Shuttered: USAID and the Geopolitics of Foreign Aid

Top Line.

  • The closing of the US Agency for International Development (USAID) and withdrawal of the United States from its international humanitarian aid commitments (40 percent of the global total) will have an energizing effect on aspiring superpowers, most notably China.
  • USAID’s demise provides space for China to accelerate soft power projects and to expand its development footprint, already highly visible across the Global South.
  • Chinese aid is highly transactional and often in the form of loans and Chinese-staffed infrastructure projects. Human rights, environmental concerns and social development are rarely part of the aid calculus.
  • In Canada, broad indicators point to a growing sense of disillusionment with the idea of multilateralism and international involvement.
  • If China assesses that there is political advantage to be gained in Canada by sowing discord around foreign aid, then it will almost certainly become a focus of Chinese interference.
  • The overnight withdrawal of American humanitarian aid will exacerbate extremism, violent crime, human rights abuses and civil strife across the developing world. Refugee flows and political violence will increase and there will be increasing pressure on Canada to increase foreign aid disbursements.

DOGEd

If there is a single characteristic that defines the two-month-old presidency of Donald Trump, it is a prevailing air of suspicion, if not outright disdain, for the institutions that have defined the postwar world. This attitude is not limited to international organizations but is also directed at the structures and institutions that define the American state – the armed forces, the intelligence and diplomatic community, the justice system, and the civil service. Since January 2025, the President and the Department of Government Efficiency (DOGE) have purged or shut down entire federal government departments, including the US Agency for International Development (USAID).

The shuttering of USAID has international ramifications. The politics of international development aid may seem like a sideshow compared to conflicts raging in Ukraine, or Gaza, or Sudan. But the sudden (and, apparently, final) withdrawal of the United States from its international aid commitments will have an energizing effect on aspiring superpowers, most notably China.

“Cold Conflict” and the Development Sector

For most of the current century, the global dynamic has been shaped by competition and “cold conflict” between the United States and China. In certain key respects, this mirrors the confrontation between the United States and the Soviet Union that defined the final half of the 20th century. And a key battleground in this conflict is the development sector, in which Washington and Beijing are vying for influence in the Global South.

By the Numbers: Who Spends What?

Historically, the United States has been the world’s single largest donor of foreign aid, accounting for roughly 40 percent of global humanitarian aid. In 2023, the US government disbursed $71.9 billion in aid, down slightly from $74 billion in 2022. Canada, by contrast, disbursed about US$8 billion in foreign aid in 2023, and is the world’s 7th largest aid donor. The Trump administration has announced that it will be eliminating more than 90% of USAID foreign aid contracts, along with $60 billion in American global assistance funding. Again, this represents the complete withdrawal of the United States from international development and humanitarian aid programming. 

While China does not publish foreign aid data, estimates from various sources put its annual foreign aid disbursements in the US$7 billion range between 2013 to 2018. This dropped considerably during the COVID-19 years as Chinese travel restrictions and a massive economic slowdown took hold. This makes it a somewhat smaller donor than Canada. But Chinese foreign aid differs from its western counterparts in that it is most often delivered in the form of loans and Chinese-staffed infrastructure projects rather than via partnerships with other multilaterals, local governments, and NGOs. Some of this happens under the so-called Belts and Roads Initiative (BRI). Globally, BRI related projects and loans between 2013 and 2023 are worth over US$1 trillion.

“A Self-Inflicted Wound”

In the immediate aftermath of the USAID shutdown, characterized by analysts as “disastrous,” and a “self-inflicted wound,” the US Council on Foreign Relations observed that “[w]hat Trump is doing is basically providing China a perfect opportunity to rethink, to renew soft power projects, and get back on track to transglobal leadership.” 

China’s development footprint is highly visible all over the Global South. In the Caribbean alone, Chinese investment has increased tenfold over the past two decades, from about US$1 billion to US$10 billion. While the bulk of this investment has been in larger countries, like Jamaica, Trinidad and Tobago, and Cuba, Antigua, Dominica and Grenada have all signed on to BRI. In Antigua, China is constructing a port and “special economic zone” near the capital city of St. John’s, and it has also invested in various tourism- and housing-related projects.  “Hearts and Minds” initiatives – like a renovated and expanded cricket stadium on Grenada – are also an increasingly important component of China’s overall development “Grand Strategy” in the region.

