International Development Exodus: Who Pays the Price When the U.S. Pulls Out? discussion with Felix Gnehm

In this episode of DevelopmentAid Dialogues, host Hisham Allam confronted the seismic repercussions of the United States’ decision to slash USAID funding—a policy shift that destabilized the global aid sector and left vulnerable communities worldwide in peril. The cuts didn’t just trim budgets; they severed lifelines, strained alliances, and reshaped geopolitical power dynamics.Felix Gnehm, President of Alliance Sud and Director of Solidar Suisse, joined the discussion with stark warnings. A veteran of humanitarian crises—from post-earthquake recovery in Pakistan to U.N. policy advocacy—Gnehm minced no words:“This isn’t just a funding cut. It’s a massive blow to global cooperation. We haven’t seen such a brutal and honest disruption before.”The cuts immediately halted critical programs, from healthcare initiatives to election support projects. Gnehm cited canceled contracts totaling over $4 billion, including a $130 million healthcare project in Madagascar and a $40 million education program in the Philippines.“Sixty-four election-related projects in nations like Senegal were scrapped overnight,” he said. “We’re looking at a complete breakdown of critical services. Without intervention, millions will suffer, and instability will rise.”See also: US Aid Freeze: Immediate Effects of the Executive Order | DevelopmentAid DialoguesWhen asked whether other donors could fill the void, Gnehm dismissed the idea. Though the European Union and smaller donors had floated pledges, he argued:“This gap is billions of dollars, and you can’t just fill it. No nation can intervene overnight.” While he acknowledged a potential long-term opportunity to reform aid systems, he stressed, “The short-term consequences will be severe.”With the U.S. retreating, Gnehm noted that China, Russia, and Gulf states had swiftly expanded their influence through loans and infrastructure deals. But he questioned their motives:“These donors don’t ask people what they need. They just build roads, ports, and railways that serve their interests—not necessarily the people’s.”The shift, he warned, wasn’t benign:“This isn’t a replacement for democratic aid. It’s a step toward reinforcing authoritarian regimes.”Even as organizations scrambled to adapt, Gnehm expressed skepticism about private sector solutions.“We’ve been talking about private investment stepping in for 20 years. It hasn’t happened at the scale needed, and I don’t expect it to now,” he said.Philanthropic efforts, while helpful, lacked the reach to replace systemic funding losses.Gnehm closed with a blunt appeal:“Development aid isn’t charity—it’s stability insurance.” He urged policymakers to recognize the domino effect of cuts: “When aid disappears, we don’t just see suffering in distant countries. We see rising instability, refugee flows, and security threats everywhere.”The podcast is sponsored by DevelopmentAid. Procurement notices, funding and grants to opportunities, lists of potential partners, insights into market trends, databases of development professionals, webinars, latest news, and much more. Stay informed and connected. Subscribe and Stay Connected