LONDON/CARACAS: The full extent of Britain’s retreat from its overseas aid commitments was revealed on Thursday as the UK Department for International Development (DfID) reshushuffled finances to pay for the reconstruction of Iraq.

Established programmes in South America and eastern Europe will suffer most under the “reallocation” exercise, which will divert Pounds Sterling 100m over the next two years to projects in and around Baghdad.

More than 20 countries will be affected, with bilateral aid to some, including Peru, Honduras, Anguilla, Romania, Bulgaria, Croatia and Macedonia, being withdrawn completely.

Spending in countries as diverse as South Africa, Russia, China, Sri Lanka, Bolivia, Jamaica, Albania and Kosovo will be substantially reduced.

About a quarter of the money — Pounds Sterling 25m — will be extracted from next year’s budget. The remainder will be taken from programmes scheduled for 2005-06. The severe cutbacks in South America and eastern Europe, revealed by the Guardian last month, have triggered protests from aid agencies who claim they breach undertakings given by Tony Blair that money would not be redirected away from other programmes to pay for Iraq.

On Thursday the charities said they were disappointed at the outcome of the review.

Phil Bloomer, head of advocacy at Oxfam, said: “The idea that we should be reducing funds to countries such as South Africa, which is ravaged by Aids, or Bolivia, which is suffering political instability and where more than half the population live below the poverty line, does not fit in with development priorities.”

Andrew Croggon, head of Christian Aid’s South America division, said he was “shocked” by the cuts. “Although these countries fall into the category of ‘middle income’, this should not obscure the fact that many are characterised by severe pockets of poverty and by large and growing inequalities,” he said.

“In Honduras, one of the countries which will cease to receive funding from DfID in the near future, 44% of the population live on less than $2 [Pounds Sterling 1.20] a day.” Judith Turbyne, the head of Christian Aid’s programme in the Caribbean and central America, said ending direct support for Honduras represented a reversal of aid policy.

“I’m very surprised at the withdrawal from Honduras,” she said. “It’s been a very positive engagement.” The department admitted the cutbacks might involve redundancies. A spokesman said there would be “some staff implications”.

Overall aid spending will increase over the next two years, but a departmental strategy means 90% of future bilateral aid will be targeted at low-income countries. The war in Iraq has accelerated and deepened the necessary cutbacks to middle income countries.—Dawn/The Guardian News Service.