Netherlands leads rich nations in helping poor

WASHINGTON, Dec 4 (Reuters) - Small European nations led by the Netherlands do more than major industrial economies like the United States when it comes to helping poor countries, according to the 2008 Commitment to Development Index released on Thursday.

The index, developed by the Washington-based Center for Global Development, ranks 22 rich countries based on how their policies on aid, trade, investment, security, environment, technology and migration promote global development.

The Netherlands ranked first for the fourth consecutive year, with Sweden, Norway, Denmark and Ireland close behind. The United States trails near the bottom in 17th place.

Among other industrial nations, Britain scores in the top 10, with Italy and Japan languishing in the bottom three just ahead of South Korea, which is included in the index for the first time this year.

David Roodman, the architect of the index and a CDG research fellow, said the United States' poor ranking demonstrates the challenges for President-elect Barack Obama's administration in improving the U.S. leadership on development, an important tool for strengthening foreign policy.

Roodman said the U.S. foreign aid system was fragmented, micro-managed and outdated and was in need of an overhaul.

"A big challenge is to organize the foreign aid establishment as if foreign aid and development really matter and we care about making it work well," Roodman told a conference call.

"A lot of groups in Washington are building up a drumbeat on a reform proposal that would make the U.S. aid system more effective, but the question is whether that will be a political priority when there is so much else to worry about," he added.

Development groups and African leaders have expressed concern that the global financial crisis that has pushed the United States into a recession will slow the flow of aid to the world's neediest countries.

Roodman said previous cases of banking crises in rich countries such as Sweden, Finland, Norway and Japan showed aid was affected. In Finland and Japan, aid fell by about half during their crises, Roodman said.

"I wouldn't be surprised to see foreign aid from rich countries fall by one-third in the next few years," he added. (Reporting by Lesley Wroughton; Editing by Jan Paschal)