How US aid cuts hurt migrant and refugee programs

The unraveling of USAID is set to affect programs that focus on migration and displacement in regions close to the United States, such as Latin America, and farther afield in places such as East Africa. This loss of funding will affect governments’ tools to manage migration in ways that cannot be easily reversed, experts told Devex. The Washington, D.C.-based think tank Migration Policy Institute, or MPI, has estimated that the funding cuts to programs focused on these issues could cost $2.3 billion. Of this funding cut, $200 million was earmarked to deter irregular migration from Central America — which could hurt U.S. interests in the long run as it ends funding meant to help would-be migrants continue living where they are, according to MPI’s analysis of leaked documents shared with Congress. “They are truly global,” Lawrence Huang, policy analyst at MPI, told Devex, referring to the geographies that could be affected. The funding cuts “hit every region of the world, and there isn't a sense that they targeted … when it comes to the migration program, one particular region over another.” This funding went to a range of initiatives. Among them were USAID programs that provided technical and job skills, psychosocial support, violence prevention, educational opportunities and scholarships, according to the MPI analysis. They were meant to provide alternatives to irregular migration. While United Nations agencies were the largest beneficiaries of this funding, a range of civil society organizations such as Oxfam, Caritas, and the International Rescue Committee were also affected, Huang said. The cuts have deeply affected the United Nations’ International Organization for Migration, and even threaten programs that facilitate the return of migrants to their home countries, such as Guatemala. IOM has reported 30% less donor support for 2025, including a significant decrease in projects funded by the United States. “U.S. funding cuts to IOM have forced the suspension of critical humanitarian programs worldwide, leaving vulnerable populations without lifesaving assistance. These cuts have disrupted essential services, including water, sanitation, hygiene, and shelter, in some of the world’s most fragile regions,” an IOM spokesperson told Devex via email. Other countries also appear to be following the United States’ lead. European donors such as France, Germany, Sweden, and Finland are also reducing their foreign aid budgets, which is likely to reduce aid earmarked for migrants, according to MPI. 3 potential scenarios The MPI study lays out three potential scenarios. The first is that the funding void left by the U.S. remains and other donors follow suit, leading to a global withdrawal of foreign aid. The second is that other donors would step up their funding to fill the gap, and the third is that a more efficient foreign aid model would emerge over time. In the first scenario, the costs would be immense, and displacement and instability would be amplified, MPI found. Huang said that the first and the third scenarios are “very much on the table” — but currently, it was the second scenario that appears to be underway. “The second scenario is what we call temporary stop gaps, and we are seeing this, for example, with Norway stepping up their humanitarian assistance specifically to help address some of the need left by the U.S. withdrawal, and it's quite possible that that continues with others, especially European donors,” he said. But this scenario is not sustainable, as it does not address the fundamental drivers of displacement, such as conflict or climate change, he said. And this could also mean a rise in migration in the future. Cuts likely to push up irregular migration People move around for a host of reasons — for work, to escape political turmoil or conflicts, or in the aftermath of natural disasters. International migrants constitute around 3.7% of the world’s population, according to the United Nations. In 2024, there were 304 million international migrants — including both legal migrants, who travel with visas or work permits, and irregular migrants, who do not possess the legal documents required for their destinations. Then there are those that are displaced within their countries’ borders. In 2024, their count stood at 72.1 million. “There is a trend in the last decades towards really putting more money and more attention in securitizing borders and closing to stop so-called irregular migration, and illegal migration. So the lack of alternative ways for people to legally travel, such as through resettlement programs, will likely increase this illegal migration if there are no other ways,” Nina Khamsy, anthropologist at the NCCR – on the move program of the University of Neuchâtel in Switzerland, told Devex. At the same time, she pointed out that humanitarian and development aid never truly managed to stop migration. “Aid is helpful when people are stuck at borders,” she said. “But ultimately, keeping people in camps is never the answer.” While the USAID funding cut can undermine the world’s ability to meet the needs of migrants, it was always a short-term solution, Khamsy said. In the long term, what is often most effective is a political solution. Along with the drop in foreign aid funding, many countries in Europe are shifting their focus from meeting migrants’ humanitarian needs to reducing irregular migration. They are also working with countries of origin and transit to accept the return of their nationals when they’re deported. Those affected by the aid cuts are pushing back. In March, refugees protested and clashed with security forces in Kenya’s Kakuma refugee camp after the World Food Programme cut its food rations. The program receives half of its funding from the U.S. — and cutting food rations was a direct result of U.S. aid cuts. Ecuador has halted its planned regularization campaign for migrants from Venezuela, citing the withdrawal of U.S. foreign aid. The climate change stressor All of this cut in aid is coming at a time when climate change is worsening extreme weather events and causing economic instability. Migration and displacement is expected to rise as agricultural yields decline, fish catch reduces due to warming oceans, and potable water becomes scarce. While “climate migrants” are not yet a well-defined category, the signs are clear across the world that environmental factors already play a role in forcing people out of their homes. By 2050, scientists estimate that climate change would force 143 million people in the global south to move — both internally and internationally, according to an article published in the science journal Nature. Most people who are forcibly displaced are living in countries that are already climate-vulnerable, according to the UN Refugee Agency. And so, Khamsy is leaning toward the need for the world to come up with a more efficient system that can deal with the challenges — rather than return to the one long in place. “The aid was also somehow putting a plaster on the big wound,” she said, adding that aid only addresses immediate needs without tackling the structural issues at play. And in the long term, it might even lead to containment and encampment of refugees. Khamsy also said that if the U.S. withdraws or shifts its engagement, other international and local players may step in, “but with potentially different agendas and outcomes, and it remains uncertain how these dynamics will unfold.” This might also lead to local players stepping in with more direct engagement with those in need and these players might be less reliant on heavy and costly bureaucracies that come with external donors. Huang for now has tempered MPI’s analysis with caution as the situation continues to change and evolve: “These are not final lists of cuts. We know that cuts are ongoing, and we also know that some terminated awards have been unterminated, and that some awards that have not been terminated are not being paid out.”