The Rise and Ironic Fall of Aid
Western politics is in crisis because we have lost the knack of making ordinary voters better off. Many voters have endured 15 years or so of falling, or stagnant, living standards. The great irony is that while governments stumble on with many of the same failed policies at home, what they have cut has been one of the few policies that actually worked: overseas aid.
It’s at the very least an unfortunate coincidence of timing that we briefly got very good at making poorer people elsewhere a little less badly off just as we began to lose the art of doing that at home. Now Overseas Development Assistance (ODA) is being slashed as the West pivots to tend to its own domestic failures. What’s left seems destined to be repurposed for use in exactly the failed ways it was before ODA’s years of triumph.
Dam(med) if you do?
A genesis for ODA’s modern success was 1988. A UK Sec of State for Defence visited Malaysia. His actions at the time later led to a landslide change in British aid policy. He promised aid in return for Malaysia purchasing UK arms1.
It led to £234 million funding of the Pergau Dam by the Thatcher government, despite it being deemed an un-economic white elephant of a project by UK officials. Tim Lankester, the top foreign office development official at the time, refused to sign off on it. It finally went to the Prime Minister’s desk where Margaret Thatcher approved it.
The “arms for aid” affair was a huge scandal at the time. Its legacy, however, was a fundamental reset of British development policy. When Labour came to power in 1997, it set up a new separate department, DFID - the department for international development - so as to free development decisions from British trade and politics. The new approach was confirmed in the 2002 International Development Act that determined that aid was for the purpose of poverty reduction alone. And UK Governments - Labour and Tory - committed to 0.7 of GDP in annual ODA.
From the UK to the MDGs
Internationally, development spending tracked the British example. At the United Nations I and others under the leadership of Secretary-General, Kofi Annan, introduced the Millennium Development Goals (MDGs). They came on the heels of a civil society anti-poverty inspired debt relief campaign aimed at lessening the burden of earlier ‘aid for arms’ type deals. The U.S., employing aid to sustain its sphere of influence during the Cold War, was particularly culpable of allowing dictator allies to run up corrupt debts from the World Bank and others that then fell on the shoulders of their hapless citizens. Countries such as Zaire, later the DRC, and Indonesia were egregious examples.
The stage was set for a whole new era of development. The MDGs established at the start of the new millennium set stretch goals for poverty reduction over the period 1990-2015. The results were bracing.
The number of people living in extreme poverty fell from 1.9 billion in 1990 to 836 million in 2015. That met the global goal of halving the proportion of those living in extreme poverty (less than $1.25 per day). The number of children not in school dropped by almost 50% over a 10 year period. There was a 53% reduction in child mortality and a 45% drop in maternal mortality over the 25 year life of the MDGs. And there was dramatic improvement too in combating infectious disease.
None of this was easy. In my early years as head of the UN Development Programme (UNDP) , the sudden scourge of HIV/AIDS seemed likely to set back all health improvements - instead, infection rates dropped by 40% over a 13 year period and those on anti-retroviral treatment increased from 800,000 in 2003 to 13.6 million in 2014. That avoided some 7.5 million deaths. It took deep diplomatic and development engagement led by Kofi Annan but also involving President George W Bush and other leaders very directly; as well as their developing country counterparts such as Festus Mogae of Botswana, who died this month, Big Pharma, Foundations and civil society. It was tough and bare knuckled at times over issues of drug copyright and pricing but we got there together because there was the political will to do so.
The fifteen year period 1995-2010 was the most dramatic decade and a half in human history in terms of global progress for humanity’s poorest.
Progress was uneven. Geographically, as many have noted, China disproportionately drove these global numbers with its billion plus population. But there were substantial gains almost everywhere and while good national priorities counted for more in this success than ODA, the mutual reinforcement between good governance and aligned ODA, leading to real progress was exhilarating for a senior development official like myself. The sins of Pergau had an apparently happy legacy. A development atonement.
But there was still a long way to go. Poverty might have been down but income inequality was persistent. And new risks were gathering. Climate-related threats were endangering progress - natural disasters were on the rise, farmlands and cities alike were subject to weather threats that disproportionately hit those on the worst land - the poor. We had just begun the journey.
