Blair says deal with US marks first step towards a $25bn aid package for Africa

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Tony Blair has struck an outline deal with President George Bush to wipe out the debts of Africa's poorest nations as the first step towards a $25bn (£13.6bn) aid package for the continent.

Tony Blair has struck an outline deal with President George Bush to wipe out the debts of Africa's poorest nations as the first step towards a $25bn (£13.6bn) aid package for the continent.

Although the US President rejected some of Britain's proposals, Mr Blair expressed optimism that a ground-breaking agreement to double global aid to Africa would be secured at next month's summit of the G8 nations at Gleneagles in Scotland.

Over dinner at the White House last night, the Prime Minister and Mr Bush hammered out the details of a 100 per cent debt relief plan that could be worth more than $20bn to Africa. It could allow its governments to channel almost $1bn a year into schools, clinics and roads instead of repaying crippling debts.

The move is seen by Britain as a breakthrough because it would clear the ground for a $25bn aid package for Africa at Gleneagles, the figure recommended in March by the Commission for Africa set up by Mr Blair.

Up to $6bn of that could be provided by the United States despite the reservations of the Bush administration. The President rejected Mr Blair's initial demands to back a British-led international finance facility to bring forward aid payments from future years and to join the European Union in pledging to meet the United Nations' goal of spending 0.7 per cent of national output on aid.

Instead, the US will insist on carefully targeted measures to combat specific problems but will still contribute to the overall $25bn package. Yesterday the White House announced the first instalment - a $674m boost for famine relief in Ethiopia and Eritrea. Mr Blair welcomed the initiative but conceded that there was "a lot more" to be done. Other US grants may improve water supplies, education, vaccination programmes and help to tackle Aids.

Although there will be some tough bargaining in the next four weeks, Mr Blair said in Washington that his aim was to achieve the $25bn target at Gleneagles. Reflecting the change of tack to secure President Bush's support, he said: "It is better we look at specific programmes about how that money is going to be used than talk simply about the global figures."

After US criticism that Britain was plucking figures out of the air and favoured a "blank cheque" approach, a British official insisted: "There is more than one way to skin a cat."

But Mr Blair appeared to make less progress on his other main priority for Britain's year chairing the G8 - a new international effort to combat climate change.

The Prime Minister conceded that the US President was coming at the issue from a different direction - the need to secure energy supplies - but argued that that did not matter. "Whatever the perspective, whatever reason people have for trying to deal with this issue, the important thing is that we deal with it, that we recognise that there is a need for clear and immediate action to tackle the problem," he said. Mr Blair added: "Whether from the point of view of climate change or energy security and supplies, we need to think about how we move beyond the present situation where there are huge emissions of greenhouse gases for the present consumption of energy."

Before his talks at the White House, Mr Blair discussed Africa and climate change with US senators, businessmen and faith group leaders. He said he was "increasingly hopeful" of a deal on debt relief, on which "significant" progress had been made in preliminary discussions between US and British officials.

Oxfam warned that the emerging package would not go far enough, urging Mr Blair not to water down his proposals. Its director, Barbara Stocking, said: "International public pressure is building on all of the G8 leaders. To waste this momentum now, to drop the bar and lower the ambition at this critical stage, would be seen by many as a betrayal of Africa.

"The minimum the Prime Minister should push for is increasing global aid to Africa by $50bnand 100 per cent debt cancellation for the 62 countries that need it. Mr Blair needs to show that he will not countenance fudges, empty gestures or half-measures."