With continuing violence in Iraq, the one-day Forum for the Future conference in Morocco is viewed by many in the Middle East as a form of US imperialism even though American officials insist change must come from within the region.
"Now is not the time to argue about the pace of democratic reform or whether economic reform must precede political reform," Powell told delegates from nearly 30 countries on Saturday.
"All of us (confront) the daily threat of terrorism. To defeat the murderous extremists in our midst we must work together to address the causes of despair and frustration that extremists exploit for their own ends," he said.
Despite criticism of the meeting, about 20 Arab, African, Middle Eastern and Asian countries attended the gathering, along with members of the Group of Eight (G8) industrial states, who launched the idea of promoting reform across the region in June.
Powell acknowledged on Friday that when the idea was first floated it was regarded by some as "America, once again dictating to the world". But he said the US intent was to help countries modernise and reform in their own way.
"It is legitimate to wonder if the promoters of this charade really believe in it themselves"
Le Journal Hebdomadaire,
Moroccan news magazine
"We all agree that effective and sustainable change can only come from within," he told the opening session.
Independent Moroccan news magazine Le Journal Hebdomadaire called the meeting's organisers delusional and branded the forum a flop even before it took place.
"It is legitimate to wonder if the promoters of this charade really believe in it themselves," it wrote in an editorial.
"This forum is imperialist," said Khalid Sufiani, a leading Moroccan human rights activist who attended a peaceful protest by about 500 people outside the Moroccan parliament on Friday night, saying the mere fact that it was being held legitimised "American military aggression on the Arab and Muslim world".
$100 million fund
The concept of promoting democracy across the Arab world has been watered down since the plan first leaked to the press, putting more emphasis on economics and less on political reform.
The idea, diplomatic sources said, was to make it more palatable to governments loath to give up power, including constitutional monarchies like host Morocco.
US treasury secretary John Snow
is among the forum participants
Finance ministers, including US treasury secretary John Snow, also flew to the Moroccan capital, where security was tight with police deployed around the city and parked cars cleared from main streets and avenues.
The forum was expected to set up a $100 million fund for small business loans and to provide funds for education and literacy campaigns, in particular for women and girls.
"Increasing opportunities to all citizens, especially women, should not be put on hold to deal with other concerns," Powell said.
The aim is to bring more investment capital to a vast region of about 560 million people stretching from Mauritania and Morocco on the Atlantic coast and northwest corner of Africa to Pakistan and Afghanistan, in central Asia.