The Ghost of the Past
And today the shadow of Pergau is back. Progress has stalled and in some cases been thrown into sharp reverse. Last year ODA fell 23%, the largest annual fall on record. And what’s left is rapidly being redirected in many cases from altruistic poverty reduction to supporting donors’ national interests.
The US takes the prize for the crassest reversal. As an example it has proposed to Zambia a health compact - one of several dozen such national health programs it plans. The US would provide $1 billion over 5 years (less than half of what it was receiving before President Trump took office). In return, the US would get privileged access to Zambia’s critical minerals and to its citizens’ private health data. Zambia is understandably stalling. As a consequence the US has threatened to suspend its ongoing antiretroviral funding. Around 1.3 million Zambians are currently being treated on the US PEPFAR program. An internal State Dept memo argued:
“We will only secure our priorities by demonstrating willingness to publicly take support away from Zambia on a massive scale.”
“Any deal that is exchanging human lives for access to critical minerals is immoral,” said Jonas Chanda, the former Zambian health minister. © NYTimes
Or another example, the US looks set to reverse decades of improvements in how it deploys its own agricultural surpluses to address hunger, sustain American farm incomes but not undermine local farmers in Africa and elsewhere. The carefully crafted steps to balance these objectives are to be jettisoned as it becomes a simple bailout for midwestern farmers, a constituency that was losing faith in Trump as his tariff wars impacted their export markets.
Aid is rapidly being remade as a tool of foreign policy and commercial interests. How did this reversal come to pass? How was such a rare global public policy achievement that at the time seemed to enjoy the support of the left and right alike take such a fall? Like so much that has gone wrong recently Trump has got quite a lot to do with it.
Yet in truth, the reality is more complex than the early antics of Trump and his chainsaw waving accomplice, Elon Musk, when at the start of his second term USAID the world’s largest bilateral aid program was shuttered. On Feb 3 2025 Musk wrote on X: “we spent the weekend feeding USAID into the wood chipper. Could have gone to some great parties. Did that instead.”
No wonder this American pageant became the defining public moment in ODA’s global immolation. The US started with a bang, falling from $63 billion in 2024 to $29 billion in 2025 - a whopping 57% decline.
The Pinch
Aid’s fall elsewhere has been a quieter, less noticed affair. And the US Congress, including some Republicans, has actually sought to restore some of the cuts, meaning that as a percentage the UK, which has cut from 0.7% to 0.3% - cuts initiated by both a Tory and then a Labour Government - will ultimately have cut proportionately more than the US. And DFID got folded back into the Foreign Office. Pergau was back.
You would not know it from the sanctimonious tone of the UK Government, which even has the gall this week to be hosting an international conference on the future of ODA. In a very British way it expects to be still taken seriously even as its money dries up. And in truth it still has as great a concentration of development experience among its officials, think tanks, foundations and NGOs as any western capital. It’s just they are now in the wrong place. They should be in Nairobi or Jakarta, not London.
Across the EU, the cuts’ story is the same. Of the 17 EU states that are DAC members (the OECD’s ODA committee), cuts were nearly 10% and EU institutions nearly 14%. Further, a fifth of Europe’s ODA spending goes on meeting the domestic accommodation costs of illegal migrant flows - a disputed DAC-approved stretching of what counts as aid.
“With 28% of UK aid spent on hosting refugees, it is now the biggest recipient of its own aid.” - Gulrajani & Pudussery
France has come down by about half from President Macron’s high point of French aspirational leadership on ODA soft power. Germany, which aspired under Chancellor Merkel to be Europe’s leading player in Africa, has fallen back as have traditional ODA superpowers like Sweden and the Netherlands.
Yet from their publics and parliaments, barely a peep. The case made by governments has been that they are reluctant cutters compelled by tight public spending and increased defence spending as the world tips back towards conflict.
Their argument is of course not entirely wrong. In the post-1989 world, there was a post Cold War political dividend. A new generation of political leaders and voters did have the luxury of not having to weigh overseas public spending through the lens solely of national security interests. There was a rare moment of relative international harmony that allowed development ambition to take wing. An aspiration for global cooperation and solidarity to end poverty became mainstream.
In the 1990s and early 2000s, as a World Bank and then UN Development leader I got in the habit of researching public opinion data before visiting European ministers and parliaments. Aid had become good politics. Among younger voters it was often more of a determinant of voting intention than party affiliation. Elevated by the debt relief campaign and the MDGs, it became a significant national issue.
