US President Donald Trump has shut down USAID, the United States’ leading foreign aid agency, as part of a broader plan spearheaded by Elon Musk’s Department of Government Efficiency (DOGE).
The Trump administration has sharply criticized USAID, accusing it of perpetuating distortions and anomalies through its aid administered to developing countries. Musk called USAID “the most corrupt institution” and declared that “it deserves to die.”
While USAID has long claimed to focus on humanitarian support, health services and development, Trump has said that it has instead facilitated political meddling, corruption, opaque governance and undue interference in the internal affairs of recipient countries.
Trump and Musk’s claims would seem to corroborate accusations that recent unrest in Bangladesh and Ukraine’s 2014 “orange revolution”—an event that ultimately led to the Russia-Ukraine war in 2022—are evidence of USAID’s role in orchestrating “color revolutions,” a modern form of regime change akin to a military coup around the world.
The US foreign policy framework has three pillars: defense, diplomacy, and development. USAID ostensibly serves the US national interests by promoting foreign policy and expanding influence rather than necessarily addressing the genuine needs of the recipient countries.
A significant portion of USAID funding is absorbed by administrative costs, high salaries, payments for intermediaries and highly expensive consultants (many former USAID senior officers), leaving only a fraction of allocated budgets to reach intended beneficiaries.
Studies reveal that for every 100 US dollars USAID spends, a mere 12.10 dollars reaches recipient countries. Moreover, USAID funding has been accused of exacerbating corruption and opaque governance in host countries by undermining local laws and regulations. Critics argue that the agency primarily benefits the ruling political elite and their US university-educated offspring rather than people in need.
Trump’s “America First” policy, which is reputedly trying to stop the misappropriation of US taxpayer money domestically and internationally, includes the decision to close USAID. The Trump-Musk disclosures have also forced Global South countries to review the effects of Western aid and take necessary actions to achieve greater economic independence, sovereignty and paths of economic progress.
Western foreign aid acts as a double-edged sword for many developing countries. While it purports to deliver development to recipients’ countries in words, it entrenches dependency and undermines their economic sovereignty and self-reliance.
Western donors initially dispense large grants but then replace grants with loans after recipient countries become more dependent on external aid.
The severe economic policy conditions of Western loans (bilateral and multilateral, such as from the World Bank and IMF) restrict the economic independence of the recipient nations by keeping them in a never-ending vicious cycle of borrowing to repay outstanding debt.
It undermines the basis of people’s livelihood and sustainable development by diverting a larger scarce government budget to repay debt and suppressing domestic agriculture and infant industries.
Western aid is usually tied to the geopolitical goals of donor countries, forcing recipient countries to align their policies with those of their donors. As a result, the receiving countries cannot implement independent economic and trade strategies.
Additionally, Western aid has been linked to promoting corruption and inefficiencies in recipient countries, which Musk has highlighted in shutting down USAID. Many funds are lost somewhere or mismanaged by aid management, failing to achieve their original objectives.
While often well-intentioned, including programs for distributing free food, seeds and other essential services, USAID’s aid often weakens local agriculture and businesses by displacing domestic producers and eroding local knowledge and skills.
Instead of fostering long-term economic self-sufficiency, such investment breeds dependence syndrome, making nations dependent on outside aid. Many academics contend that Western aid maintains dependency and hopelessness rather than promoting actual development.
It is high time for developing nations to transition to economic independence and self-sufficiency. Trump’s revelation on USAID calls for a concerted effort to build local industry, cut down on imports and increase local production.
Investment in education, technology and infrastructure is crucial to developing the ability to grow sustainably. These actions, however, require resources, which means that developing countries have to partner with lenders that provide development funds without political and policy conditions attached.
Regional trade and cooperation offer a promising path forward for the Global South. As the US embraces protectionist policies—more stringent than even the Smoot-Hawley Tariff Act of 1930—the Global South must abandon the illusion of getting rich through exporting cheap goods to Western markets or relying on foreign aid for national development.
Instead, it should focus on fostering regional partnerships and trade agreements. African nations can leverage pan-African cooperation and collective bargaining to shield themselves from raw material and labor exploitation.
ASEAN countries should seize the opportunity to launch similarly bold regional initiatives, while South America must advance frameworks for regional collaboration. Russian-led Eurasian Economic Union is key to integrating Eurasian economies to deliver tangible results.
South Asia should revive the South Asian Association for Regional Cooperation (SAARC) to implement its stalled free trade agreement (FTA). These regional efforts can be interconnected through a strengthened BRICS+ framework, fostering greater cooperation among Global South nations.
More importantly, these countries need to reclaim ownership of their natural resources. Developing countries must end the exploitation of their resources by wealthy nations by taking control of their extraction, mining, utilization and trade. This will enable countries to sell their resources reasonably, increasing the value added from these assets.
There may be a good chance to accomplish this goal by holding joint and regional talks with China. Compared to the zero-sum game traditionally promoted by the West, China’s “win-win” trade and development strategy emphasizes mutual benefit. Developing nations that collaborate with China may advance Beijing’s objectives, but while avoiding the many drawbacks of Western aid.
The political and economic interests of donor nations are given priority under the Western assistance paradigm, which is defined by the conditionality of grants and loans. Western aid often comes with demands for democratization, political reforms, human rights improvements and pressure to join alliances against rival nations.
It is a form of interference in the internal affairs of recipient countries, compelling them to adopt Western economic, political and social norms—often at odds with their cultural values and traditions.
China, in contrast, prioritizes trade and investment over social engineering. Through policies like the Belt and Road Initiative, China invests in large-scale infrastructure projects, including ports, railroads and highways, in recipient countries. For many emerging nations, these initiatives are the mainstay of long-term economic expansion.
For instance, Chinese investment has accelerated Africa’s green energy transition and digital and transportation infrastructure. Importantly, because China’s model does not impose economic policy, political systems or social requirements, it permits nations to preserve economic policy-making and political autonomy. As such, it has become a desirable substitute for countries looking to map out their development routes.
The Global South could gain a lot from China’s growing economic might. As the world’s largest retail and luxury market since 2020, China has a high demand for resources and goods from developing countries.
Developing countries can access big new markets for their goods, including for food, raw materials and manufactured goods, by engaging more deeply with China’s supply chains. Additionally, China’s industrial overcapacity offers opportunities for relocating its “sunset industries” and low-technology-based manufacturing sector to the Global South, fostering local industrialization and job creation.
China’s critics often warn of the dangers of resource exploitation and “debt trap diplomacy.” However, many people in the Global South see China’s strategy as a solid substitute for the Western assistance paradigm, which has traditionally put donors’ interests above those of their recipients.
China provides an often welcome alternative to Western aid where there was no alternative in the Global South just a decade ago. (Though Japan has long provided foreign aid without the strings attached by Western donors).
These countries can lay the foundation for self-reliance, economic sovereignty and sustainable development by embracing China’s positive-sum game model over the West’s often zero-sum approach.
To be sure, the debate over foreign aid and development models is far from settled. However, as the Global South grapples with the legacy of Western aid and explores new partnerships, it must prioritize its economic sovereignty, national interests and independence.
By utilizing regional collaboration, claiming control over natural resources and interacting with alternative partners like China, the Global South may escape the cycle of dependency and create a more just and prosperous future.
Bhim Bhurtel is on X at @BhimBhurtel
