The impact of US foreign aid cuts on the Arab world

Since US President Donald Trump returned to office in January, his administration has implemented a series of policies with significant implications for the Middle East and North Africa region. One of the most controversial moves was a drastic cut in foreign aid. This included a reduction of 90 percent in the US Agency for International Development’s foreign aid contracts and an overall reduction of $60 billion in US assistance worldwide. Since the announcement, the State Department and USAID have ended almost 10,000 foreign aid grants and contracts.

With a support base that is broadly isolationist and of the view that federal money is better invested domestically, the US administration has been keen to make this policy a focus of its first 100 days. However, this move has triggered concerns in many MENA countries, some of which rely heavily on American aid to sustain their economic development, security and humanitarian assistance.

For decades, USAID has been fundamental to US foreign assistance, funding vital programs worldwide. Between 2014 and 2024, the agency gave out $314.3 billion of a total of $635.2 billion in US foreign aid. In fiscal year 2023 alone, the US government allocated $71.9 billion for foreign assistance, supporting a wide range of initiatives, including humanitarian assistance, economic development and democracy promotion.

The Arab world has been one of the largest beneficiaries of US aid. In 2023, Jordan and Egypt were the fourth and fifth-largest recipients, respectively. Jordan received $1.6 billion and Egypt received $1.5 billion.

The fallout from the US’ foreign aid cuts is already hitting hard. UN Secretary-General Antonio Guterres warned that “the consequences will be especially devastating for vulnerable people around the world.” In Lebanon, UNICEF has been forced to scale back or suspend crucial programs, worsening an already severe food crisis, with more than half of children under the age of two in the country’s east now facing extreme food poverty. Meanwhile, in conflict zones like Sudan and Nigeria, at least 2 million people have been cut off from essential services due to funding reductions.

The ripple effect extends across multiple humanitarian sectors. Organizations that are highly dependent on Washington aid and which provide lifesaving healthcare and humanitarian assistance are now scrambling to ensure stable funding. The International Rescue Committee revealed that it has lost 46 grants from USAID and the State Department. This loss directly affects aid operations in vulnerable areas such as Sudan, Yemen and Myanmar, where millions are already suffering from war, famine and displacement.

Beyond the immediate humanitarian crisis, Washington’s decision will force countries with incredibly precarious socioeconomic models to reassess their economic policies, given the specter of a further cut in US aid.

This shift provides an opportunity for Amman to adapt its economic and diplomatic strategies by reducing its dependence on foreign aid, while maintaining its status as one of the most stable countries in the region.

Egypt is looking beyond US aid to build new economic partnerships with China and the Gulf states.

Washington’s decision will force countries with incredibly precarious socioeconomic models to reassess their economic policies.

Zaid M. Belbagi

Whether Jordan, Egypt or Syria can transition toward a more sustainable economic model that is not reliant on US foreign aid is a pressing question. Fostering stronger ties with Gulf countries, which have been major contributors in terms of financial assistance, is not a long-term solution. The Gulf states are asserting themselves in foreign aid and regional affairs but they cannot finance their neighbors without end.

Yet, in the midst of this crisis lies an opportunity. The US’ recent move poses a significant challenge for the Arab world’s flailing economies, but it may compel these states to end their reliance on American aid, making it a turning point in the region’s economic history. In recent years the Arab world has made efforts to seek economic and political diversification, with the expansion of its partnerships with China, Russia, India and South Korea. For example, Beijing’s Belt and Road Initiative has already expanded its footprint across the region, offering infrastructure investment and economic opportunities. Russia, too, has deepened its security and energy partnerships with the Middle East.

To successfully navigate this transition away from American aid, the Arab world will need to ensure that it does not switch to another source of aid, but rather uses international support to build domestic manufacturing capabilities and enhance regional economic integration.

• Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the Gulf Cooperation Council. X: @Moulay_Zaid