In making America great again, the US is putting the final nail in the coffin of a world order it had put together, brick by brick after World War II. It no longer wants to pay the bill, whether it is defence funding for Nato or the tab for multilateral development.
The rules that held the legitimacy of this order had already begun to fray after 9/11. Pre-emption could give any muscular power the right to reframe its rules of engagement. Today, it is clear that much more is at stake as America abandons its role as the global leader of a system based on multilateralism.
The January 20 Executive Order freezing “all foreign development assistance” is now dismantling this role, suspending $67 billion in annual aid, while immediately cutting at least $30 billion from USAID and State Department programmes. The obvious big cuts are already fuelling disruption all over the world. Since 2003, the US has provided the largest absolute amount of development aid, funding between 25–30 per cent of global official development assistance (ODA).
The International Development Association (IDA), which relies on US contributions for 17 per cent of its funding, faces a $2.8 billion shortfall, jeopardising an additional $8.4 billion in leveraged lending. The African Development Fund (AfDF) will see $197 million evaporate, while the Asian Development Fund (AsDF) will lose $174 million. The World Food Program (WFP), which provided $7.3 billion in aid in 2023, now faces severe funding gaps, including humanitarian programs. Health programmes are already among the hardest hit, with the Global Fund losing over $800 million in US aid. Other countries are also following the lead of the US, which has fully withdrawn 14 per cent of the WHO’s budget, weakening not just pandemic preparedness, but many other crucial programmes.
Although US Secretary of State Marco Rubio has said that waivers could be obtained for life-saving humanitarian assistance, which he defined as “medicine, medical services, food, shelter and subsistence assistance”, US aid workers said they were uncertain about the criteria of such waivers. Millions in the poorest countries who benefited from US aid to the Global Fund to Fight AIDS, Tuberculosis and Malaria, and other lifesaving interventions are holding their breath.
With Nato facing its own cuts from the US defunding spiral, many European governments, plus the UK, will be recalibrating their defence budgets by slashing development aid. The new German government will be pumping an additional 100 billion euros to its defence budget and making development aid cuts up to 4.8 per cent, while France’s minority government has announced its plan to slash development aid by 40 per cent.
The UK’s plans to reduce its official development assistance from 0.7 per cent to 0.3 per cent of gross national income by 2027 may impact Pakistan which has been a key beneficiary of bilateral British aid. The EU support for Pakistan’s Water Capacity Building Program is also at risk, undermining country efforts to meet water and energy needs for the next decades of climate stress. With no clarity yet on the sustenance of the World Bank’s ongoing resilience and partnership programmes, all such cuts in aid will bring in harsher summers for Pakistan’s farmers, already struggling with high temperatures and unprecedented water shortages in three provinces out of four for the first time due to climate change.
Given that the agriculture sector employs 40 per cent of Pakistan’s population, the reduced funding will hurt the poorest hardest. With the US pullout from the Paris Accord, the planned $120 billion annual financing for climate adaptation in low- and middle-income countries will be disrupted, including Pakistan, with the WB already indicating its non-interest in Pakistan’s Clean and Affordable Energy Program.
Pakistan has been a major recipient of American aid since 1948, and since 1961 via USAID, supporting a wide array of development, education, agriculture, gender and energy infrastructure projects. While the argument most popular in Pakistan — that external aid and USAID enhanced a culture of dependency — has some merit, what it glosses over is the stark reality that aid cuts will immediately impact the poorest, who already struggle with inflation and the highest electricity rates in the region. Until Pakistan enhances its tax revenue collection exponentially, and government expenses continue to overshoot revenues, rent-seeking elites who allegedly swallow up aid will remain unimpacted, while it is the vulnerable who will suffer the fallout in the medium term.
For the indigent and underserviced of Pakistan, the suspension of $845 million in US funding to Pakistan under Trump’s latest policy shift will have severe consequences across multiple sectors, particularly energy, healthcare, education, and economic development. With cuts to UNFPA, for instance, which depended on USAID as the world’s largest single donor of family planning, Regional Director for Asia and the Pacific Pio Smith said that there will be devastating consequences for many. In Pakistan, he said the freeze will impact 1.7 million people, including 1.2 million Afghan refugees living in precarious conditions, in which women will be cut off from lifesaving reproductive health services. With the closure of 60 health facilities, a ‘lifeline’ to this vulnerable cohort will go dark.
The suspension of $52 million for the Global Health Supply Chain Program, which was to modernise health supply chains, and the closure of the $86 million Service Delivery Integrated System Initiative will be the biggest shutdowns. As the main treatment centre shuts down in Pakistan, the US cut on TB funding will impact thousands who will be left without essential treatment, leaving many jobless in an economy with high unemployment. At the same time, Pakistan’s huge HIV-affected population of 201,000 will lose life-saving medicines, leaving the country with a public health crisis.
With polio cases seeing a resurgence along with conflict, Pakistan’s needs on polio eradication will go up from $300 million, and the funding cuts on Unicef’s polio partnerships globally may need other donors like Japan and the Gates Foundation stepping in further. In the education sector, Washington’s freeze on the $30.7 million merit and needs-based scholarships in the HEC’s programmes, will hit young students from low-income households seeking the opportunity of quality education programmes.
In the energy sector, five major projects — including the Pakistan Private Sector Energy Activity and Power Sector Improvement Activity — have been halted. At an immediate scale, the $150 million Mangla Dam Rehabilitation Project will now go off track, which will exacerbate Pakistan’s ongoing water and power shortages. The Pakistan Private Investment Initiative ($43.5 million), designed to create jobs, will also be unable to assist in the vital support programme. The aid cuts so far also extend to climate resilience programs.
A notice sent to government officials ordered a ‘stop work’ on several development projects, including the reconstruction of ten women’s police stations damaged by the 2022 floods. The Pakistan Climate Financing Activity, which aimed to improve climate adaptation, has been suspended, even as Pakistan faces projections of a 50 per cent drop in wheat yields by 2050 due to climate stress and $348 billion to obtain resilience by 2030.
Although a dwindling tap from the heyday of the 1980s, all military aid also remains suspended. While Pakistan received $2.5 billion in aid from the US between 2010 and 2020, it did so as an ally on crucial anti-terrorism goals, yet it lost an estimated $ 130 billion on the costs of the longest war next door in Afghanistan. The incalculable price in human lives is still being paid with a resurgence in Afghan-based terrorist attacks on Pakistan after the US exit.
Beyond direct financial impacts, the slash and burn of American aid will see a strategic loss of US influence in the region, pushing Pakistan further towards China, which already holds $68.9 billion of Pakistan’s external debt. At the global level, US aid cuts across the board (from which Israel and Egypt have been exempted), along with a broader disengagement with the Paris Agreement, and other multilateral commitments, including global trade, will shift the global development leadership north star closer to Beijing.
The latter’s Belt and Road Initiative, along with American divestment from stewardship of multilateralism, has already positioned China as the world’s largest bilateral development partner. Washington would do well to remember that nature and geostrategy have one thing in common: they both abhor a vacuum.
The writer is chair of the Climate Committee in the Senate and former federal minister for climate change. She has also served as Pakistan’s ambassador to the United States.