In 2005 as a UN official, I was asked to speak at both the Labour and Conservative party conferences. More glamorously Bono and friends had become the face of campaigning. Aid was cool from Glastonbury to Westminster.
Now, aid is not. Polling reveals exaggerated public estimates as to what was spent on aid but ever more a resentment that at a time of domestic spending cuts, money is still diverted to foreign causes. That resentment taps into a deeper vein in our contemporary politics, the insecurity - economic and cultural - of those in the old economy.
But nor are its tribulations donor centred alone. When Musk swung his chainsaw at USAID, there was not just silence in the North. There were not the sustained protests across the Global South that many might have expected - and this despite analyses from the Lancet and the highly regarded Center for Global Development (CGD) in Washington, that possibly millions of lives were at risk.
Partly perhaps Southern leaders, like their Northern counterparts, were reluctant to prompt Trump’s wrath. The Secretary of State Marco Rubio has brazenly and provocatively asserted that not single a life would be lost because of the cuts. And perhaps also too many ministers remain regrettably detached from their country’s frontline of needs. A rural health clinic or refugee camp cut off from vital medical resupply may not be top of mind for the minister in the distant capital.
The Second Decolonisation
But there is something else too. ODA, despite its authors’ good intentions and its success, had never escaped its history - not the Pergau history - but an earlier war of empire and colonies. It has been a prisoner of the DNA of its beginnings: support to countries largely under European colonial rule; a means in later years to prepare them for self-rule but nevertheless one that meant priorities and direction were set from a Western capital, too rarely their own.
Later this led to ever more detachment between real needs on the ground and donors with their changing menu of development priorities. Issues fell in and out of vogue: community development; microfinance; education; public health; the private sector; climate. Each important, indeed vital, but each needing consistent attention and prioritisation rather than the fits and starts of the changing donor agenda. A great benefit of the MDGs was that even though they may have shared the same colonial birthmark, in some respects they did allow a consistency of approach over a critical 15 year period. The successor SDGs are so all-encompassing, and adopting of so many priorities, that they provide no such useful discipline.
So from the crash and burn of the old ODA system, there may be a silver lining: an opportunity to build a new development finance system that is centred on developing countries themselves. A power shift, from the donor-created strategies of the past.
Some ODA will remain but it will need to be triaged: for humanitarian needs, which are sharply growing in a conflict and climate hit world; for fragile states that have no other financing choices; for some basic health and education programs; and for Global Public Goods where arresting climate change, for example, benefits us all directly and so merits shared funding. Hopefully, a narrower, more focused ODA will over time allow some rebuilding of donor public support.
But beyond that, developing countries are going to have to find ways of accessing Western financial markets and savings pools. A new financial tyranny for some but for others an emancipation from overbearing western aid officials.
And developing countries recovering control over its own development strategy may be a political win and in the long term a much more promising development path, for now, it will be expensive, unaffordable in many cases, and risks building up unmanageable debt all at a time when fuel and fertiliser prices are soaring. Countries are going to be thrown back on growing their own tax revenues, international public borrowing, some of it at concessional rates from development banks, and private investment. It will be a cold new world for many developing countries. The giddy progress of the MDG years is not coming back anytime soon.
To borrow an old phrase: ODA is the baby that has been thrown out with the bath water. It needed reform, not evisceration. But in today’s age of political demons nothing is safe - least of all the rare public policy that actually produced results.
Best,
Mark
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With assistance from Eilis Klein
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More:
Make fun of Musk corner: Jon Oliver on Twitter
For more on the rise and fall of DFID, read Mark Lowcock and Ranil Dissanayake’s book
From Masood Ahmed, one of DFID’s finest, and colleagues: https://www.cgdev.org/publication/clear-vision-official-development-assistance-purpose-principles-and-priorities
For more on a new development financing system: https://www.bwi80.org/
The second episode of World’s Toughest Job is out now
Important read from the New York Times on a reporting trip in Somalia.
On my weekend watch list: Dr Comfort Ero’s remarks (starting around min 42) at Georgetown’s Walsh School of Foreign Service Graduate Commencement:
This Substack draws on a lecture I gave at the LSE on May 11th sponsored by the Marshall Institute and the School of Public Policy