U.S. Program Will 'Lead by Example'

By Karen DeYoung and Kevin Sullivan
Washington Post Staff Writers

MONTERREY, Mexico, March 22 -- President Bush called on the world's wealthy nations today to target their foreign aid more tightly, linking a bigger share of
their largess to poor countries' willingness to end corruption, reform their economies and help their own people.

"The lesson of our time is clear," Bush told a U.N. conference on poverty and development. "When nations close their markets and opportunity is hoarded by a
privileged few, no amount -- no amount -- of development aid is ever enough. We must tie greater aid to political and legal and economic reforms. And by insisting
on reform, we do the work of compassion."

The United States, he said, will "lead by example" with a new aid fund, beginning in 2004 and reaching $5 billion annually by 2006, that was described by senior
administration officials as a reward system for countries that "adopt policies we know will work." Distribution will be based on standards to be developed by
Secretary of State Colin L. Powell and Treasury Secretary Paul H. O'Neill, he said.

"We'll apply these criteria fairly and rigorously," Bush said.

Bush's speech was the first major event of his four-day visit to Latin America, and was followed by a meeting with Mexican President Vicente Fox, who hosted the
U.N. conference. In a news conference after their talks tonight, they outlined agreements on border security and an effort to promote U.S. private investment in
Mexico, and said they would continue working toward an overhaul of immigration laws that have long been a sore point between the two countries.

As it has begun to return its attention to foreign policy issues beyond the war against terrorism, the administration has been eager to recapture momentum in the
U.S.-Mexico relationship that waned after Sept. 11. Bush praised Fox tonight and said, "I'm grateful to call you friend."

But much of their news conference was taken up by questions about an issue that has dominated the Mexican media and talk in the halls outside the development
conference for the past 24 hours -- the abrupt departure from Monterrey of Cuban President Fidel Castro following his speech to the gathering Thursday, and
subsequent charges by the Cuban government that the Mexicans had bowed to U.S. pressure to exclude him from conference events once Bush arrived.

Speaking to the conference Thursday afternoon, Castro won applause from a number of delegates when he accused "the rich world" of "plunder and exploitation."
Then, reading from a paper he pulled dramatically from the pocket of his military fatigues, he said he was returning immediately to Cuba because of "a special
situation created by my participation in this summit."

Fox and his foreign minister, Jorge Castaneda, strongly denied that Washington had even brought the subject up with them. "He was here. He participated in the
conference, and he returned to Cuba -- nothing more," Fox said.

"I know of no pressure placed on anybody," Bush said in response to the same question. "Fidel Castro can do what he wants. What I'm uncomfortable about is the
way he treats his people," Bush said, adding that Cubans were denied free speech, a free press and "the freedom to realize [their] dreams."

Asked a second time, Bush replied: "I don't know what you're talking about pressuring anybody. I just said that."

Bush also fielded questions about U.S. policy toward Iraq and repeated charges that Iraqi President Saddam Hussein is "a dangerous man who possesses the
world's most dangerous weapons." Asked whether Arab rejection of a U.S. military move against Hussein communicated to Vice President Cheney during his recent
Middle East tour had given him pause, Bush said Cheney had "told Arab allies there would be no imminent action against Iraq."

But, he said, the United States would "deal with Saddam Hussein, and he knows it."

In his speech this morning, Bush said the new development fund will be administered separately from the $10 billion in current annual U.S. development aid.

Bush first spoke of the fund, called Millennium Challenge Grants, in a speech last week in Washington that was intended to preemptively blunt criticism here of low
U.S. aid levels. But while U.S. officials credited him with introducing the concept of criteria-based aid, he was to some extent preaching to the choir at the Monterrey
conference.

Setting more stringent requirements in exchange for assistance has been a recurring theme at the meeting, promoted by the World Bank and others. Governments of
poor countries have complained for years that World Bank and International Monetary Fund loan requirements are too strict.

While most delegations applauded whatever aid increase the developed world is ready to provide, however, some insisted it was not enough, no matter what the
terms. Goals adopted at a U.N. summit two years ago call for cutting world poverty in half by 2015, and an early draft of a consensus document for the Monterrey
conference called on developed countries to increase foreign aid far above current levels, to 0.7 percent of their gross national product. But the final document
adopted today made that figure a goal rather than a commitment and included no timetable.

Muhammad Hassan, a Pakistani diplomat, said Bush's approach was "so full of conditions it won't be effective." And, he noted, Bush did not mention debt relief,
which he said "is the most important thing for many developing nations."

As he has with virtually every issue since Sept. 11, Bush tied the development initiative to the fight against terrorism. "We fight against poverty because hope is an
answer to terror," he said.

The Bush-Fox meeting was designed to pump new life into the Partnership for Prosperity, a languishing bilateral initiative they announced during Fox's state visit to
Washington just days before the September attacks. The accord involves no new U.S. government money for Mexico but aims to increase development by
encouraging investment by American companies.

U.S. officials say American companies invest $10 billion to $15 billion a year in Mexico. The number topped $24 billion last year, but more than half that total was
accounted for by Citibank's purchase of the Mexican bank Banamex.

Nearly all current U.S. investment goes to the more prosperous northern half of the country, particularly to border states. The U.S. initiative is meant to encourage
more of that money to go to Mexico's south, where poverty and unemployment are rampant. Providing more capital to entrepreneurs there and developing those
areas, where many Mexican emigrants come from, would help discourage illegal immigration to the United States.

The plan also aims to ease the flow of money from Mexicans living in the United States to their relatives at home. It is estimated that Mexicans in the United States
send more than $9 billion home every year, making these remittances Mexico's third-largest source of foreign capital after crude oil sales and tourism. But much of
that is lost in fees charged by companies that transfer money.

On Saturday Bush will go to Lima, Peru, where a massive security operation has been launched following the explosion of a car bomb across from the U.S. Embassy
on Wednesday. Before returning to Washington on Sunday, the president will stop briefly in El Salvador, where he will discuss trade and security issues with Central
American presidents.

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