* Donors have suspended or diverted aid worth $110 mln
* Lawmaker Bahati says bill protects moral values
* Critics say Bahati backed by U.S. evangelicals
By Drazen Jorgic and Philippa Croome
KAMPALA, March 3 (Reuters) - The author of Uganda's new anti-gay bill that imposes tough jail terms for homosexual acts said aid cuts imposed by disapproving Western donors were a price worth paying to protect the east African nation's moral values.
Lawmaker David Bahati, who first sought the death penalty for some acts when he introduced the law in 2009, said aid suspensions were tantamount to blackmail but that he expected more to follow.
The donor backlash after President Yoweri Museveni's approval of the bill last week, imposing jail sentences of up to life for gay sex, reflects a gulf in social attitudes between the West and conservative African governments.
The World Bank, Norway and Denmark have withheld or diverted aid totalling about $110 million. The United States, the biggest Western donor, says it is reviewing ties.
"(The law) is very much worth it because it will protect our values. I think a society that has no moral values is a contradiction to development," Bahati told Reuters.
Gay activists say the bill has forced many homosexuals into hiding. They report a surge in night-time house raids and harassment since parliament passed the law in December.
Uganda's leading Red Pepper tabloid last week began outing those it called the country's "top homos" and some gay-rights campaigners say a small number have fled the country.
Western nations were swift to condemn the Anti-Homosexuality Act, but the law received broad support in Uganda, two years ahead of the next presidential election, and in neighbouring states on a continent where gay sex is illegal in 37 countries.
"It's also unfortunate that the World Bank would take such a decision ... and create an impression that accepting homosexuality is a condition for World Bank money when it is not," Bahati said, referring to the bank's decision to freeze aid worth $90 million.
The political shockwaves have reverberated through Uganda's markets. The shilling weakened about 3 percent last week on investor fears of deeper aid cuts. Sweden said the new law could deter foreign investors, in particular from liberal nations.
Bahati said Uganda could cope with the aid blocks, seeking loans from less interfering countries in order to resist what he called the "social imperialism" of traditional Western donors. Russia, China and India backed Uganda's stance, he said.
"This blackmail will go on," Bahati said. "It might get worse before it gets better but at the end of the day, the sovereignty of our nation will triumph," the legislator said in an interview on Sunday.
The new law imposes up to life in jail for "aggravated homosexuality" - including sex with a minor or while HIV-positive. It also criminalises aiding homosexuality, which opponents fear could include health clinics and counsellors.
Bahati's critics label him a demagogue who champions the anti-gay agenda to raise his own profile in the staunchly conservative east African country.
They also say he has ties to U.S. evangelicals who are widely seen as having a growing influence in social and health policy, for example in tackling HIV AIDS, in Uganda - an allegation Bahati denied.
Several Ugandan Christian and Muslim organisations supported the law.
"We have political friends in the U.S.," Bahati said, but added that those relations had been distorted by the media.
Bahati, a devout Christian, urged gay people to come forward so they could be "rehabilitated".
"There should be some psychotherapy mechanism to help those people because we love them but hate what they do." (Writing by Drazen Jorgic; Editing by Richard Lough)