FOCUS: Japan lives up to 'cash dispenser' role to help poor nations

WASHINGTON, Nov. 16 Kyodo -
Japan has established a reputation as a generous financial contributor during
global crises -- whether natural disasters or postwar reconstruction efforts --
and the country is living up to its expected role of ''cash dispenser'' in the
current financial crisis by pledging to help poor economies.

As Japan's financial sector has been less damaged by the credit turmoil than
that of the United States and Europe, the country commanding the world's
second-largest foreign reserves after China offered to provide financial
assistance to emerging and smaller economies through the International Monetary
Fund and the World Bank.
Prime Minister Taro Aso declared during a just-ended two-day global financial
summit in Washington that Japan is ready to lend a maximum of $100 billion from
its foreign reserves to the IMF so that the money can be extended to emerging
economies hard hit by the ongoing crisis.
Finance Minister Shoichi Nakagawa and World Bank President Robert Zoellick
sealed a deal Friday to launch a $3 billion fund at the multilateral
development bank to help recapitalize embattled financial institutions in
developing countries that have come under strain as a result of the turmoil.
Tokyo will contribute $2 billion to the fund.
These steps are apparently aimed at raising Japan's profile in international
financial circles and boosting Aso's support base amid recent declines in the
approval rating for his Cabinet.
Aso boasted of Japan's initiatives at a press conference, saying he felt his
counterparts held ''great expectations for Japan's role.''
The measures are also in line with moves by major Japanese banks and securities
firms to acquire stakes in beleaguered U.S. financial institutions.
As Japan has recovered confidence after an economic slump that lasted more than
a decade following the burst of the asset-inflated bubble economy in the 1990s,
the country has been eager to promote itself as the survivor of a major banking
crisis.
Tokyo was also hoping to play a role in bridging the differences between
advanced and emerging economies at the G-20 meeting, with the prime minister
seeking to boost the IMF's capital base.
Increased contributions to the fund by poor countries could lead to a greater
voice for them.
Japan's initiatives were warmly welcomed by some G-20 leaders and the IMF and
World Bank chiefs. But it is doubtful whether Japan will be able to continue to
exert leadership in this area.
Tokyo has urged other cash-rich economies such as China and oil-producing
countries in the Middle East to provide similar support for crisis-hit poorer
countries through the IMF.
Chinese President Hu Jintao expressed his willingness to help boost the IMF's
capital base.
Hu was quoted by China's official Xinhua News Agency as saying at the summit
that China supports the strengthening of the lending capability of
international financial institutions.
Saudi Arabia, however, said it has no plan to make additional financial
contributions to the IMF and other international institutions, according to
reports.
Japanese officials said Tokyo will step up diplomatic efforts to enlist support
for a boost in the IMF's resources, but Japan's focus on financial
contributions often draws fire.
Some critics argue that Japan should not think about bringing ''gifts'' every
time but should rather promote its specific ideas and philosophy.
Since the outbreak of the U.S. subprime loan problems in summer 2007, Tokyo has
been enthusiastic about offering lessons from its own banking crisis.
In meetings of the Group of Seven major economies since, Japan has repeatedly
talked about its experience and offered advice based on it.
At the G-20 summit, the prime minister stressed the importance of removing
non-performing loans from the balance sheets of financial institutions and of
injecting public funds into banks.
But Noriko Hama, professor at Doshisha University's Graduate School of
Business, said it is too late for Japan's advice to be considered useful as she
believes the country's experience could have served as a negative example about
a year ago to prevent the crisis from worsening.
''Japan should have warned other economies much earlier that they might repeat
Japan's mistake and that the scale of the crisis would be much bigger'' if they
did not learn from Tokyo's experience, Hama said.
''If Japan cannot offer decent ideas or proposals, the country might as well
make financial contributions,'' she said.
The professor said Tokyo could still provide affected economies with a scenario
and timeline for when to come off ''life-support apparatus'' -- the emergency
policy measures implemented to sustain their financial health.
As for the plan to use Japan's foreign exchange reserves for contributions to
the IMF, it could thwart domestic calls to divert the money to other budgetary
needs.
Some lawmakers have even called for using the reserves, currently worth $977.72
billion, to create Japan's own sovereign wealth fund.
Lending to the IMF is considered a less risky way to manage Japan's foreign
reserve assets.
==Kyodo