The Potential Geopolitical and Security Ramifications of the USAID Shutdown / Global Guardian's Risk Barometer (March 2025)

The Potential Geopolitical and Security Ramifications of the USAID Shutdown

On 26 February, the White House announced plans to cut over 90% of USAID contracts. This followed the 20 January executive order halting work at USAID for most employees and contractors, effectively freezing foreign aid disbursements. While a 05 March Supreme Court ruling required the administration to pay aid organizations for work already completed under contract (around $2 billion), the decision does not otherwise change the situation. As the world’s largest single donor, USAID disburses approximately $40 billion of the $68 billion allocated by Congress for foreign aid.

While at this stage, many of the long-term consequences are unclear, disruptions to the global aid apparatus could destabilize certain governments, introduce anti-American sentiment, embolden non-state actors, and introduce an opportunity for other countries to step in and increase their own influence abroad. At the same time, these cuts will deprive corrupt institutions of money and eliminate the funding source that a handful of terrorist, criminal, and militant groups would divert and hijack for their own purposes. Read more.

Forecast

The halt on USAID operations will have humanitarian, geopolitical, and economic consequences. As former recipient governments divert internal resources, seek alternative partners, or in some cases, don’t address the resource vacuum, the potential for instability increases. 

Failing a coordinated international reaction to replace the cancelled USAID contracts, damage to the global assistance infrastructure could take years to repair, complicating resumption of operations if foreign aid begins to flow again. The coming months and years will determine whether this policy shift will lead to long-term strategic realignments or trigger a cascade of regional instabilities that could reshape the geopolitical landscape for years to come. Irrespective of the ultimate outcome, this policy change will require businesses to consider these ramifications in their risk calculus when planning for traveler safety and staff security.

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