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Last Updated: Friday, 21 November, 2003, 19:07 GMT
Aid agencies alarmed over funds
By Mark Doyle
BBC World Affairs correspondent

Rebuilding in Iraq
Agencies say resources are being siphoned into re-construction
US and UK aid agencies are alarmed about what they say is the diversion of over $1bn in foreign aid funds.

They are concerned the funds might be used to pay for the War on Terror and the re-building of Iraq.

The agencies told the BBC that if a trend of this kind continues, the UN's aim of halving extreme poverty by 2015 is unlikely to be met.

The target was agreed by all member states and represents the UN's central Millennium Goal.

Two recent moves over the allocation of funds have alarmed development economists.

First was the scaling down by US congress of an aid package of $1.6bn to just $650m.

This was described by the largest consortium of aid agencies in America, known as InterAction, as a trade-off caused by demands on US money from Iraq.

The second was the diversion of about 150m-worth of British development aid to the re-building of Iraq.

Channelling funds

The UK-based charity Christian Aid expressed "anger" at this move.

An economist representing a group of British agencies, Audrey Gauchran, said some rich countries' development budgets, including those of Japan and Australia, were being re-defined to include items like counter-terrorism training, which was limiting the money left for poverty reduction programmes.

British officials said their overall aid budget was still rising.

The head of the large American aid agency CARE USA, Peter Bell, said the US Government should realise that the safety of Americans depended not only on vanquishing enemies such as al-Qaeda and the Taleban but on limiting the poverty which bred extremism.

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