The changing landscape of Development Assistance
How to make sense of the consequences for developing countries of the changes in US policy? It is hard to understand, difficult to foresee - but important to analyze and reflect.
The direct consequences of American aid-cuts are severe for many countries, especially the poorest and war-ridden - where aid matters most. The US was typically the biggest donor to most African countries, and the largest humanitarian donor in most conflicts. What fewer people have noticed is that the US cuts were both preceded and followed by cuts in many European aid budgets. Foreign aid from western countries is going down. https://lnkd.in/dUj5kPAg
The reasoning behind US and European aid cuts is different. The US has a new and American-centered policy, where soft power hardly has a role. In Europe the cuts are mainly driven by fiscal concerns and the need to spend large sums on security.
The announced tariffs - which are now paused for 90 days - are also very high on many developing economies. If they are introduced, they could be hitting exports that are essential to some economies. https://lnkd.in/d5PCg6GD We don't know what's going to happen to those, but the pause will not take away the doubt and risk for investors. The combined consequences of potential tariffs and aid cuts are severe for many of the world's poorest countries, there's no denying that. The consequence could also be - or at least look like - a diminished engagement in the Global south.
Others are moving in. I am writing this from a hotel-room in Riyadh. The Gulf-states are increasing their aid and investments abroad, albeit with less transparency. Qatar and the UAE have levels of aid comparable to many western countries. Countries like Brazil, Colombia, South Africa, India, Indonesia and South Korea are all (to a varying degree) investors and donors in their regions, some also beyond that.
Not to speak of China. Early reports of increased engagement from China when USAID is pulling out are already in. It also seems likely that China will be more important as an investor and trading partner for many countries in the Global south. But China is unlikely to replace USAID - the numbers are too big, and the Chinese aid is different. But even small grants from China are welcome now. Charles Kenny of Center for Global Development could be right, that without a lot of effort China is receiving “a diplomatic gift" https://lnkd.in/dF-MwV5U
What we know is that a large number of people will not receive humanitarian assistance, medical treatment, education and food because of aid cuts. What we can be pretty sure of is that the aid landscape is changed forever. What remains to be seen, is how these policy changes will affect the relationship between the west and the rest of the world. Norad - Norwegian Agency for Development Cooperation