The EU's Development Policy in a Post-USAID World

By Petra Debusscher

Prof. Dr. Petra Debusscher is a professor with the Ghent Institute for International and European Studies (GIES). 

Donald Trump’s second term has torn up the development playbook, freezing US aid, hollowing out USAID and loosening the multilateral order. For the EU - still the world’s largest aid provider - this is both an opening and a danger: a chance to lead, and a temptation to turn development into leverage. This paper tracks how “geopolitical Europe” is reshaping NDICI–Global Europe and the 2028–34 budget talks, including the proposed removal of binding targets for climate, gender equality and human development in favour of “mainstreaming”. It asks whether the EU can square strategy with solidarity - under the pressures of the war in Ukraine and continued reliance on the US - while keeping its credibility intact.

Europe’s aid moment of truth

Donald Trump’s second term (2025–2029) has disrupted the global development landscape. The United States has frozen and cut foreign assistance, hollowed out USAID, and retreated from multilateral commitments. For the European Union - the world’s largest provider of official development assistance (ODA) - this is both a shock and a test: how to adjust to a tougher world without losing the values and partnerships that underpin its credibility.

But this recalibration is not just technocratic. It is happening at the same time as Europe’s own strategic “growing up”: Russia’s full-scale war against Ukraine has pushed security, energy resilience, and industrial capacity into the centre of EU politics. That war is also the elephant in the room for development finance: political attention and fiscal space are strained, and trade-offs are becoming impossible to hide. Moreover, despite talk of strategic autonomy, Europe remains deeply reliant on the United States for hard security and for sustaining Ukraine’s defence over time. In other words: Europe cannot simply walk away from transatlantic cooperation – it must tread carefully, but without rewarding coercion, as it decides what kind of power it wants to be.

This short paper argues that Europe’s response in a “post-USAID” world is twofold. On the one hand, Europe presents itself as a stable and values-based partner committed to sustainable development and human rights. On the other hand, EU aid is increasingly shaped by geopolitical priorities, including security, migration management, raw materials, and competitiveness. The core question is whether the EU can combine these agendas in a credible way, or whether strategic pressure will slowly hollow out its development priorities.

The stakes are not only reputational: they are about whether Europe can reinvent its external action for a harsher era without sacrificing the long-term, partnership-based logic that makes development cooperation more than “foreign policy spending.”

The end of the old bargain

Trump’s return to the White House in January 2025 marked a shift in the international development regime. An executive order signed on Trump’s first day back conditioned all U.S. aid on alignment with an “America First” agenda, initiating a 90-day review pause on foreign assistance programmes (Trump, 2025). Within months, the new administration froze most foreign assistance, dismantled the U.S. Agency for International Development (USAID), and pushed through a “Rescissions Act” that slashed roughly $9 billion (about €7.5 billion) in foreign aid (Trump, 2025).

By mid-2025, more than 80% of USAID programmes had been cancelled or reduced, effectively hollowing out the agency’s role (Unger & Friedman, 2025b). The impact was immediate: projects were abruptly halted, thousands of aid workers furloughed, contracts with NGOs and international organisations terminated, and the delivery of humanitarian and health assistance disrupted. For example, major cuts in bilateral programmes with several African countries undermined HIV prevention and treatment for millions of people within months (Unger, Friedman, & Ali, 2025).

Equally significant was the U.S. retreat from multilateral engagement. In early 2026, the White House announced plans to withdraw from 66 international organisations, mostly United Nations agencies (Sherriff, 2026). While some of these withdrawals were later adjusted or nuanced, the message was clear: the U.S. was stepping back from the post-1945 multilateral order it once championed. This “America First” stance extended to coercive diplomacy as well – by Trump’s second year, Washington was openly tying any remaining foreign assistance to political quid pro quos, demanding support for U.S. positions in exchange for aid. For instance, countries were pressured on issues from Taiwan to trade deals under threat of losing U.S. assistance (Trump, 2025).

This retrenchment rippled across an already strained donor landscape. Some European donors had cut ODA in the years prior (Unger & Friedman, 2025b). With the U.S. effectively stepping away – it provided 30% of global ODA as of 2024 – fears grew that the wider architecture of development cooperation could fray. The abrupt U.S. funding void in humanitarian aid (historically the largest humanitarian donor) left a sharp shortfall in global humanitarian financing, at the worst possible moment for communities hit by conflict, displacement, and extreme weather (Unger, Friedman & Ali, 2025).

For Europe, this shock coincides with another, older rupture: the war in Ukraine has already forced member states to spend politically and financially on defence, energy security, sanctions implementation, refugee reception and Ukraine support. That does not make development policy “secondary” – but it does make every additional euro contested. In this tighter environment, Europe’s external action is increasingly judged through a dual lens: does it express solidarity abroad, and does it also protect Europeans at home?

