Tag Archive for: AusAID

Australia can take USAID’s place in the Pacific islands

One of the first aims of the United States’ new Department of Government Efficiency was shutting down USAID. By 6 February, the agency was functionally dissolved, its seal missing from its Washington headquarters.

Amid the sudden shutdown, Australia must increase its developmental aid to Pacific islands before China fills in.

The most aid-dependent countries—the Freely Associated States, including Marshall Islands, Palau and the Federated States of Micronesia—happen to be among the most strategically located for US resistance to possible Chinese aggression against Taiwan, Japan and the Philippines. Maintaining aid to them is doubly important.

Moreover, island countries across the Pacific suffer from intense poverty and are unusually vulnerable to climate change.

The Pacific islands’ geostrategic importance necessitates aid to achieve ideal defensive posture. The primary military value of the islands is that they enable the US to disperse military assets across the wide expanse of the region. The second island chain provides several secondary and tertiary operating locations important in a Sino-American conflict. Important islands include Palau, and Yap and Chuuk in the Federated States of Micronesia.

The Pacific is important to China’s counterinsurgency strategy, which aims to prevent reinforcement of the US’s position inside the first island chain. Limiting access is the name of the game for military strategists on both sides of the Pacific. If Beijing were to convince countries in the second island chain to let the Chinese army’s rocket force deploy ballistic missiles on their soil, that would be devastating for the US. The DF-17 medium-range ballistic missile has a range of 1600km, while the DF-ZF hypersonic glide vehicle has a range of 2000km. Given that there are currently no viable defences against hypersonic weapons, this would effectively box US navy carrier strike groups out of much of the Pacific Ocean.

The Pacific is the world’s most aid-dependent region and thus particularly susceptible to China’s coercion. Pacific states are small with few natural resources, making them reliant on aid to develop. Between 2008 and 2021, the region received more than US$40 billion in aid.

Aid packages are only effective in scoring geopolitical influence insofar as they align with the priorities of Pacific countries, which are increasingly concerned with adapting to the negative impacts of climate change. This makes complete sense: rising sea levels, declining fish populations and increased natural disaster prevalence all spell a true existential threat. With the planet surpassing the 1.5 degrees C limit outlined in the Paris Climate Agreement, Pacific island states will need further aid to diversify food sources and build seawalls. USAID created the Pacific-American Climate Fund in 2020 specifically to help Pacific island countries weather the effects of climate change through grants and loans to local organisations. This program ceased with the agency’s sudden closure.

It is perfectly reasonable for these states to look for a more reliable source of funding, which China is eager to provide. This is a real threat: on 15 February, the Cook Islands signed a comprehensive strategic partnership agreement with China. This agreement is just the latest in a series: in 2019, China sent generous economic aid to Solomon Islands, leading the Pacific state to drop its diplomatic recognition of Taiwan. Kiribati soon followed.

Australia is the ideal candidate to aid the freely associated states to prevent a Chinese fill-in. China is the second-largest provider of aid to the Pacific after Australia. US aid is primarily directed to the Federated States of Micronesia, Marshall Islands and Palau, with whom the US has Compacts of Free Association. These three states contain key dispersed military operating locations and they received about 82 percent of the roughly US$250 million the US sent to the region in 2022. These states are therefore sensitive to a funding freeze. The Biden administration signed into law US$7.1 billion in aid to them in 2024, though USAID’s axing has likely disrupted this funding.

Australia is best equipped to fill the void left by the US, given its robust relationships with many Pacific countries. Additionally, most US money dedicated to Pacific aid goes through Australian NGOs. This decreases the need to alter existing programs, which increases the chances of a smooth transition.

The shutdown of USAID has been an enormous hit to US soft power and its ability to counter China in the Pacific. But the worst outcomes can be avoided through the intervention of steadfast allies—especially Australia.

This article has been amended to omit references to AusAID, which was absorbed into the Department of Foreign Affairs and Trade in 2013.

Britain’s cut to foreign aid undermines threat prevention

Britain’s decision to cut foreign aid to fund defence spending overlooks the preventive role of foreign aid. It follows the pause and review of USAID activities and is an approach to foreign aid that Australia cannot afford to consider.

