A multilateral conference of regional and international governments together with non-governmental organisations (NGOs) from across the Middle East has backed a US plan to establish a private grant-making foundation to fund NGOs and promote democracy in the region.

The agreement follows months of diplomacy by the US, which sees the democratisation of the Middle East as central to future stability in the region. However, many Arab governments remain nervous about relaxing the rules governing NGO operations and funding, believing that some are little more than front organisations for extremist groups.

Announcing the new foundation at the G8 Forum for the Future in Bahrain on 12 November, US Secretary of State Condoleeza Rice said the not-for-profit Foundation for the Future will promote democracy, human rights, transparency and the empowerment of women in the Middle East by providing financial and technical assistance. The foundation has start-up capital of about $50 million available for grant funding.

The foundation will be headed by an independent chairperson from the Middle East, who will appoint an international board of directors. No government officials will sit on the board. Sources in the US State Department say it is currently seeking a chairperson from a shortlist of four-five candidates. 'We expect an appointment in the first quarter of next year,' says one source. The foundation's headquarters will be within the region but a location has yet to be agreed.

Rice also announced the establishment of a $100 million fund to provide start-up grants to small and medium-sized enterprises (SMEs) in the region. The Fund for the Future will have an initial capital of about $100 million.

The aims of the fund are to stimulate job creation in growth sectors, help the emergence of a vibrant middle class, support private-sector led, sustainable economic growth and act as a catalyst to attract investment to the targeted countries. The fund will begin operations in Morocco and Egypt.