WASHINGTON, Dec. 13: The United States has set aside $29 million to encourage democracy in the Middle East and has promised a “ significant increase” in the funds next. Announcing the new initiative in a major policy speech at Washington’s Heritage Foundation on Thursday, Secretary of State Colin Powell said the funds will be in addition to the more than $1 billion the United States provides in economic assistance to the Arab world every year.

But he warned Arab regimes, even those allied to the United States, that they must change and give more freedom to their citizens, including the freedom to express their feelings and form political parties.

Similarly, he emphasized the need for giving equal rights to women, pointing out that in some Arab countries women did not even have identity cards, which prevents them from casting their votes in the elections.

The new policy, called the US-Middle East Partnership Initiative, aims at undoing the impression that Washington often sacrifices democracy for strategic interests and prefers authoritarian rulers to elected leaders.

The initiative comes amid a US military build up around Iraq to oust President Saddam Hussein, a move not hugely popular among the Arab masses.

In a long-awaited speech that is being described as so far the Bush administration’s most comprehensive policy statement on the Middle East, Powell announced a combination of measures to stimulate political, economic and education reforms in the region.

This includes the establishment of the Enterprise Funds for the Middle East, modelled after the successful Polish-American Enterprise Fund. The fund will encourage investment in promising new business and will help small and medium-sized business gain access to capital.

“We will also help more countries share in the bounty of the global economy,” Powell said. “That means offering aspiring World Trade Organization members like Saudi Arabia, Algeria, Lebanon, and Yemen, technical assistance to meet the WTO’s membership criteria.”

He said “significant” additional funding would be sought for the next year.

“Our initiative rests on three pillars: We will engage with public and private sector groups to bridge the jobs gap with economic reform, business investment, and private sector development.

“We will partner with community leaders to close the freedom gap with projects to strengthen civil society, expand political participation, and lift the voices of women. And, we will work with parents and educators to bridge the knowledge gap with better schools and more opportunities for higher education.”

A major part of Powell’s speech was a critique of the prevailing conditions in the Middle East.

While urging Palestinians to give up violence and allow a new leadership to emerge, Powell also urged the Israelis to make sacrifices for a secure future and stop the construction of Jewish settlements in the West Bank.

Powell said the United States has “a deep and abiding national interest” in bringing the Israeli-Palestinian conflict to an end. “With our friends in the region and the international community, we are working to bring about a lasting peace based on President Bush’s vision of two states, living side-by-side, in peace and security,” he declared.

This peace, he said, will require from the Palestinians a new and different leadership, new institutions, and an end to terror and violence.

“As the Palestinians make progress in this direction, Israel will also be required to make hard choices, including an end to all settlement construction activity, consistent with the Mitchell Report,” he added.