Filling the Gap: Australia’s Opportunity in the Wake of the USAID Cuts

Christopher Hogan

Image sourced from USAID Agency via Flickr.

In only a few short months, the second Trump administration has delivered a concerted attack on key pillars of a globalised world long taken for granted. One of the largest casualties of this has been the United States Agency for International Development (USAID). The administration has frozen resourcing to USAID, with the expectation that 83 per cent of programmes could be cut and the remainder transferred to the State Department. 

The apparent and abrupt end to USAID has left a gulf in the funding of multilateral organisations and international development projects aimed at achieving sustainable development around the world. The finance, resources, and expertise lost from the sector is not guaranteed to return despite ongoing legal challenges or under a future administration. 

The gap this leaves also comes at a geopolitically sensitive moment for the Indo-Pacific amid China’s growing economic and development influence. A decreasing US development presence in the region will cede further influence, raising concerns for Australia’s regional relationships and security.

Despite this, Australia has both a strategic opportunity and a moral responsibility to help fill the gap left by USAID’s demise. This can be done by leveraging its financial, logistical, technical, and labour capabilities to promote values of sustainable development and enhance regional security through soft power diplomacy.

The end of USAID and its regional impact

Since its establishment in the 1960s to counter the influence of the Soviet Union, USAID’s work has spread to more than 170 countries around the world, working across a broad range of areas including education, human rights, environmental sustainability, health, and civil society.

The interruption to the agency’s work has significant ramifications for development in the Indo-Pacific region. Critical funding for a range of programs spanning healthcare, refugee assistance, demining operations, the promotion of democratic values, and climate resilience in the Indo-Pacific have effectively ended. The reality of this includes major future concerns, including that the Mekong region of South-East Asia may see malaria regain footholds in areas where it was almost eliminated.

These impacts are further compounded by the defunding of important data underpinning development work, such as the Demographic and Health Survey (DHS) programme. These surveys had become vital tools for measuring and comparing progress across a range of development indicators. Without these and other key data resources, practitioners and governments will struggle to monitor progress and identify areas of priority at the national and regional levels.

Furthermore, the vacuum left by the USAID cuts creates opportunities not only for Australia but other state actors to exert greater influence in the region. The biggest winner from these cuts will be China as it replaces the US as the largest bilateral aid donor for an even greater number of countries in the Indo-Pacific. With the US’ hard and now soft power in decline, China will become increasingly influential in shaping the region’s future.

Australia’s strategic opportunity

Australia faces an important choice amid the ongoing upheaval in the development sector. Either it can allow development in the Indo-Pacific to drift towards China’s orbit, or embrace this opportunity to increase engagement with new and traditional development partners. While Australia alone cannot replace the resourcing gap, it has an opportunity to leverage its strengths and bilateral relationships to promote sustainable development outcomes and avoid repeating past mistakes. 

For example, domestic concerns over vaccine safety coupled with delays in their procurement during the COVID-19 pandemic largely diverted debate away from Australia’s opportunity to supply resources throughout the Indo-Pacific. While Australia eventually became a significant donor of vaccines, earlier recognition of and action on vaccine demand in the region would have elevated Australia’s standing as an agent for development. Similarly, the loss of funding from the USAID cuts presents an opportunity to build stronger bilateral relationships and create a more resilient regional development environment.

While Australia as a middle power may not be able to compete for size, innovatively using its capabilities could help to solve some of these emerging development challenges. One strategy through which this may be achieved is by filling the finance and technical vacuum left by the loss of data capabilities of the DHS programme, which was underpinned by technical and subject specialists in the US. For example, creating technical data, coding, and project management positions in Australia could initially complement fieldwork and management roles in partnering countries, while building their data capabilities to promote long-term self-sufficiency. Facilitating such an arrangement would be mutually beneficial by creating jobs, increasing industry links, and promoting engagement between Australia and regional partners across all areas of development.

Time to act

As the dust settles on the USAID cuts, the negative impact on sustainable development outcomes in the Indo-Pacific region will likely become more evident. However, the vacuum left also presents a strategic opportunity and moral imperative for Australia to innovatively evolve its engagement with the region.

Failing to rise to the challenge risks regressing development outcomes and regional instability, which would force Australia to invest in its security in different, more insular ways in the long-term. 

Australia does not need to do this alone. It has good relationships with several countries, including New Zealand, Japan, and South Korea, who it can partner with on development and to offset concerns over a more influential China. 

By reasserting itself as a middle power invested in collaborating with partners for regional outcomes Australia will emerge as a leader for sustainable development in the Indo-Pacific.

Disclaimer: The AI software Claude was used by the author for organising and structuring notes and ideas in preparing an earlier draft and for providing critical feedback.

Christopher Hogan is a PhD Candidate in Geography at Flinders University, Adelaide, Australia. He has a keen interest in development in the Indo-Pacific. His ongoing research includes projects investigating labour migrant outcomes in the Pacific Australia Labour Mobility scheme and demographic analysis of Timor-Leste’s population. He also works as a Statistical Analyst for the Australian Bureau of Statistics.