In late February, Britain said it would cut foreign aid. Prime Minister Keir Starmer said the decision was extremely difficult and painful. Foreign Secretary David Lammy described it as a hard choice. Both said it was necessary to keep Britain safe.

But foreign aid does help keep Britain safe.

Threats come in many forms. This means there are hard-headed security arguments for foreign assistance.

If another, poor country’s health system can’t deliver vaccinations or cope with a disease outbreak, your country can end up with a pandemic. If a nearby country suffers government collapse, military coup or state failure, this will affect your country economically and politically. If people affected by climate change are not assisted, you could end up dealing with a migration crisis.

Development funding is worthwhile investment. Dealing with a full-blown security crisis is far more expensive than the small amounts that help prevent it from happening.

People often assume that overseas development assistance gets a much larger slice of the budget pie than it does. For example, the 2018 Lowy Institute Poll showed that people thought that Australia spent $14 from every $100 in the budget on foreign aid when, in reality, it was about 80 cents. Now it is 68 cents.

Considering current threats, it makes perfect sense for Britain to increase defence spending. Lammy has said ‘Putin’s Russia is a threat not only to Ukraine and its neighbours, but to all of Europe, including the UK.’

But increased defence spending should not be at the expense of foreign aid: the preventive spending that guards against future threats. It is like taking money from preventive health care to fund emergency units. Britain is following the United States in a path that makes the world less safe.

This is something that Australia should not even consider.

The context is strikingly different. In the US, the target was the standalone aid agency USAID. Australia has already amalgamated AusAID into the Department of Foreign Affairs and Trade, meaning development programs are integrated across the entire department. Minister for International Development Pat Conroy has described it as an egg that can’t be unscrambled.

Unlike Britain, Australia’s development spending has already endured huge cuts during the Abbott years, and the vacuum this created for other actors in the Pacific is a salutary lesson not to follow Britain and cut further.

For those concerned about what aid money is being spent on, the government has a transparency portal that tells them. It lists conflict and security development projects including early warning reports, mediation services, reducing illicit arms flows, monitoring landmine and cluster munition use, strengthening cyber and critical tech resilience and reducing the threat of violent extremism.

And unlike the US and Britain, Australia simply can’t afford to vacate the field. Australia is surrounded by developing countries, and if it wants to have friends and partners in the region it must support them in the things that matter to them. The damage to Australia’s long-term interests would be incalculable. That’s what’s at stake. An adequate development budget is non-negotiable if Australia wants to have influence in its region.

Cutting aid might feel like a quick budget fix, but it will cost more in the long term as the world’s problems become expensive crises. In the British parliament, the chair of the International Development Select Committee made this point: ‘Cutting the aid budget to fund defence spending is a false economy that will only make the world less safe.’ She said she was ‘bitterly disappointed’ with a decision she sees as ‘endangering our long-term security’.

Humanitarian organisations have described the move as short-sighted, reckless and a betrayal of Britain’s national interest. Importantly, they have called out the decision as a political choice, noting that other options were possible.

Cutting aid is not a hard choice; it’s a weak choice—and a counterproductive one. People who care about Australia’s defence and security should be making this point.

What Donald Trump can learn from allies on foreign aid

There are smarter and more effective ways to streamline and re-strategise US foreign aid.

The Trump administration is not the first Western government to envision a stronger, safer, and more prosperous country by integrating foreign aid with strategic objectives. The experiences of the United States’ Five Eyes partners, particularly Australia and Britain, offer encouraging evidence for reform, having achieved tightly targeted development programs supporting diplomatic and strategic priorities. They also offer sobering lessons about implementation pitfalls, including the abrupt disruption of established programs, especially those already aligned with strategic policy, loss of critical skills among government personnel and heightened unease among international partners.

The logic driving aid integration is compelling. In an era of great power competition, maintaining separate tracks for diplomacy and development is an unaffordable luxury. China has harnessed development, along with trade and financial investment, as an instrument of strategic influence through both soft and hard means. Both Australia and Britain recognised this reality, merging their aid agencies into their foreign ministries to create more strategically coherent development policies. Having made clear its intent to fundamentally reshape USAID, the Trump administration has the opportunity to learn from its allies in the pursuit of the American national interest.

