DOLLAR diplomacy, make way for yen diplomacy. Since World War II, the main source of America's power and influence in the world has not been guns, but greenbacks. The United States not only has had the globe's most powerful economy, but it also has been the principal dispenser of foreign aid. This year, though, Japan has eclipsed the US as the largest donor of aid to the developing world. American policymakers are generally sanguine, however, about this latest development in Japan's emergence as an economic superpower. Indeed, most regard it as a very constructive step. Japan's third-world assistance does little to threaten US interests, and it spreads the burden of meeting what are increasingly seen as critical needs for the world economy.
Until rather recently, Tokyo regarded its aid programs as means strictly to ring up sales for Japanese heavy-equipment manufacturers and other exporters. (Japan was hardly alone in using aid for commercial leverage, of course.)
By most accounts, that's changing. A larger percentage of Japanese aid is being channeled through multilateral lending agencies like the World Bank, and even in its bilateral aid programs, more assistance is untied to commercial deals. Some Japanese aid even is going to promote third-world exports.
An encouraging sign that Tokyo is broadening its vision on the world economy has been the way it has stepped forward on the international debt crisis. Last year the Japanese finance minister proposed a debt-reduction plan that anticipated some aspects of the Brady plan later championed by the US. And Japan has been a generous contributor to the fund that undergirds the recent debt-relief pact for Mexico.
The US and other developed nations should encourage Tokyo to work still more frequently through the international agencies - in part to help offset Japan's shortage of trained aid administrators - and to become more sensitive to the environmental effects of development. Also, Japan could still do far more to aid developing nations by opening its markets to third-world exports.
Nonetheless, the West should welcome and applaud this particular flexing of Japan's economic muscle, and the evidence it offers that Japan is growing in stature as a world citizen.