New Zealand Aid and Development Dialogues

Hello and welcome to an NZADDs update,

If you’re like me, you will be desperately be trying not to think about Donald Trump. However, his aid cuts make this unavoidable.

In the blog post below, which will be published on Devpolicy this afternoon, I discuss what the cuts will mean for the Pacific. If you want other analysis, my Development Policy Centre colleague Cam Hill has a good overview (plus a follow-up in his Aid News). The Centre for Global Development is providing very insightful and timely updates. Canada’s McLeod Group has an astute take. And political scientist Ken Opalo has great analysis on what the Trump decision will mean for African countries.

Before we get to what the Trump decision will mean for the Pacific, there’s the matter of Winston and Kiribati. Radio NZ has background as does Islands Business magazine, I-Kiribati MP Ruth Kwansing provides an interesting take, while Barbara Dreaver, who is of I-Kiribati heritage, provides a powerful response. I offered my two-cents on Radio NZ; One point I that missed is that Kiribati is an example of a small Pacific state with a government overwhelmed by the number of aid officials visiting each year. That doesn’t necessarily excuse the behaviour of their Prime Minister, but it has likely contributed to the way their government is behaving now it has the leverage of being able to play two blocs of competing donors off against each other.

On administrative matters, Mail Chimp, which I use for these emails is becoming costly and clunky. I may try moving to Sub-Stack. The only difference you will notice is that these infrequent emails will come from a different URL.

Now, sigh, onto Trump and the Pacific:

Although the Trump administration is now attempting to walk back some of the most obviously murderous aspects of its aid freeze, its ramifications remain: the damage already done, the effects on work still covered by the freeze, the apparent demise of USAID, the sheer capriciousness of the decision. (To make matters worse, supposed humanitarian exemptions to the aid freeze are not working.)

While impacts on other parts of the world have dominated the headlines, the decision is going to be felt in the Pacific too. The region is the world’s most aid dependent. It’s countries are, for the most part, either tiny and remote, or large and politically unstable. Malaria, HIV, dengue fever and tuberculosis are major problems in several countries. Most Pacific countries are highly vulnerable to the effects of climate change and natural disasters.

Regionwide, the United-States is not nearly as large a donor as Australia, but as the figure below, based on Lowy Institute data shows, it gave more to the region than China did over the five most recent years with data for both countries.

Major aid donors in the Pacific (2018-22)

US aid is not equally spread out within the Pacific. As can be seen in the next chart (based on OECD reporting for the five most recent years with data), the bulk of US aid to the Pacific goes to Micronesia, and in particular the so-called Compact States: FSM, the Marshall Islands and Palau.

Share of US aid to different parts of the Pacific (2019-23)

As my colleague Cam Hill has reported, there is considerable confusion as to whether aid to the Compact States is covered by Trump’s executive order to freeze US aid. Legally, it seems as if the compact states should be excluded from the freeze, but in practice it appears as if impacts are being felt.

A cessation of most US aid would be disastrous for the Compact States, but that’s not the end of the story. In recent years the United States has provided more than US$13 million dollars in disaster preparedness work to countries such as Papua New Guinea, Solomon Islands, Vanuatu and Tonga. It has provided nearly US$20 million dollars in HIV assistance to Papua New Guinea and Fiji. (Some of this was PEPFAR funding, which has supposedly been declared exempt from the funding freeze. However, the majority of funding does not appear to have come via PEPFAR). It has provided nearly US$12 million for biodiversity work in Papua New Guinea. It has helped with unexploded ordnance work in Solomon Islands (the ordnance in question being left over from World War 2 and a perennial problem.)

There will be other flow-on effects too: the US is the largest contributor to the World Bank’s International Development Organisation (the Bank’s main concessional loan and grant body). And the World Bank is the third largest aid donor in the Pacific. The US has also, historically, been the second largest donor to the Asian Development Bank and the ADB is a major donor in the Pacific the first chart above shows. It would be unprecedented for the United States to renege on existing funding commitments to these multilateral development institutions, but precedent counts for little at present.

Other US decisions about multilateral organisations will also be felt through the Pacific. The United States was the World’s largest contributor to the World Health Organisation in 2024-25. The Trump administration has just pulled out of the WHO, which will have a massive impact on funding. As Samoa’s prime minister Fiame Naomi Mataʻafa has pointed out the impacts of falling WHO funding will be felt in the Pacific too.

To make matters worse, if other donors attempt to fill aid gaps caused by what the United States is doing elsewhere, they might potentially cut their aid to the Pacific.

In a purely quantitative sense, not all Pacific countries will be that badly affected directly by the US aid freeze. But the flow-on effects of what is happening in the United States – the World’s largest aid donor – will reach the Pacific one way or another.

It’s easy to feel helpless watching as the United States right now. It is worth remembering though, that Australia and New Zealand (the largest and third largest bilateral aid donors to the Pacific), can help. We could quite easily increase our aid budgets and focus these increases on helping Pacific countries cope with the current American trainwreck. We will need to help for other reasons too: the government of the world’s most powerful country is in complete denial when it comes to climate change, which will increase the need for our assistance even more.

Australia and New Zealand often talk the talk about being good neighbours to the region. In coming years, as another of the region’s neighbours goes rogue, we are – more than ever before – going to have to walk the walk.

Terence (NZADDs admin)