When democratic countries neglect development cooperation

By Patrik Berlinger

Shortly after his second accession to office, US President Donald Trump ordered the winding-up of USAID early in 2025. At the beginning of July, the development agency was transferred fully to the State Department, the USA’s foreign office, and its budget was slashed to less than half of its original volume. Experts fear that its dissolution will cost the lives of more than 14 million people in the coming five years. The United Kingdom, France, Germany, the Netherlands and Switzerland are strongly reducing their support too. 

All in all, a decline in world-wide development aid by up to 17 per cent is reckoned with, its already having been cut by 9 per cent last year. And over the next few years too, less money will be available – despite the world-wide rapid increase in humanitarian needs.

Already this year, a quarter of the development aid for the least developed countries (LDCs) could be cancelled. Countries in sub-Saharan Africa are threatened with a decline of 16 to 28 per cent. In addition, austerity measures are being taken among the multilateral organisations which are  going to trigger a second wave of funding cuts for the  poorest countries – with strongly negative consequences for  the vital services in the food and health areas as well as for combating poverty and for sustainable development. 

Four options to fill the gaps 

1. Raising  income in developing countries

Given the enormous debts, and since important finance “from outside” is crumbling away, the poorer countries ought to mobilise more domestic resources. Developing countries really are generating too little revenue from taxes. This is no wonder, considering that where good roads and railways, reliable power supply and affordable healthcare are absent, it is difficult to argue in favour of tax increases. So anyone seeking to establish robust and efficient finance systems has to reckon with a strong headwind. Many people are poor and cannot pay tax in any case. And those who are rich know how to dodge the treasury. 

And then there are international companies which transfer their profits to the seat of their corporation instead of declaring them in the countries in which they have earned them. In this manner, poorer governments lose billions in potential tax revenue each year. Instead, the money flows into tax havens and low tax areas such as Switzerland. As long as the international rules are not adjusted, this is not going to change. At the International Conference on Financing for Development (FfD4) early in July, once again, hardly any progress was made in this respect.

2. Improving terms for remittances from migrants

Cutbacks in development aid are making remittances – money which migrants transfer to their home countries – more  and more important. In many countries, they account for more than five per cent of the gross national product (GNP), and they play a significant role in combating poverty. Since 2024, the World Bank has been reckoning with increases in remittances, which it estimates will reach 700 billion US dollars by the end of the current year. In comparison, Official Development Assistance from the countries of the Organisation for Economic Co-operation and Development (OECD) amounts to around 200 billion US dollars. 

When people send money back to their families, they pay an average seven per cent in fees. In 2020, the costs of remittances world-wide roughly corresponded to the entire volume of US American development aid. This is inacceptable, which is why, for the last ten years, in the context of Agenda 2030 for Sustainable Development, the international community has been demanding that fees be lowered to less than three per cent. World-wide, families depending on remittances would thus have an annual additional 20 billion US dollars at their disposal for investing in their own businesses or simply to cover day-to-day costs. But neither the private financial intermediaries nor the rich countries are backing this.  

3. Philanthropic billionaires filling the breach

Only recently, Microsoft founder Bill Gates announced that his foundation would be raising twice as much money for health and education purposes in the coming 20 years than it had in the past. As of 2026, annual payout will be raised to nine billion US dollars. For some time now, with its considerable contributions, the Gates Foundation has been influencing international institutions such as the Consultative Group on International Agricultural Research (CGIAR), whose members include, for instance, the International Rice Research Institute (IRRI) in Manila/Philippines and the International Potato Center (CIP) in Lima/Peru. With its cash infusions, the Gates Foundation is also shaping the vaccination alliance Gavi and the Global Fund to combat AIDS, tuberculosis and malaria. 

Unlike Elon Musk, Jeff Bezos and many other plutocrats who are above all conspicuous because of their aggressive tax avoidance and contempt for the state, Gates is interested in fair, sustainable development and the Sustainable Development Goals. However, he takes advantage of his wealth by promoting approaches matching his personal notions, giving democratic legitimation a wide berth. This is not entirely unproblematic. When controversial topics are concerned, such as whether genetic engineering is good for agriculture or whether nuclear power qualifies as clean energy, Gates tends to opt for tech solutions. In a nutshell, whereas the super-rich have to assume more responsibility for the commonweal, they will never be able to replace official development aid with possible foundation finance. 

4. Other countries filling the gap 

The Global South has long ceased to receive support solely from the “western” industrial nations, but also does so from burgeoning take-off countries such as China, India or Brazil. Beijing is by far the most important player here. If the USA withdraws from aid efforts, global power Number Two can fill the vacuum, for instance in the UNO or on the African continent. For example, China’s “Belt and Road Initiative” (BRI) focuses on developing infrastructure, transporting raw materials and safe supply chains. Roads, ports and railways are given special attention – means to an end, that of facilitating China’s foreign trade. 

The development cooperation of the take-off countries differs from that of the OECD countries. Support is based mainly on loans, with recipient countries going into debt. Moreover, there is little transparency in China’s activities, and it agrees its projects directly with the respective governments, without involving the public. In contrast, value-oriented development cooperation contributes to improving the living conditions of poor, left behind people, e.g. through youths gaining new prospects thanks to vocational education and training, smallholders raising their harvest yield and hence their income and people affected by the climate crisis not being forced to migrate. In addition, such development cooperation strengthens democratic co-determination and good governance as well as human rights and a strong and free civil society and media diversity. 

Value-oriented order under pressure

The brief discussion of local resource mobilisation, more favourable terms for remittances, philanthropic contributions and new donor countries such as China shows that the gap in development aid can at best only be partially filled. Fundamental problems accompany the process. The austerity measures resorted to in international cooperation by the established, liberal donors are weakening the human rights-based and value-oriented multilateral order system and are leading to an unprecedented re- and deconstruction of the UNO.

Values such as sustainability and justice, respecting human rights and international law are losing influence. An unstable new world is threatening to emerge. 

Patrik Berlinger is responsible for political communication at the Swiss non-governmental organisation HELVETAS and based in Zurich, Switzerland.

Contact: patrik.berlinger(at)helvetas.org