The deeper question is whether “geopolitical Europe” becomes a synonym for transactionalism, or whether it can become a form of values-backed power: principled, but not naïve.

The vacuum - and the powers moving in

Meanwhile, other powers have not waited to fill the space Washington is leaving behind. China has pushed its Global Development Initiative as a contribution to the UN’s 2030 Agenda, wrapping strategic investment in the language of the SDGs (Sherriff, 2026). The United Arab Emirates has launched its “XDGs to 2045”, positioning itself as a thought leader for a post-SDG world (Sherriff, 2026).

The point is not that these actors have suddenly become champions of multilateralism, but that they are legitimising their influence by invoking global norms even as they reshape them. As Sherriff (2026) observes, many emerging players view the turbulence and U.S. retreat “not solely as a threat, but as an opportunity” to reframe global cooperation on their terms. In effect, a new era of development competition is unfolding, where money, norms and influence travel together - and where Europe’s credibility depends on whether its rhetoric, resources, and practice still match.

Global Europe comes of age - in a harsher world

For the European Union, Trump’s second-term disruption arrived just as it was overhauling its own external financing instruments. The Neighbourhood, Development and International Cooperation Instrument (NDICI) – “Global Europe”, was created in 2021 to merge a patchwork of funds into a single instrument for 2021–2027, promising more flexibility and strategic coherence across regions (for the European Neighbourhood, Africa, Asia, Latin America and beyond). Even before 2025, there was a live debate about how strongly to tie external funds to Europe’s geopolitical agenda: should external finance primarily serve poverty reduction, human rights, and global public goods, or should it more explicitly deliver strategic returns on security, migration, raw materials, and competitiveness? In practice, the EU is trying to do both – but not without tension.

Two contrasting visions illustrate this internal schism. On one side are those who champion the EU’s traditional role as a values-driven donor, arguing that Europe’s influence rests on its credibility as a principled actor that does not explicitly tie aid to narrow interests. On the other side are proponents of a more realpolitik use of aid, often centred on Europe’s own strategic interests: financing security and defence capacities, stemming irregular migration, securing raw materials, and strengthening European economic ties abroad. These voices have grown louder as great-power competition heats up, contending that development policy must be an integral tool of Europe’s geopolitical strategy. This is precisely where Europe’s “soul-searching” sits: not in whether it has interests (it always has), but in how transparently and fairly it balances those interests against partnership commitments and global public goods.

The MFF fight: who controls the cash, and what it must “deliver”

This tension is now visible in the negotiations for the EU’s next Multiannual Financial Framework (MFF) for 2028–2034. In its July 2025 proposal, the Commission puts competitiveness, security and strategic autonomy at the centre of EU spending. It explicitly links internal and external investments, for example by pairing a new European Competitiveness Fund (to boost industry and innovation at home) with a reinforced Global Europe instrument to deepen external partnerships. The proposed Global Europe envelope, €200.3 billion for 2028–34, represents a 57% real-terms increase over the current period and stands out as a “bold move” in a context of shrinking global aid (Gianesello et al., 2025). EU officials frame this as a reaffirmation of Europe’s commitment to common goals and values – citing continued support for the Paris Climate Agreement and the SDGs, as well as emphases on climate, environment, gender equality and human development (European Commission, 2025).

Still, the Ukraine war hangs over these numbers. Even where Ukraine support is financed through distinct channels, the political reality is “one purse, many priorities”: defence, energy resilience, and Ukraine solidarity compete with long-term external partnerships for attention and fiscal room.

Yet behind this rhetoric, a more pragmatic shift is evident. In the new proposal, the Commission has removed all binding thematic targets for climate, environment, human development, and gender that existed under the NDICI. Instead of stipulating (as before) that a minimum percentage of funds must support these priorities, the Commission advocates “full mainstreaming” – integrating these themes across programmes without fixed earmarks (Gianesello et al., 2025). The logic is to maximise flexibility: Brussels wants to be able to move money quickly as crises or strategic priorities shift. However, critics worry that without clear targets, cross-cutting issues like gender equality or climate action could be quietly deprioritised when political winds change. This is the paradox of Europe “growing up”: a more strategic EU may be necessary, but a credible EU still needs guardrails to stop flexibility becoming drift.

