Britain is pressing the European Union to threaten to halt aid to countries in the Arab world who do not live up to their promises on democracy, human rights and economic reform.
David Cameron and William Hague, the Foreign Secretary, will urge the EU next week to end its "blank cheque" policy of channelling billions of pounds to North Africa without attaching strings. Although the EU is moving towards a "conditions-based" approach, other member states oppose Britain's "tough love" plan to cut off aid if nations such as Egypt and Tunisia do not maintain the momentum of their political and economic reforms.
In an interview with The Independent, David Lidington, the minister for Europe, said: "We need to break away from the idea that once the cheque has been written, nothing more is required of the recipient country. That does no favours to anyone." He warned: "The task of both political and economic reform is going to be very demanding for all these countries in the Arab world."
The EU is due to spend more than €6bn (£5.2bn) in North Africa between 2007 and 2013 and, following the Arab Spring, the European Commission is proposing a €1.24bn top-up. EU officials admit the "no strings" investment failed to boost democracy but that the change now sweeping through the Arab world offers Europe an opportunity to play a more effective role.
A tough approach to aid will be taken by Mr Hague at a meeting of EU foreign ministers on Monday and Mr Cameron at a summit of EU leaders in Brussels a week today. Britain also wants North African countries to be allowed to export more agricultural products to the EU – a move resisted by some southern EU member states.
Mr Lidington said Arab nations could not be offered the carrot of EU membership in the same way that central and eastern European countries can. But they could benefit from close ties on trade and eventually enjoy a status similar to the non-EU countries in the European Economic Area single market – Norway, Iceland and Liechtenstein.
The minister said: "There is already enough evidence of exaggerated expectations on the street that the overthrow of an autocrat will automatically lead to prosperity. But it will require creative political leadership of the highest quality in countries like Egypt and Tunisia to carry through reform programmes sensibly."
He said the conditions attached to EU investment would not be the same in every Arab country. "We must not think there is one political model we can pull off the shelf. Where a country refuses to reform, or having embarked on reform and backtracked, there should be a penalty."
Mr Lidington said Arab nations would benefit from greater private sector investment if they could assure EU companies they had introduced an independent judicial system and that contracts and licences would be awarded through fair competition.