In 2025, the YGLN formed four working groups exploring diplomatic, informational, military, and economic aspects of Euro-Atlantic security. This commentary is the result of the network-wide event and following discussions in the economic affairs working group.

Development aid is facing unprecedented challenges. Compounded by the fallout of Russia’s invasion of Ukraine, which redirected EU assistance toward migration management and conflict stabilisation, already declining aid flows were further disrupted in 2025 by the withdrawal and restructuring of USAID programs. This change is especially damaging due to the shock-and-awe nature of the cuts, which left no room to adapt and marks the end of an era of three decades of deepening engagement.

The scale of the financial fallout is also unprecedented: USAID alone disbursed 47% of all humanitarian aid worldwide in 2024. As USAID’s largest single recipient of aid since Russia’s invasion, Ukraine hosted over $6 billion worth of projects last year. Georgia was the largest recipient in the South Caucasus with over $110 million in 2024. In Moldova, USAID has had dozens of projects in energy, education, justice, and rural development, totalling up to $150 million in 2024. This sudden shortfall in support for long-term development and institution-building carries profound implications for governance, civil society, and geopolitical dynamics, with particularly clear effects in vulnerable states such as Georgia, Ukraine, and Moldova.

The Younger Generation Leadership Network’s Economy Working Group consulted with analysts and practitioners on the ground to gain a deeper understanding of their perspectives on the cessation of aid and their future outlook. Their insights revealed the human, institutional, and political consequences of the changing aid landscape, offering a sobering view of what may lie ahead.

The USAID retreat: a human and strategic loss

A former USAID official shared a deeply personal account of the agency’s abrupt transformation following a wave of executive orders in early 2025. Over 4,000 employees were placed on indefinite leave, and 1,600 were fired. The freeze on foreign aid programs disrupted critical health, education, and governance initiatives across more than 80 countries.

USAID’s role extended far beyond funding, which is a hardly quantifiable but critical factor. A practitioner, leading a large NGO, said, “It is disheartening that the global discussions are reducing USAID to just dollars and cents.” It was a stabilising force, a promoter of democratic norms, and a trusted partner in times of crisis. USAID’s sudden retreat has opened the door for other actors, most notably China and Russia, to expand their influence, often without the same commitment to transparency, human rights, or local empowerment.

A former USAID official highlighted how their organisation’s cooperative agreement, worth tens of millions of dollars with USAID, was abruptly terminated, leaving critical health and governance programs in limbo. The loss of USAID’s democratic influence has emboldened the Georgian government to pass laws restricting civil society, media freedom, and public assembly. In April 2025, Georgia’s parliament finally passed a law, after more than a year of protests and one presidential veto, labelling nongovernmental organisations as foreign agents if at least 20% of their funding stems from foreign sources. The law can effectively suffocate a significant part of Georgia’s civil society: a 2020 report by the Asian Development Bank estimates that more than 90% of Georgian civil society receives funding from abroad. Pro-democracy demonstrations and against the law have continued for over two years now.

USAID’s direct inclusion of US policymakers and its visibility in Washington were the distinguishing factors that helped civil society in recipient countries feel protected from excessive scrutiny by local authorities, creating an additional safety layer between them. EU organisations, even if nominally matching US contributions, may appear structurally weaker and less capable of acting quickly in crisis situations, opening the door for more repression.

EU aid: not enough to compensate for US retreat, but a crucial actor

While the EU and its member states have historically matched the United States in terms of development aid volumes, they now appear to be following the US lead in cutting aid as well. Budget constraints, shifting priorities, and the war in Ukraine have redirected resources toward defence and security, leaving less for traditional development assistance.

According to a recent OECD policy brief, for the first time in nearly 30 years, France, Germany, and the United Kingdom reduced their Official Development Assistance (ODA). Similar trends are seen in Germany, the Netherlands, and Belgium. The OECD projects a decline of 9% to 17% in total ODA in 2025, in addition to a 9% decrease in 2024. The aid gap from Europe, compounded by US cuts to the UN budget, is already leading to scaling back aid in Ukraine and drastic staff reductions. OCHA reports a 40% (y/y) drop in global aid in July 2025.