Manifest Destiny?

China is an emergent Asian superpower with both the intention, and the financial wherewithal, to stand up to the West and even to the whole idea of Western hegemony. And there is no doubt that China has its own sense of “Manifest Destiny,” and its own version of a Monroe Doctrine, both of which directly mirror their American originals. As above, with BRI, the Chinese presence in Latin America and the Caribbean is growing rapidly, as it is in the South China Sea, especially around the prewar American colony of The Philippines. Both bodies of water are well on their way to becoming “Chinese lakes,” just as they were “American lakes” at the turn of the 20th Century.

Why Is This Important?

For the better part of 80 years, Canada and most of its closest allies – the United States, Europe, Canada, Australia and Japan – have profited – in both measurable and immeasurable ways – from a “peace dividend” and from a world dominated by liberal (in both senses of the word) democracies and economies. China, along with global bad actors like Russia, North Korea and Iran, are trying to advance a world that is rooted in authoritarianism. 

All foreign aid and, arguably, all multilateralism, are rooted in some measure of national and regional self-interest. Postwar history is replete with examples of how American aid, in particular, has brought out the worst in both America and the countries on the receiving end of that aid: think Latin America in the 1970s; Vietnam and Indochina in the 1960s.  

But Chinese (to say nothing of old time Soviet, and now Russian) aid is often transactional and entirely pragmatic. Human rights, environmental concerns, and social development are rarely part of the aid calculus. So, governance and accountability are often corroded in recipient countries, so that corruption and predatory oligarchies become the norm rather than an unfortunate side-effect. This, in turn, both encourages bad international behaviour and validates a particularly corrosive form of global Darwinism in which democracy is for chumps and the exercise of power is its own reward.

China has a lot of money, as well as a standing interest in expanding its “soft” power. With what appears to be the demise of American “good global citizenship,” China does not have to work that hard to replace the United States as the leader of the foreign aid pack. As the Council on Foreign Relations observes, this will boost China’s narrative about its own altruism, gathering even more of the developing world into its fold.

The Canadian Angle

Opinion polling on Canadian views of this country’s role as an international aid donor remain consistently positive. The most recent EKO / Global Affairs Canada data indicate that 58 percent of respondents believe that the Government of Canada should provide foreign aid to poor countries, while only 28 percent believe that the government should not. However, in a broader context, indicators point to a growing sense of disillusionment, even disdain, for multilateralism and international responsibility. A recent Angus Reid poll, for example, found that around 29 percent of Canadians believe that Canada is offering “too much support” to Ukraine, up from only 13 percent who said the same thing in mid-2022. That figure climbs to 51 percent for respondents identifying as politically conservative. 

Where this apparent disparity in public opinion will go is difficult to predict. But given the volatility of the Canadian political scene right now, and the deeply controversial effects of American global and continental policy, it is a disparity that will be closely watched by China. If China believes that there is political advantage to be gained in this country by sowing discord around foreign aid and foreign involvement, then they will almost certainly become one of the targets of Chinese interference. This could take the form of either straight up anti-government messaging around “waste” in foreign aid spending; sowing doubt about the use and abuse of Canadian aid; or portrayals of aid recipient countries as ungrateful and corrupt. 

Finally, the overnight withdrawal of 40 percent of funding from the international humanitarian aid “pot,” will have a profound effect right across the developing world. The correlation between extremism, violent crime, human rights abuses, and civil strife on the one hand, and social and economic collapse on the other, is indisputable. So already critical situations in Latin America, Africa, the Middle East and parts of Asia are no doubt going to get worse as humanitarian funding dries up. Not only will this have spillover effects in terms of refugee flows and political violence, but it will also bring pressure to bear on countries like Canada to increase foreign aid disbursement. And this will certainly exacerbate some of the disparities in public opinion alluded to above.