A unified strategy: Australia 

The Australian government integrated the Australian Aid Agency (AusAID) with the Department of Foreign Affairs and Trade (DFAT) in 2013 with the stated goal of better aligning Australia’s development, foreign policy, trade priorities, strategies and objectives while bringing an enhanced focus on the Indo-Pacific. The integration accompanied a reduction of Australia’s development funding. After reaching a peak of more than $5 billion in 2013–14, or 0.33 percent of gross national income, Australia’s development budget has progressively declined. In 2023-24, the budget was $4.8 billion, or 0.19 percent of gross national income. This change is also stark in terms of the slice of the Australian budget spent on foreign aid compared to defence expenditures.

An independent review of the integration in 2019 found that 90 percent of the Australian government’s strategic targets for the integration had been met, driving development allocations towards infrastructure and the Pacific. The review also found ‘examples of development goals being more strongly advanced through joined-up, whole-of-department efforts.’

These initial efforts—such as the Pacific Seasonal Worker Scheme and the Australian Infrastructure Financing Facility for the Pacific—have since grown to enable more ambitious and innovative integrated development and strategic initiatives. Key among these are the Falepili Union with Tuvalu (which provides Australia with strategic denial rights and Tuvalu with climate resilience monies and opportunities for migration), the agreement between Australia and Papua New Guinea (which encompasses development and security elements) and Telstra’s acquisition of Digicel Pacific, the largest mobile provider in the Pacific, with the Australian government’s support amid rumors of interest from China Mobile. While the review stepped carefully around the issue, it found integration had increased Australia’s ability to counter efforts to overshadow Australia’s influence, like China’s Belt and Road and Digital Silk Road initiatives.

However, the review also found several areas of concern. Early morale problems among staff arising from the abrupt way the integration was implemented had largely dissipated by 2019, but a ‘pronounced deterioration in skills and systems’ remained. The review found that ‘almost 1000 years of experience left [government service] shortly after integration.’ Additionally, ‘estimates suggest another 1000 years of experience’ left the department in the five years before 2019 due to the department underestimating the capability needed to design and deliver development programming.

This loss of know-how continues to hamper effectiveness over a decade later. While development is now firmly accepted as a tool of statecraft, best wielded as part of a whole-of-government strategy, an article by the review’s author 15 months ago suggested DFAT still had room to improve in terms of fully harnessing its development delivery.

Strategic prioritisation: Britain

The merger between Britain’s Department for International Development and its Foreign and Commonwealth Office occurred in 2021. The principal intention behind the merger was to better align Britain’s development activities with its wider diplomatic, trade and geopolitical interests, both in strategic terms and in terms of in-country representation. The merger coincided with a decision to reduce the Britain’s development funding commitment from the 0.7 percent of GDP enshrined in law to 0.5 percent of GDP. Notably, the integration occurred while Britain was experiencing the economic slowdown of the Covid-19 pandemic, which resulted in a double blow to funding in absolute terms, constituting a 30 percent reduction overall.

Alongside the budget reductions, a strategic prioritisation of development initiatives was pursued, in which Britain focused on bilateral funding to a smaller group of countries where measurement of effect is often easier to determine, but at the expense of some wider bilateral and multilateral commitments which were deemed to deliver less tangible value to Britain.

In addition, Britain identified a select set of issues for its development focus, namely climate investments, girls’ education, and global health, where it had demonstrated expertise and where funding would have constructive spillover effects. For example, improving girls’ education is found to reap positive dividends for local security, prosperity and governance. These initiatives, concentrated in Africa, the Indo-Pacific and South Asia, are all areas in which Britain’s adversaries were harnessing development as an instrument of influence, dependence and coercion.

Britain’s National Audit Office (NAO) review of the progress of the merger in 2024 found positive evidence ‘of where a more integrated approach has improved the organisation’s ability to respond to international crises and events, which has led to a better result.’

