Rupert Cornwell: Is America ready to lead the global war on poverty?

'Enlightened self-interest argues strongly for more aid; without it, thousands of terrorists will be born'

Internal links

America and Europe at odds over helping poor

Aid agencies questioning the US order of priorities

The cost of inequality

European fishing fleets plundering west African stocks

Rupert Cornwell: Is America ready to lead the global war on poverty?

Finally, George Bush is getting it. Perhaps not all of it, but at least part of it. Terrorism won't be defeated by smart bombs and special force units, financial embargoes and cunning diplomatic squeeze plays. In the speech last week in which he announced $5bn (£3.5bn) of extra US government aid to poor countries, the President acknowledged what has been plain to almost everyone else since 11 September: you will not eradicate terrorism and the causes of terrorism unless you attack the poverty which helps generate it.

Now you can criticise his aid proposals (and I will do so myself in a moment). But one line in his speech said it all. "We work for prosperity and opportunity because they help defeat terror." Now this is not the first time his administration has voiced such sentiments. But previously the spokesman has been Colin Powell – who we all know is Secretary of State primarily to keep wimpish foreigners quiet. This time, however, the words were uttered by Bush in person. Dare one think that the penny has dropped: to drain the swamp of terrorism, you must start to drain the swamp of poverty?

Now cynics – and I find it hard not to join them – will say the whole thing is a ploy ahead of the Monterey development summit which begins today. This gathering was always going to feature a generous helping of America-bashing. Indeed, you might argue that the Bush initiative is a mere exercise in damage limitation, amid the general expectation that Monterey will fail. We've done our bit, Washington will be able to say – pity about the others.

For a layman, many of the points at issue are outrageously trivial. The Americans want the aid to come as grants, while the British, the World Bank and others insist it should continue to be loans – otherwise, they say, the bank and its affiliates will turn from a credit co-operative into a charitable foundation. But, please tell me, what is the practical difference between a grant and a loan, interest free for 40 years, of the type the poorest countries already receive from the World Bank?

Much the same goes for the dispute over the criteria by which aid should be granted. The Americans have a point when they insist some aid has often been a failure. Loans, grants, whatever you choose to call them, must not "go down a rathole," to borrow the phrase of the infamous Senator Jesse Helms – disappearing from the World Bank into the Swiss bank account or 24-carat gold bathroom fittings of a third world despot. But nor should assistance be so hedged about with conditions that it becomes impossible to disburse it at all.

Aid will never be perfect. There will always be ineptitude, corruption, and wars. But other things being equal, it does work. And surely, what matters is not the theology of aid, but the amount which actually reach recipients. That is the only criterion the world's poor will use to answer the question that counts for them: beyond the pious posturing, do rich countries really care?

And if recipients are put through the hoop, why shouldn't donors be scrutinised as well? If so, America would be found especially wanting. Even with Bush's extra $5bn, the US will remain the most miserly donor in the rich men's club. Its foreign aid proper, $10bn measured by the internationally accepted OECD standard, is just 0.1 per cent of gross domestic product. This compares with an EU average of 0.3 per cent. The bulk, moreover, is directed not to the poorest countries, but to relatively well-heeled strategic allies. Israel and Egypt, for instance, will receive three times the aid America gives to all of sub-Saharan Africa). And much peace has it bought.

Yes, $5bn sounds like a lot of money. But it will be allocated over three years. To put it into true perspective, that annual $1.67bn represents less than 0.1 per cent of total central government spending of $2,128bn for fiscal 2003. Of that sum, the Pentagon alone will account for the pretty figure of $379bn (more than the 25 next largest national defence budgets combined).

In the meantime, $5bn adds up to barely a tenth of the latest annual increase in defence spending. True, $5bn would buy the USS Ronald Reagan, the ninth Nimitz-class aircraft carrier, due to be launched next year. But you'd have to shell out another $2bn for the 85 F-15s and F-18s required for the finished article.

The tragedy is that Mr Bush could have promised 10 times as much aid and still have barely troubled the federal budget. Yes, America can be isolationist and self-righteous and unilateralist, but it is always open to new ideas as well. And Mr Bush has at his disposal Teddy Roosevelt's proverbial bully pulpit, as well as the most-wonderful speechwriters.

This President goes on endlessly about American leadership. But let him cast his mind back to 1947 and to the Marshall plan, that earlier and glorious example of far-sighted American leadership at a time when US economic and military power was without equal. In those days, the spectre was global communism. Today it is global terrorism. Enlightened self-interest argues as strongly now for action as it did then – and Americans are no less generous now than half a century ago.

There is also a foundation to build upon – the ringing Millennium Declaration, subscribed to by the Clinton administration, whereby rich countries pledged themselves to halve global poverty, provide primary education for all children everywhere, and reduce infant mortality by two-thirds within 15 years. The Bush people, cannot but accept this geopolitical equivalent of motherhood. But they reject the proposal of the World Bank, Britain and the Europeans that aid be doubled from $50bn to $100bn to achieve this. Why?

Instead they have come up with something called the "Millennium Challenge Account", which sounds more like a television quiz show. The ubiquitous senior administration officials who explain such things helpfully suggest that the new $5bn should be seen as a "pool of money that will be used to reward nations that demonstrate good policies". Five correct answers and contestant Country X wins the prize.

But still I am hopeful. Bush's mini-epiphany on aid is not the only piece of good news to report. Jesse Helms, that bigoted scourge of foreigners is about to retire from the Senate. The US, moreover, has made a peace of sorts with the United Nations.

Aid alone will not deal with the root causes of terrorism. Mohammed Atta, the best known hijacker of 11 September, was an Egyptian, while 15 of the other 18 originated in Saudi Arabia, one of America's most important allies and not exactly on the global poverty line. As Mr Bush pointed out, it is not only prosperity which counts but opportunity – which means, in much of the Arab world, opportunity for change, where the alternatives should not be radical Islam or quasi-dictatorship.

But that does not alter the case for foreign aid. If Monterey merely enshrines the status quo, not only will another 50 million children die of hunger or preventable diseases by 2015. Thousands, perhaps millions of potential terrorists will also be born.

Rupertcornwell@hotmail.com