While financing development matters, optics are no less important. The EU’s approach, often criticised for being overly bureaucratic and top-down, is lacking the political assertiveness and strategic engagement that have characterised USAID’s work. However, signs of stronger assertiveness regarding EU aid funding have been visible in Ukraine as of July 2025. New financing was swiftly cancelled when the Ukrainian government introduced a law curtailing the independence of anti-corruption bodies.

The geopolitical vacuum: Russia and China step in

All of our interlocutors agree: the retreat of Western aid creates a dangerous vacuum. Russia, despite its negative image in many post-Soviet countries, may regain influence simply because there are fewer actors to counter it.

China, with its no-strings-attached funding model, is increasingly attractive to non-democratic governments seeking quick financial support, for example, for infrastructure development without political oversight. In 2024, the Georgian government selected a consortium led by a Chinese state-controlled entity to build a new $2 billion port on the Black Sea. Local think-tanks have already cautioned that the project could end up generating tremendous costs for Georgia if the Chinese push for revenue guarantees, as usual, and critical infrastructure falls into the hands of a foreign state.

This shift risks undermining democratic institutions, empowering authoritarian regimes, and increasing the vulnerability of marginalised communities. In Georgia, for example, foreign aid once helped mitigate extremist recruitment and promote inclusive development. Without it, disenfranchised populations may become more susceptible to radicalisation and exploitation.

The survival of democratic values does not stem solely from the presence of Western development aid funding. The most important agency is within the societies themselves that can counter Russian propaganda ahead of elections. A prime example is the recent elections in Moldova, where a pro-EU party won despite heavy Russian propaganda. In Moldova and throughout the region, the role of development aid funding is indirect yet crucial in supporting independent media. In the absence of credible metrics, many of the long-term consequences of development aid cuts will become apparent only when they are firmly entrenched.

Based on the insights from practitioners and researchers, the following recommendations aim to guide policymakers and aid organisations in navigating this critical juncture:

Reaffirm commitment to democratic aid
Aid should continue to support democratic institutions, civil society, and human rights, even in politically challenging environments. The path to stronger democratic institutions requires a long-term, continued commitment, but the process can already bring benefits in the form of stability. The US retreat in this leaves a vacuum for a beacon of democratic values in the region.
Strengthen the EU’s commitments
Given the popularity of development aid is falling in the European capitals and the EU’s understandable preoccupation with aiding Ukraine and re-arming itself, lessons from USAID’s model, such as deeper local engagement and conditionality, could enhance the EU’s impact even with less euros to spare for development aid. Development aid is a tool for enhancing security—a notion that can be lost in the current security environment, which favours hard power. This engagement should also be accompanied by intensified public diplomacy.
Monitor and counter authoritarian influence
Policymakers must track the influence of Russia and China in aid-receiving countries and help ensure that engagement aligns with local priorities and democratic norms.  This includes supporting independent media, education, and civic engagement. Additionally, more resources should be allocated to undertaking this work in the EU, with special attention given to aid transparency-oriented projects within member states.
Promote transparency and the use of credible and comparable metrics
The retreat of Western institutions severely deteriorates transparency. While Russia’s and China’s regional influence may increase, it will inevitably do so without a measurable trace. International organisations have traditionally provided widely accepted metrics, but their role now appears to be undermined as well. This should not be permitted to wither away.

The European Leadership Network itself as an institution holds no formal policy positions. The opinions articulated above represent the views of the authors rather than the European Leadership Network or its members. The ELN aims to encourage debates that will help develop Europe’s capacity to address the pressing foreign, defence, and security policy challenges of our time, to further its charitable purposes.

Image credit: Wikimedia Commons / National Police of Ukraine