UK continue financing dictators in Ethiopia £214m, & Sudan £146m; annually and Nuclear stats- India & Pakistan

Aid given by the UK to countries with a history of fraud and corruption should be "conditional" on them improving their governance, MPs have said.

The Commons international development committee said there were "obvious benefits" in focusing UK aid efforts on fragile and post-conflict states.

But it warned there were "considerable risks" and aid should be withdrawn if conditions were not met.

Ministers said they had suspended support where agreements were broken.

As part of an overhaul of overseas aid commitments announced in March, 30% of the UK's budget - some £3.4bn - will be spent on fragile states in Africa and Asia by 2015. Ethiopia, the Democratic Republic of Congo, Bangladesh, Nigeria and Pakistan are among countries due to get big increases in aid.

In contrast, a number of larger countries with fast-growing economies - including China, Russia and Vietnam - will no longer receive direct, bilateral aid.

'Value for money'

The committee said it was right to focus the UK's efforts on countries which needed support the most.

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Current top 10 recipients of UK direct aid
Country	Aid 09/10	Country	Aid 09/10
* COUNTRIES THAT WILL SEE BIG INCREASE IN BUDGET. SOURCE: DFID
India	£295m	Pakistan*	£140m
Ethiopia*	£214m	Afghanistan	£133m
Bangladesh*	£149m	Nigeria*	£114m
Sudan	£146m	Congo (Dem Rep)*	£109m
Tanzania	£144m	Ghana	£90m

"There are obvious benefits of providing aid to fragile states," Malcolm Bruce, the Lib Dem MP who chairs the committee, said. "It is, after all, cheaper to prevent conflicts than to deal with wars and their aftermath."

But Mr Bruce said ministers must be "frank and open" about the potential risks in giving money to countries emerging from long periods of conflict or at risk of future instability and the reality was that some money may be squandered.

"In countries where fraud and corruption are rife, the Department for International Development will not always be able to mitigate against this adequately - especially where it sub-contracts delivery of its programmes to third parties," he added.

"This means it may not be able to guarantee value for money for every pound it spends."

Aid debate

Specific conditions on governance and the circumstances in which aid would be withdrawn should be set out in all agreements, the committee argued.

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Analysis

Mark DoyleBBC International Development Correspondent

The International Development Committee says that in exchange for aid, Rwanda, for example, should allow more freedom of speech. This is an example of how aid can be highly political.

The President of Rwanda, Paul Kagame, justifies his tight grip on power as his way of avoiding a repeat of the 1994 genocide in which up to a million people were killed.

And London has usually avoided open criticism of Mr Kagame, partly because of official British embarrassment at its failure to help stop the genocide nearly two decades ago.

If Britain really insisted on full political freedom in Rwanda, in exchange for aid, President Kagame is quite capable of cutting off relations completely - as he did, for several years, with France. If that happened, the UK might lose some of the influence it seeks to assert in the region.

The MPs' concerns echo those of the National Audit Office, the government's spending watchdog, which warned last year that the UK had no clear picture of how much aid was failing to achieve its objectives, due to fraud.

The Department for International Development's budget was one of only two protected from government cuts in the 2010 spending review.

Spending on aid is set to rise between 2011 and 2015 to meet a United Nations target for wealthy nations to spend 0.7% of GDP on development by 2013.

However Chancellor George Osborne said in his Autumn Statement that it had been on track to surpass 0.7% and that would be adjusted, as it could not be justified in the economic circumstances.

International Development Secretary Andrew Mitchell said Thursday's report endorsed the thrust of the UK's aid strategy in seeking to deal with problems before they escalated.

He added: "We make absolutely clear to countries that transparency and good governance are vital.

"We are prepared to withhold funding through governments when our standards are not met, as we have done in Malawi."

The UK reduced aid to Malawi last year amid concerns about extravagant spending by ministers and a government clampdown on human rights.