Aid agencies questioning the US order of priorities

Economists call it "opportunity cost"; what you could have bought if you had spent your money on something else. It is an expression that is likely to be on the minds of government economists today as they sit down at talks that could save the lives of millions or plunge the Third World further into debt, poverty and misery.

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Economists call it "opportunity cost"; what you could have bought if you had spent your money on something else. It is an expression that is likely to be on the minds of government economists today as they sit down at talks that could save the lives of millions or plunge the Third World further into debt, poverty and misery.

The United Nations Financing for Development Conference in Monterrey, Mexico, will try to elicit pledges from rich countries to help the poorest. But, because of the opportunity cost choices of one country, the conference is likely to be seriously hampered in its aims. That country is the United States, whose proposed defence spending of $2.1 trillion (£1,500bn) over five years could alleviate the world's poverty, debt, educational and health problems many times over.

In the wake of 11 September, President George Bush proposed a budget increase of $48bn for 2003, taking military spending to a staggering $396.1bn. At the same time, the US is refusing to increase its spending on overseas aid from 0.1 per cent of its gross domestic product – already the smallest proportion donated by any developed country.

Inevitably, aid agencies in the West are asking tough questions of America at a time when its response to the World Trade Centre and Pentagon attacks has been a withdrawal into further political and economic isolationism. What, they are asking, could be done with these huge sums of money that could make the US more popular abroad and safer than it might be underneath its Star Wars missile defence shield, a shield that will not stop fanatics flying planes into buildings?

But placing all the blame on one country alone is to ignore the fact that while many Western countries give less than they can afford, such reluctance is often the product of years of mistrust. There remains a widespread belief that corruption and mismanagement in the Third World means money spent on aid and development often fails to achieve the desired result.

Yet the problems facing the planet are enormous.

According to the World Development Movement, almost half the earth's population, 2.8 billion people, lives on less than $2 a day. More than 800 million people in sub-Saharan Africa do not have enough to eat at a time when the region pays $40m a week to service its debts. In 59 countries, income is lower today than it was 20 years ago. And in Africa, 5,500 people a day die of HIV/Aids.

In 2000, the UN adopted eight Millennium Development Goals aimed at alleviating some of these problems. By 2015, it hopes to eradicate extreme poverty and hunger, provide primary education for all, promote gender equality, combat ill-health, including Aids, malaria and tuberculosis, provide a better environment, with improved housing for 100 million slum dwellers, and lay the foundations for global economic development.

According to the World Bank, this would require a doubling of the money spent on overseas aid by the 30-plus developed nations that form the Organisation for Economic Cooperation and Development (OECD). That means an extra $50bn a year is needed.

The biggest hindrance to Third World development is debt. The 52 most debt-ridden countries identified by the World Development Movement's Jubilee 2000 debt campaign owed $372bn in 1998, of which at least $300bn was considered by campaigners to be unpayable. The New Economics Foundation, an independent think-tank, warned last week that the UN's millennium goals had no chance of succeeding unless all this debt was cancelled. Spending on the military in the US in just one year, 2003, would wipe it out with $24bn to spare.

A December 2001 report by the World Health Organisation (WHO) found that people in developed countries enjoy a life expectancy 27 years longer than their counterparts in poor, sub-Saharan states. Per 1,000 births, 159 children in poor countries die before they reach five, compared with just six in the developed world.

The WHO has proposed a plan of increased spending on healthcare for 750 million people in the poorest countries targeting, in particular, Aids/HIV, malaria, tuberculosis and childhood infections.

The programme, it concluded, would save 8 million lives every year if the poorer countries spent an extra $23bn a year and the donor nations an extra $27bn. Again, at $50bn, a figure close to the cost of President George Bush's proposed defence increases.

Education, too, could benefit from a different opportunity cost choice. According to Unesco, 130 million children worldwide are not receiving a basic primary education. To give an education to all the world's children not currently receiving one would cost less than one-third of the proposed defence budget increase or about the same as a year's spending on Star Wars.

Finally, the other great problem facing the planet is global warming, with predictions that rising sea levels will render millions of people homeless during this century. Yet in March 2001 President Bush refused to ratify the Kyoto protocol on climate change.Citing US Department of Energy figures rejected by Greenpeace as representing a worst-case scenario, he told Americans: "The approach taken under the Kyoto protocol would have required the United States to make deep and immediate cuts in our economy to meet an arbitrary target. It would have cost our economy up to $400bn and we would have lost 4.9 million jobs."

Divided over the lifetime of the protocol, this figure would still be less than America's defence hike. Instead, the President said he would set aside just $4.6bn over the five years to tackle the problem.

Mark Curtis, Christian Aid's head of policy, asked: "If we are talking about security, which is the more likely to yield results: launching a few more fighter jets, or tackling global poverty, a breeding ground for problems?"