Trump’s closure of USAID was no surprise, following a decade of similar closures by conservative governments in Canada, New Zealand, Australia and Britain. But the wholesale cancellation of USAID contracts and sacking of most staff represents an unprecedented attack on one of the globe’s great “system stabilisers”.
It’s not just that the aid cuts imperil millions. Nor only that it sacrifices a leading source of soft power – it’s that this choice makes the globe less safe from pandemics, climate change, conflict and famine-induced people movement.
While the Trump/Musk vandalism has attracted most attention, less noticed was the recent Starmer government announcement for the United Kingdom to pay for significantly increased defence spending by slashing development cooperation 40 per cent. And they’re not alone. France has recently announced similar cuts.
In fact, we’re almost two years into substantial European aid reductions as multiple nations attempt to free-ride on a system now in danger of collapsing. The Australian National University Development Policy Centre’s Robin Davies has conservatively estimated the cumulative global impact of cuts at around 25 per cent, while his colleague, Cameron Hill, has concluded the decline might be closer to 50 per cent.
The New York Times has estimated up to 1.65 million additional deaths annually flowing from the US anti-HIV reductions alone. Approximately 40 per cent of global humanitarian resources and a similar proportion of international health funding is estimated to come from America, and much of the rest from Europe. Already, World Food Program rations are being halved from Bangladesh to Kenya.
There will be huge fights over what’s left, but bilateral efforts will be privileged and multilateral efforts sacrificed. Many multilateral organisations will be hollowed out. NGOs dependent on government grants will go bankrupt, and many private companies specialising in international assistance will exit the market or risk insolvency.
Australia will fully own Pacific problems in future.
There will still be emergencies, of course, demanding political responses, but those responses will be fragmented, inefficient, and much less effective. So dies the rules-based order.
And at just the moment when we need to come up with new international groupings, agreements, and partnerships to deal with geopolitical insecurity, rising protectionism, climate change, health security, and massive destabilising people movement, there won’t be the money, the people, or the organisations to do so.
Indeed, there won’t be the data, analysis, or early warning systems that have been built over decades to avoid crises becoming disasters.
For Australia, the consequences will be bigger and more immediate than for many nations, surrounded as we are by close to two dozen developing countries. As a relatively open trading nation, we’ll be hit by the slowdown in global growth accompanying the Trump mayhem. Less immediately obvious will be what happens when progress on climate change slows further and when the development aspirations of our neighbours are thwarted.
The Pacific will be hit hard. The big bilateral donors will retreat to regions more important to their interests. The multilateral institutions will not be able to justify the diseconomies of servicing small Pacific populations. Australia’s success over two or more decades in drawing international partners into the Pacific worked well while funds were growing. The reversal will be fast and destabilising. Australia will fully own Pacific problems in future.
What’s Australia to do in such circumstances? Don’t follow suit is the most important message.
Ten years ago, AusAID was abolished and programs were cut by more than 20 per cent only to have to be painstakingly and partially rebuilt to deal with demanding international circumstances. Even after the Starmer cuts, the United Kingdom will spend 50 per cent more than Australia as a proportion of its income.
In the Pacific, we will need to accelerate recent political and economic agreements to allow countries to access our biggest assets, which are our markets, cities and education and health systems, while helping them strengthen their own. Tighter Australia-New Zealand-Pacific integration with comprehensive support to keep the lights on where possible. It’s the only deal that will maintain our regional predominance.
In Southeast Asia, our rapidly rising diplomatic, security, and economic interests can only be realised by engaging countries seriously on their development priorities. But there won’t be the money to pay for the highly inefficient, project-based models of old.
What’s the alternative? Directly using the capabilities of governments at all levels, but also universities, research organisations, chambers of commerce, unions, etc to increase growth and development and make it more socially, politically, and environmentally sustainable.
Instead of spending years on strategies and plans, complex designs, micro-management, and overblown monitoring and evaluation, we should directly resource expert organisations and individuals to work jointly and organically with our neighbours on the biggest shared problems we face.
This would modernise our approach, make the most of the limited resources available, and build relations on a much bigger, broader scale than we do now. Most importantly, it would be in keeping with recent feedback from the region, gathered by the Development Intelligence Lab, that Australia should prioritise people-to-people partnerships.
The aid and development crisis upon us represents a transatlantic failure of leadership. Australia should use the crisis to drive big reforms to deliver stronger development results and better integrate us with both the Pacific and Southeast Asia.
