Mark Thomas looks closely at his wristband

US foreign aid programmes give more back to the giver than to the needy and help ailing armies shoot

America is in debt. It probably owes millions merely from the bank letters that charge £20 to tell people they are in debt. America owes so much that I expect to see George and Laura Bush on TV advertisements sitting on a battered sofa, dressed in football shirts, saying: "We found it really easy to consolidate our debts into one loan with manageable repayments." However, it was the developing world's debt that Tony Blair visited Bush to discuss.

Blair returned home looking like a witness from the Michael Jackson trial and, as he usually does after trips to his friend George, emphasising their "special relationship". Disappointingly, though, there was no mention of drinking "Jesus juice" and sharing a bed.

Much was made of Blair's visit. America, we were told, is onside for the G8 summit - victory chalked up for Blair and Brown. Or, as Bono would call them, the "Lennon and McCartney" of politics, though I prefer the sobriquet "the Chas and Dave of privatisation".

Many may see the prospect of increasing American aid as a "good thing", but the fact is that the world would be a much better place if America cut its aid budget. Yes, you read that correctly, CUT it.

If Blair cared for poverty reduction and peace, he would get on bended knee to Bush and plead: "In the name of sanity, slash your aid and get back to the golf course."

As a US government website stated: "The principal beneficiary of America's foreign assistance programmes has always been . . . the United States. Close to 80 per cent of the US Agency for International Development's contracts and grants goes directly to American firms." So America's aid serves as a subsidy for private US companies (as always the free marketeers can't function without state support). If this money were given directly to US companies, rather than via the aid route, the World Trade Organisation would outlaw it.

So, while the G8 finance ministers insist that poor countries privatise their economies and scrap "impediments to private investment both domestic and foreign" in order to qualify for debt cancellation, the US runs a Keynesian programme of state aid to its own companies.

Granted, hypocrisy and self-interest are not necessarily reasons to cut aid programmes. Nor is the Bush policy of not funding clinics in the developing world that even mention abortion. Nor is the teaching of abstinence in place of safe sex - even this doesn't quite justify a cut in the aid budget: a policy change, yes, but a cut, no. What does justify a cut is that, of the $19bn (about £10bn) US aid budget for 2004, $4.8bn was for military aid, according to the Congressional Research Service. Since 2000, these free guns have averaged 26 per cent of the aid budget, the main recipients being Israel, Colombia and Egypt.

It was only a few weeks ago that Egypt changed its constitution in a referendum. Now, under the new, improved constitution, a massive two candidates can run for president. A mere four weeks ago, President Hosni Mubarak, what with the US military assistance, appalling human-rights record and one-candidate elections, was practically certain of getting a front-page photo in the Sun dressed only in his underpants.

Colombia is down to get an estimated $574m of military aid this year. So the US equips an army that colludes with right-wing paramilitary forces such as the AUC, in a country where human rights defenders and trade unionists are routinely assassinated.

Which leaves Israel, the largest recipient of US gun aid, with $1.8bn for 2004. This means that Israel (a country of six million people, representing 0.1 per cent of the world's population, with one of the highest per-capita incomes) receives nearly 10 per cent of America's total aid budget, for arms alone. And this figure is poised to rise to $2.4bn by 2008.

So what are these arms Israel gets? Well, no surprises here: Apache helicopters, F-16 fighter planes and assorted Palestinian-killing equipment. What you might not know about is America's generosity to the Palestinians. Usaid gave $8m to Save the Children in grants for projects in the occupied territories "to help children deal with the current conflict situation". Roughly $22m has been given to Care International for medical equipment and training to provide "basic first aid". So America arms the Israelis, the Israelis shoot the Palestinians and America gives the Palestinians some bandages . . . All in all, worth wearing a wristband for.

PS: The arms manufacturer General Electric, maker of the engines for the F-16 fighters that fly over the occupied territories, and recipient of US aid via foreign sales, owns NBC Universal. Universal bankrolls Working Title Films in a partnership deal. Working Title pays Richard Curtis to write its films. Richard Curtis is one of the founders of Red Nose Day and a fellow wristband-wearer . . . Love Actually? Er, money, actually.

This article first appeared in the 20 June 2005 issue of the New Statesman, Latin America rises up