The EU institutional dynamics reflect these pressures. In the Council, member states are split: some – notably France and certain Central European countries – want external spending to deliver clearer strategic returns: security, migration control, influence. Others, including the Nordics and Ireland, argue that Europe cannot drop its poverty reduction and human-rights mandate without paying a credibility prize. Everyone, however, wants more control over flexibility - over how funds are shifted between priorities, and who decides when crises justify reallocations, rather than leaving those choices mainly to the Commission (Jones, 2026). The Council’s compromise text signals a more transactional use of external action, with stronger links to EU competitiveness objectives and the Global Gateway agenda, and it proposes an indicative 10% benchmark for migration, without restoring comparable targets for gender equality or human development (Jones, 2026). That asymmetry is telling: when choices get hard, the priorities with the strongest domestic pull are the ones most explicitly shielded, while social objectives are expected to survive through “mainstreaming”.

Ukraine also quietly amplifies the “security-first” coalition: with Russia seen as an enduring threat, some capitals argue that the external budget must prioritise stabilisation and geopolitical leverage. The risk is that this logic becomes self-reinforcing, squeezing the very prevention-oriented spending (health systems, education, gender equality, climate adaptation) that reduces fragility over the long run.

The European Parliament meanwhile is positioning itself as a counterweight. In the BUDG co-rapporteurs’ draft interim report, it supports reinforcing Global Europe but warns that the proposed amounts still fall short of the EU’s ambitions, and it pushes for clearer budget lines, stronger transparency, and ring-fencing of humanitarian aid (Jones, 2026). In short: while the Council is increasingly treating Global Europe as a tool to deliver strategic returns (including on migration), the Parliament is positioning itself as the actor that will contest this ‘transactional turn’.

In that sense, today’s 2026 MFF negotiations are no longer mainly a sector-by-sector discussion (development here, defence there). They are increasingly a “one budget, many agendas” negotiation involving bargains between institutions and member states: who gets money overall, who controls it, and what each part of the budget must “deliver” politically.

The NDICI–Global Europe instrument is therefore an interesting test case: can it simultaneously serve Europe’s strategic interests and its partnership goals with the Global South? A robust external budget has been framed by the Commission as a strategic necessity for Europe. Defending it will require demonstrating “value for money” and results for EU citizens – convincing sceptics that external action is an investment in Europe’s own security and prosperity, not just charity (Jones & Di Ciommo, 2025).

Can the EU be geopolitical without losing its soul?

The EU’s development policy is moving in a more openly geopolitical direction. This shift may be unavoidable in a world of sharper rivalry and higher insecurity - but it is not neutral. It changes what is funded, how partnerships are framed, and which objectives are protected when trade-offs bite. As Veron (2025) argues, the EU must improve coherence between its values and interests – and between its rhetoric and on-the-ground actions – if it is to remain a credible partner.

Europe nevertheless has an opportunity to recalibrate. The real test will be whether it can fold climate, gender equality, and human development goals into a more strategic external policy, rather than sidelining them. With the proposed removal of dedicated targets under Global Europe, the burden shifts to institutions to prove – transparently, and with partner-country and civil-society scrutiny - that climate, equality and human development priorities are being delivered, not just declared. If Europe wants to be taken seriously as a partner, it cannot define success solely in Brussels.

Finally, the Ukraine war makes the balancing act sharper, not optional. Europe is being asked to do more externally at the very moment resources and political bandwidth are tight. And because the EU still depends on the US for key elements of hard security and for sustaining Ukraine’s defence, it must navigate Trump’s disruptive posture without severing transatlantic cooperation. If Europe manages that balancing act well - more autonomy, but not isolation combined with more strategy, but not a loss of soul - it can emerge as a more credible global actor in a post-USAID world.

References

European Commission (2025) Proposal for a Regulation of The European Parliament and of The Council Establishing Global Europe. COM(2025) 551 final. 16 July 2025.

Gianesello, S., Di Ciommo M., van der Meer K. and Desmidt, S. (2025) From ambition to uncertainty: Gender equality in the EU’s new Global Europe instrument ECDPM Commentary, 10 September 2025

Jones A. & Di Ciommo M. (2025) One budget, many agendas: Why the EU should connect the dots in the MFF talks ECDPM Commentary 29 October 2025

Jones A. (2026) What’s next for Global Europe in the 2026 MFF negotiations? ECDPM Commentary 14 January 2026

Trump, D. J. (2025). Reevaluating and realigning United States foreign aid. Executive Order. Jan, 20, 2025. The White House.

Sherriff, A. (2026, January 14). Europe and the post-2030 agenda: A call for action. ECDPM Commentary.

Unger N. & Friedman A. (2025a) A New Landscape for Development, CSIS Global Development Department Report, November 13, 2025.

Unger N. & Friedman A. (2025b) The Ground Has Shifted. CSIS Global Development Department Report, November 13, 2025.

Unger, N. Friedman A. & Ali H. (2025) Examining Impacts, Capabilities, and Opportunities. CSIS Global Development Department, November 13, 2025.

Veron, P. (2025, May 21). Perceptions of the EU’s international cooperation: Navigating troubled waters. ECDPM Paper.