Two such examples were Britain’s coherent humanitarian, diplomatic, and military response as the leading European power supporting Ukraine after Russia’s invasion, and the joint humanitarian and political response to the Ebola crisis in Uganda. The findings supported the rationale for the merger and the modernisation of the department as fit-for-purpose in sharpening the Britain’s geopolitical interests. However, the NAO also noted that ‘the indirect costs’ of the merger ‘in terms of disruption, diverted effort and the impact on staff morale should not be underestimated.’

The NAO also reviewed the effect of the overseas development aid reduction and found that while the prioritisation compelled in the government’s activities had some positive dividends, ‘the speed and scale of the budget reduction, and the lack of long-term planning certainty, increased some risks to value for money.’

What can the US learn?

These cautionary tales suggest some considerations for the Trump administration:

First, pace matters more than may be immediately apparent. While decisive action has its advantages, too rapid a transformation risks institutional damage that could take years to repair. Recipient partners need to be assured about the value of the relationship, as reputation matters when development partners have the luxury of choice. A phased integration that maintains critical expertise while gradually aligning strategic direction would likely prove more effective in the long term.

Second, capability preservation requires active management. Both Australia and Britain learned the hard way that development expertise isn’t quickly or easily replaced. The technical knowledge required for effective commissioning, procuring, financing and managing of development programs, while not unique to the aid world, is distinct from traditional diplomatic and geostrategic policy skills. Any US reforms must include concrete plans for retaining and developing each of these specialised capabilities and empowering them to work together to deliver coherent whole-of-government priorities.

Third, funding stability enables strategic coherence and builds influence with partners. Britain’s experience shows that simultaneous organisational and budgetary upheaval can undermine even well-conceived reforms. While efficiency gains are desirable, treating integration primarily as a cost-cutting exercise risks strategic self-harm. With strategic competitors snapping at our heels, such interruptions cannot always be remedied.

Fourth, clear metrics for success must encompass traditional development indicators and strategic effects. Australia’s focus on its immediate neighbourhood and Indo-Pacific infrastructure and Britain’s emphasis on areas of demonstrated expertise and reputational value offer useful models for linking foreign aid and development assistance to broader national interests.

The stakes for getting this change right are immense. China has outflanked the West in harnessing foreign aid as a strategic tool of statecraft, having learned from the experiences of Western development agencies. The US cannot afford to unilaterally disarm in this arena and sacrifice its many areas of retained advantage through poorly executed reforms.

Secretary of State Marco Rubio’s framework of strength, safety and prosperity provides useful guideposts. Development programs should demonstrably enhance US security partnerships, expand trade relationships that benefit US workers, or strengthen allies facing authoritarian pressure. Programs that cannot do this should be reconsidered.

Achieving these goals requires maintaining the US’s development capabilities even as they are more tightly aligned with strategic objectives. The experiences of Australia and Britain suggest this balance is achievable but demands careful attention to ensure areas of national strength and influence are strengthened, not squandered.

Australia helping to facilitate Africa’s ‘third liberation’

Life in Kigali, capital of Rwanda.

In my previous post, I reviewed the progressive book, Africa’s Third Liberation. Today I’ll discuss how Australia can help to bring about that liberation in partnership with African professionals.

The time for relations based purely on the aid donor—aid recipient paradigm has passed, and Australia and African countries must now work on building relations of cooperation and mutual benefit. The argument in Africa’s Third Liberation is that African populations are now involved in the struggle to be liberated from poverty and unemployment, and that success depends on the policies of African governments. The authors argue that governments need to create environments that support economic growth and enable business, investment and the growth of the private sector. Most importantly, there’s a need to end political systems based on patronage networks so that resources can be used to promote growth and development for entire nations. Read more

Aid and building maritime capacity

As a country that’s acutely aware of its own interests in the oceans around it, you’d think that Australia would be playing a leading role in ocean management and development in the wider region.

But in a new Policy Analysis out today, Sam Bateman and I point out that maritime assistance doesn’t figure prominently in our international aid. We think that there’s real potential for our aid policy to focus on oceans management and development.

While it would be a new direction for them in many ways, this would be a good strategic goal for AusAID and, at a time when the Australian Government is committed to raising its international aid spending, this is a good opportunity to launch some new initiatives. Read more