,
the first priority for the Japanese government has become community empowerment through theintroduction of local development projects.
In this regard, the introduction of the OVOP concept in certain regions of the country has served
as an essential infrastructure development and capacity building method enabling the country to revitalize
the regional economy and gain socioeconomic development. The local development program of Japan
has also played an important role for the revitalization of the local community and the environment.
(6) Japan`s Contribution to Human Resources Development
Kyrgyzstan is well-known among Central Asian states for its introduction of fast-tracktransitioning into the market economy through its attainment of WTO membership, liberal approach
towards privatization, land distribution reforms, and promotion of domestic trade and industry. Despite
the favorable and utmost efforts of Kyrgyzstan to liberalize its economy, its efforts have not brought thedesired results, because the majority of the country’s entrepreneurs have been practicing old businessadministration techniques since Soviet times. Besides, in most cases public officials tend to be confronted
with the challenge of effective governance, given the fact that they lack adequate and proper knowledge
28 Ibid.
29 Food and Agriculture Organization (FAO), The Kyrgyz Republic: Opportunities and challenges to agricultural growth,

Annual Report, 2011 ed., http://www.fao.org/3/a-i2711e.pdf; (Accessed on 13 December 2017).
30 Supra n.25.
31 Ibid.
32 Ibid.

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on how to pursue public administration and tackle the problems arising throughout the process oftransitioning towards a liberal market economy.
Therefore, one of the priority directions of Japanese assistance to Kyrgyzstan has become theprovision of support for human resources development aimed at fostering the country`s transition to amarket economy. In its efforts to facilitate the country’s human resources capacity, the Japanese
government has been providing technical cooperation grants in order to support the “development of thelegal system for the market economy, governance improvement for enhancement of democracy that
affects development of sound market economy, and legal system improvement for the establishment of
the rule of law.” 33 Another significant step undertaken by Japan in relation to human resources
development can be observed in the example of Japan Centers for Human Resources Development thatwere established in three countries in Central Asia, including Kyrgyzstan. These centers tend to deliver
the necessary capacity building training and share expert knowledge, and, therefore, serve as an effective
tool for increasing country`s potential for economic growth.
5. Conclusion
As described in this paper, over the last two decades, Japan has been providing a significant
amount in foreign aid to support the economic development process in Central Asia and the Caucasus.
In addition to serving as a main instrument for the maintenance of regional development, Japanese ODA
has also served as a main tool for establishing bilateral relationships and supporting Japan`s foreign
policy objectives in recipient countries. Despite the fact that Japan has been pursuing a similar
development policy objective — the achievement of sustainable economic development in bothcountries—Japan has been practicing different tactics to operationalize this goal in target countries.
The development policy areas for both regions were set taking into account the socioeconomic
situation in respective countries and was focused mainly on stimulating economic development, humanresources development, capacity development, and infrastructure development. These areas were set anddeemed by Japan as important to gain a long-term impact on economic growth and regional development
in Central Eurasia.
The study has shown that majority of Japanese development projects, in general, resulted
positively on recipient countries. This was achieved owing to transmission of Japan`s funding andexpertise through the established country assistance program. As exemplified in the paper, the ODA
policy set by Japan enabled Armenia to benefit from receiving technical assistance to support its
agricultural and private sectors. This in turn has served as an important factor in revitalizing the local
economic development of the country. In Kyrgyzstan, Japanese efforts to support the revitalization of
the Kyrgyz economy was limited to the provision of technical assistance and implementation of
infrastructure development projects. These projects had less impact on economic development in the
country since projects implemented under the Japanese ODA scheme had less exposure and generated
less economic opportunities to scale up the country-wide development process. Nevertheless, unlike theArmenian case, in Kyrgyzstan, Japan`s efforts to spur the economic development of the country wereaccomplished by multi-vector operations in the areas of transport infrastructure, agriculturaldevelopment, social development, and human resources development. These projects were deemed as
crucial in supporting local communities and enabling them to benefit from Japanese expertise andtechnology.
Japanese interaction with countries beyond Southeast Asia also denotes its strong aspiration formaintaining extended and closer ties with the countries of Central Asia and the Caucasus. The ODA
serves for Japan as a crucial postwar innovative mechanism for the transmission of its material and nonmaterial resources that have been utilized by Central Asian and South Caucasian recipient countries forthe achievement of their economic development gains. The further direction of Japanese development
assistance to the target countries can make a greater contribution to the achievement of their economic
development goals if it was focused on supporting not only infrastructure development projects but
would also integrate local capacity building projects, which, in turn, may create a greater and significant
economic value to spur the overall economic development of recipient countries. Provision of support tolocal community empowerment projects can also ensure that development projects implemented by
Japan benefit not only the central government but may also increase grassroots development prospects.

33 Supra n.25.

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