Frozen funds: Why Europe will struggle to fill USAID gap

Joanna Gill, Reuters

The US administration’s 90-day foreign aid freeze has left a huge hole in funding worldwide for everything from HIV medicines to mosquito nets, but as calls go out for alternative donors to plug the gap, Europe is ill-placed to step up. Despite court rulings challenging the funding freeze, the fate of the US Agency for International Development remains in doubt as the administration reviews all projects to see if they align with President Donald Trump’s “America First” policy.

With activities from demining, to teaching, to preventing malaria suspended, the question is who can step up to secure the future of those programmes that do not fall under waivers granted by the Trump administration for life-saving projects. The European Union has been non-committal. “Everyone in the international community must shoulder their responsibility. The EU cannot fill this gap left by others,” a commission spokesperson said. NGOs say programmes on reproductive health, chronic diseases and psychosocial health are particularly at risk, as everything except emergency aid is paused. “It’s like going back to the 80s and 90s when we were coming with food trucks. That’s the risk that we will return to the bad practices of the past,” said Jean-Yves Terlinden, humanitarian director at Caritas Europa, a network of Catholic relief, development and social services organisations in Europe. The US contributed approximately 42% of global humanitarian aid in 2024, with the EU and Germany accounting for around 8% each, according to the United Nations.

But analysts agree that Europe cannot replace USAID funding at a time when governments grapple with economic slowdown and soaring energy prices linked to Russia’s war in Ukraine. Germany shaved $500 million from its aid funding from 2023 to 2024 as part of general belt tightening. The Netherlands said it would cut overseas development aid by more than two-thirds over three years and Belgian development cooperation funding will fall by a quarter under a new government formed this year.

This goes against UN targets for countries to spend 0.7% of their gross national income (GNI) on development assistance. Britain, which had previously met this target, announced cuts in 2021, and its overseas aid budget remains at 0.5% GNI.

These cuts have only been partially offset by increases in overseas aid from donors, such as Norway, which just signed $170 million in multi-year funding deals with Norwegian NGOs, providing support to vulnerable people in war and conflict.

“There is no filling the gap when we look at these figures,” said Maria Groenewald, director of VOICE, a network of European humanitarian NGOs, adding that NGOs would increasingly look to emerging donors such as the Arab states, Brazil or India. As other donors manoeuvre, the EU stands to lose out to countries like Russia and China when it comes to Africa, say analysts. “The EU has an interest when it comes to security, migration, global health challenges and not stepping up now will further threaten its interests,” Anita Käppeli, Europe policy outreach director at Washington-based think tank, the Center for Global Development, told the Thomson Reuters Foundation. Aid flows have also been affected by the sheer number of conflicts and climate change-linked disasters across the world.

In 2023, a record 311 million people were in need of humanitarian assistance, but the world’s wealthiest nations are committing less money to aid, meaning the U.N. will only be able to raise enough money to help 60% of those in need this year.

Even if there were the political will to step in, some analysts cautioned that Europe should use the opportunity to reassess the effectiveness of aid policies. Africa tops the list of regions receiving EU overseas aid between 2007 and 2023, followed by Europe and Asia. Since the 2022 Russian invasion of Ukraine, the EU has allocated more than 1 billion euros ($1.04 billion) in humanitarian aid to Ukraine, ranging from medical supplies to temporary shelters and energy equipment. It has also provided more than 1 billion euros in humanitarian support for Palestinians since 2023.

“The EU should not try to fill the gaps which they cannot fill, we have to reflect on what is good work and what is not going well,” said Dr Peter Hefele, policy director at the Wilfred Martens Centre, the European People’s party official think tank. Since 2021, the EU has pivoted towards development deals instead of development aid, such as the 300 billion euros ($313.80 billion) Global Gateway programme of investments in infrastructure, digital and climate projects to compete with China’s Belt and Road scheme, half of which is earmarked for Africa.

“The EU cannot match China for speed or scale of initiatives, and the danger is that you’re left with a cheap copy not matching your rivals’ offer,” said Käppeli, adding that the EU’s unique selling point is sharing its human rights values, and would result in a bigger return on investment when linking infrastructure projects with human development.