The United States aid freeze continues to bite, and the questions are piling up. This week we offer some possible answers.
Could the US pull out of the World Bank?
With Moody’s, S&P, and Fitch all warning that the World Bank’s AAA rating could be at risk should the U.S. withdraw its support, Devex’s Jesse Chase-Lubitz has taken a closer look at how likely that is and how it might work.
Legal and development experts say a withdrawal or dilution would not be in America’s best interest, with China ready to swoop should the U.S. move to sell its shares. But if the Trump administration did go ahead and follow the idea espoused by the conservative manifesto Project 2025 to “terminate its financial contribution” to the bank, then what happens?
“It’s so unclear the extent to which [the U.S.] Congress needs to be involved in this or not,” Clemence Landers, vice president and senior policy fellow at the Center for Global Development, tells Jesse. “That’s the game-changing thing.” And if Congress has to approve it, “there’s no chance this could happen,” Landers adds.
Legal expert Jan Klabbers says that since the bank’s founding articles require approval from the U.S. Senate, then “logic would suggest” that the same applies to any withdrawal decision.
Oh, and as if the stakes weren’t high enough, Jesse notes that the World Bank treaty states that the offices of the bank must be in the country that contributes the most (i.e. currently the U.S.).
Were Trump to withdraw, experts say, the headquarters could shift and thousands of people could lose their right to work.
Read: Could the US pull out of the World Bank? Unlikely — but not impossible
How can NGOs respond?
This one could ruffle some feathers.
The USAID freeze may be the wake-up call the NGO sector needs to speed up the path it was arguably already on, argues Lukasz Bochenek, deputy CEO of the communication consultancy Leidar, in an opinion piece for Devex.
With donor funding down, development agencies increasingly requiring closer alignment between their own priorities and how aid money is used, and high spending on executive-level salaries and administrative overheads no longer acceptable, “NGOs need to start operating more like commercial businesses,” Bochenek writes.
“Make it simple for donors to understand what they will get for their money, as with any investment or purchase. Put a value on the impact, and show exactly what that value is and how it is being delivered. Package the programs and work as products and services, with price and the expected results.”
Opinion: NGOs need to start operating more like commercial businesses
Can philanthropy fill the gap?
Short answer: No. In 2023, USAID spent $40 billion across 130 countries, Lauren Evans reports for Devex.
“There’s no way private philanthropy can fill the USAID funding gap,” says Gillian Caldwell, a consultant who advises foundations and nonprofits and who until December served as the chief climate officer and a deputy assistant administrator at USAID.
Caldwell said that after U.S. President Donald Trump’s executive order last month, there were early discussions about what she referred to as a “nerve center” — a small, central hub likely housed within an existing organization, where foundations could mobilize communications responses, liaise with Congress, and support litigation. But it’s not clear that the idea ever came together.
Instead, the hope is that philanthropies such as the Rockefeller Foundation can provide more long-term grants, as well as catalytic funding to support blended finance deals.
As Solange Baptiste, executive director of ITPC Global, which advocates for affordable health care in South Africa, puts it: “what we ultimately need is a new system that works for the majority world.”
Read: US foreign aid has collapsed. How should philanthropy respond? (Pro)
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What’s next?
Speaking of a new system, it’s fair to say today’s ructions are creating headaches for the organizers of two upcoming conferences. We’ve written a lot in recent weeks about the Financing for Development summit in Spain in late June. But there is another gathering kicking off in South Africa on Feb. 26 that will also be trying to find a way forward for development finance.
Finance in Common is the brainchild of Rémy Rioux, chief of the French Development Agency, designed as a way to get the world’s hundreds of public development banks working toward the U.N. Sustainable Development Goals.
We’ve followed the summit since its inception in 2020 as it has grown with stops in Côte d'Ivoire in 2022, Colombia in 2023, and now Cape Town.
Devex’s Adva Saldinger will be on the ground covering it for us. Drop her a line at adva.saldinger@devex.com if you’ll be making the trip.
Listening post
As the lawsuits begin pushing back at the Trump administration’s attempt to dismantle U.S. foreign aid, we are staying on top of this unprecedented period in global development. Catch up with the latest episode of our This Week in Global Development podcast, where our reporters and editors break down the latest news.
“[Diversity, equity, and inclusion] are written into the DNA of the United Nations. Is diversity inherently a bad thing?” asks Devex Senior Global Reporter Colum Lynch. “A lot of the concerns that the Americans have, they are quite vague, and [the administration has] an interpretation of any of those words being used as kind of suspect.”
But, as Colum points out: “The Americans have enormous financial leverage. They can break the system if they want to. And so people may have to make compromises that they normally wouldn’t make.”
Listen: Can lawsuits save US foreign aid?
+ Today at 12 p.m. ET (6 p.m. CET) we’ll host a Devex Pro briefing with Robert Nichols, a lawyer involved in the legal fightback for USAID funding, to understand more about what’s going on. Can’t attend live? Register anyway, submit your questions, and we’ll send you a recording.
Parsing procurement
We’ve written plenty about the European Investment Bank’s struggles with procurement — from former boss Werner Hoyer’s call for the European Union to lose its naiveté on Chinese firms winning EU-financed work to the European Commission stopping EIB from pursuing a digital infrastructure project abroad due to concerns over who would ultimately get the tender.
So we noted with interest a recent LinkedIn post detailing a new procurement initiative for the bank, dubbed “Strategic Procurement.”
Approved in December 2024, the idea is to allow project promoters to introduce considerations like sustainability, climate, innovation, and circular economy, a bank spokesperson tells us by email. That’s opposed to traditional procurement focused on economy, efficiency, and open international competition.
“For example this might include awarding additional points for bids that offer reducing CO2 emissions during construction, using alternative eco fuels, reducing water, fuel, electricity consumption, or waste generation,” the spokesperson writes. “The initiative is not mandatory but provides a framework and guidelines to support non-EU promoters in further raising the project quality and sustainability by adopting best practices and achieving best overall value for money."
So — our favorite question — can we see this new framework/guidelines? Not yet, the answer came back. Plus ça change.
Background reading: How Brussels runs interference on China
In other news
Trump advisers look to shift U.S. foreign aid to Wall Street ally. [Bloomberg]
World Health Organization chief eyes idea of a $50 billion endowment fund to plug resource gaps. [Devex]
Munich diary: The latest from the jam-packed security conference. [Devex]
The United Nations official pushing to unite biodiversity and climate goals. [Devex]
About the author
Vince Chadwickvchadw
Vince Chadwick is a contributing reporter at Devex. A law graduate from Melbourne, Australia, he was social affairs reporter for The Age newspaper, before covering breaking news, the arts, and public policy across Europe, including as a reporter and editor at POLITICO Europe. He was long-listed for International Journalist of the Year at the 2023 One World Media Awards.
