Impact of US foreign aid cut in Asia to be minimal

Bangkok Post

a day ago

The freeze and subsequent reduction of US foreign aid for democracy promotion in Asia, following the Executive Order signed on Jan 20, had a broadly limited impact.
At first, the funding freeze sparked major concerns about the future of civil society and democratic development in the region.
But a closer look reveals that the real issue is not the absence of US aid, but rather the uncomfortable reality that much of that aid may not have been effective in the first place.
After all, the state of democracy and human rights in Asia has remained poor and, in many places, has continued to decline despite years of international funding. For instance, according to a 2024 report by The International Institute for Democracy and Electoral Assistance -- a Stockholm-based intergovernmental organization that supports democracy worldwide -- 51% of countries in the Asia-Pacific region from 2018-2023, experienced a decline in their democratic systems, while only 26% saw improvements.
In 2023, US democracy promotion made up just 3.2% of total US foreign aid, or around US$2 billion (65 billion baht), according to recent data collected by Pew Research Center. The vast majority of the aid is directed towards foreign governments to support their national peace processes, or health, education, and humanitarian programmes.
Even within that small democracy slice, most funding does not reach local actors. Instead, it flows first to US-based (and then other Western) international NGOs (INGOs) and large foreign intermediaries.
According to the report by the Stimson Center released in 2023, these groups absorbed around 90% of the direct budget, with only a fraction trickling down to local civil society organisations (CSOs). The result is a top-heavy model, in terms of budget, mandate, agenda, and selection of beneficiaries that often sidelines the very communities the aid is meant to empower.
Many past democracy initiatives, while well-funded, were symbolic at best -- driven more by optics than outcomes. Large-scale democracy convenings, for instance, often bring together the same groups and personalities for repetitive networking and the exchange of familiar narratives, rather than fostering genuinely new strategies or alliances. The suspension of these activities thus has not dramatically shifted realities on the ground because their presence did not either.
So, what does this tell us about the current state of democracy and human rights in Asia?
In the short term, yes, there has been a noticeable decline in externally funded democracy activities. But has this led to a further deterioration in freedoms and rights? Not necessarily. These freedoms were already in decline, even with US support and ongoing support from other governments.
Amid the unfavorable trend, the financial aid suspension has triggered a crisis for organisations dependent on US aid, nevertheless.
First and foremost, as far as US foreign aid is concerned, especially for democracy promotion, presently, there is a cautious wait-and-see approach all around, with many actors -- including INGOs and CSOs -- holding back until there is greater clarity on the direction of US foreign policy and budget commitments.
Against this backdrop, several immediate consequences can be observed. For instance, INGOs heavily reliant on US funding initially paused their activities and contracts with local CSO partners, before furloughing or laying off staff, scaling back operations, and closing local offices. Many are now seeking alternative funding sources while also waiting to see whether and how US foreign aid might be reinstated.
At the local level, US funding-reliant CSOs' activities and services have been slashed. In some cases, staff have been laid off, and operations have either been closed or passed. Even though local CSOs are pivoting towards alternative sources of funding, the ripple effects have been, and will continue to be, painful.
On the other hand, INGOs and local CSOs that were never overly reliant on US aid have fared better. INGOs with European and other sources of non-US funding have been able to continue their work uninterrupted, consolidating their position, strengthening local networks, and deepening community engagement.
Yet, there are also longer-term consequences to consider. With the aid cut, the future of democracy and human rights in Asia will be shaped less by foreign assistance and more by local legitimacy and grassroots support.
As foreign‑funded programmes come under increasing scrutiny -- especially under newly enforced "foreign interference" laws -- the argument for locally driven activism becomes not just preferable, but absolutely essential as conventional donor models are structurally flawed: aid routinely reaches only a narrow set of intermediaries, leaving genuine grassroots movements excluded.
An alternative is to build a network of community-led groups, equipping them with governance and financial management skills, and enabling them to implement their projects, bypassing large foreign intermediaries. Such models can empower local organisations through direct funding and capacity building, yielding more sustainable and context-sensitive democratic change.
Ultimately, the fate of democracy in Asia will not be decided in Washington, DC. It will be shaped in Bangkok, Dhaka, Jakarta, and beyond -- by the strength, resilience, and ingenuity of local and regional actors. If donors are serious about democracy, they need to pivot towards direct, flexible, locally anchored funding models that bolster community‑led efforts instead of replacing them.
In this new scenario, foreign aid can play a supporting role, but only if it reinforces rather than replaces local and regional leadership. This principle underscores the need for a new kind of donor engagement -- one that prioritises equitable partnerships, respects local agency, and aligns with the priorities identified by affected communities. Funding strategies must move away from top-down, prescriptive models and towards a more collaborative, flexible framework that enables local CSOs to lead, innovate, and sustain change on their terms.
So, has US aid made a difference? The short answer is yes. However, its most lasting impact may not lie in the programmes it funded, but in the wake-up call it delivered -- a reminder that democracy cannot be outsourced. It must be built from within.