The U.S. foreign aid agency, declaring itself spread too thin, said Friday it is phasing out 21 missions serving 35 countries and territories as part of an ambitious reform program.

Seven of the targeted countries are wasting U.S. taxpayers' money because they are run by dictatorial governments, officials said. Twenty-six others are considered to be too prosperous to warrant continued U.S. assistance - at least at the same levels.The remaining two will lose their bilateral aid programs, but the Agency for International Development maintain a presence in them through regional programs.

The cutbacks are part of a long-range overhaul that eventually will reduce the number of recipient countries from 108 to about 50.

"We were just spread too thin," said J. Brian Atwood, administrator of AID. "We were an agency on the road to mediocrity or worse."

The announcement does not mean the countries and territories on the list will be cut off from all U.S. assistance. As an example, officials said humanitarian assistance to some countries, channeled through charitable groups, may continue.

The cutbacks will be spread out over three years and will save AID $26 million out of its total $500 million in operational costs. Almost 1,100 jobs are being eliminated, including those of 185 Americans.

The actual total cuts in direct aid to the affected countries have not been determined.

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Historically, the largest aid recipient on the list is Pakistan, which received substantial assistance during the 1980's, partly as a reward for backing U.S. policies in Afghanistan when Soviet troops were based there.

The United States cut aid to Pakistan several years ago after officials concluded it violated a law barring aid to countries attempting to develop a nuclear capability.

Atwood said the process of phasing out AID operations in Pakistan will be accelerated.

He said Zaire was being eliminated because of its undemocratic government. Zaire, once a Cold War ally of the United States, has become progressively poorer under the 28-year dictatorial rule of President Mobutu Sese Seko despite more than $1 billion in U.S. assistance.

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