Essay

Soon after coming into office for his second term, President Trump announced the dismantling of USAID. The decision, and subsequent ‘stop work’ orders issued, triggered widespread panic across the aid sector, particularly given that the United States alone had previously accounted for 43 percent of humanitarian spending globally. By March 2025, roughly 83 percent of USAID’s programmes were cancelled, leaving millions of people suddenly without support. On 1 July, USAID officially closed as an independent agency, with the vast majority of staff laid off.

While the Trump administration’s actions were swift, drastic and unprecedented, they reflect a longer downward trend in Western aid budgets. In 2024 – before Trump returned to office – the OECD recorded a 9 percent fall in official development assistance. That same year, three other major donors – France, Germany and the UK – also announced cuts, which together with the US, could amount to a 17 percent reduction in global aid spending in 2025.

Foreign aid cuts can reshape displacement and migration dynamics. The reduction in development aid can also affect the ‘root causes’ of migration, due to the impact on economic development and exacerbate existing problems like climate change and instability.

At the same time, as cuts to development aid soar, donors are increasing their security spending, with migration control and defence as clear priorities. The budget of Europe’s Frontex agency, for example, surpassed EUR 750 million in 2023, making it the fastest-growing EU agency. In the United States, Immigration and Customs Enforcement (ICE) is the largest federal law enforcement agency with USD 170 billion allocated toward deportations alone over four years. Meanwhile, the United Kingdom, Germany, France and other NATO members are responding to pressure from the Trump administration and the Russia-Ukraine war to increase defence spending to 5 percent of GDP.

For institutions focused on migration and refugee protections, the impact of these cuts has been stark. The International Organization for Migration (IOM) has a projected fall in its budget from USD 4 billion to USD 2.89 billion, with little flexibility to reallocate funds due to its projectised funding. UNHCR, meanwhile, anticipates having to leave one third of its target population without assistance, having received only 23 percent of its current budget of USD 10.6 billion for activities like protection, basic needs and resettlement. Since nearly half of all official development aid in 2023 was channelled through multilateral agencies, further cuts to these organisations are expected to have cascading effects across the sector which are yet to be fully seen.

With sharply reduced budgets, aid agencies are being forced to ‘hyper-prioritise’ resources, curtail life-saving programmes and leave millions without support. The immediate consequences are already being felt by the most vulnerable, including people on the move. What remains to be seen is how mixed migration dynamics will shift as aid is hollowed out while security and migration-control budgets expand. This essay examines the global aid system, how funding cuts are reshaping the aid landscape and, in turn, what this may mean for refugees, migrants and mixed migration dynamics.

After the Second World War, the United States, as the dominant global power, spearheaded the creation of a Western-led multilateral aid system, which remained largely under its (and its European allies’) control in both governance and funding. One of the first tasks was to address the millions displaced by war, leading to the adoption of the Refugee Convention, which provided international protection to a defined group of people displaced before 1951 with a well-founded fear of persecution for reasons of race, religion, nationality, membership of a particular social group or political opinion. Yet hundreds of thousands more remained outside their countries, without meeting asylum criteria, unable to find work and described in policy debates as a “surplus” labour force. In response, the United States worked with Western European states – through bodies such as the Intergovernmental Committee for European Migration (Iater, the IOM) – to resettle and redistribute workers in ways that aligned with their economic and political priorities.

Over the decades since World War II, Western donors supported the growth of foreign assistance into a large industry following a sort of ‘carrot and stick’ approach, regularly pairing aid (the ‘carrot’) with security measures and maintaining conditionalities on spending tied to their own productive economic sectors (the ‘stick’). Under US and European stewardship, foreign assistance generated dependencies among developing countries and created a system of international NGOs and multilateral agencies dependent on and accountable foremost to a small group of donors, leaving limited ability to reform the system from within.

In recent years, major donors have also broadly shared the same political objective to reduce irregular migration to their borders. Across both right-wing and centre-left platforms, irregular migration has increasingly been framed as a security threat, drawing heavily on discourses shaped by the Global War on Terror. In the United States, development was incorporated into the national security strategy following the 9/11 attacks, making migrants the object of both development and security responses.

These dynamics have underpinned a decade of aid responses designed to target the so-called root causes of migration. In 2015, EU leaders launched the Valletta Summit Action Plan with African governments to limit irregular migration, including support for migrant returns, readmission and reintegration. Its main vehicle, the Trust Fund for Africa (EUTF) with pledged contributions of EUR 1.8 billion (later expanded to over EUR 5 billion), was widely criticised for its opacity and for prioritising border control and return programmes over stated objectives like employment creation and the provision of local services. Likewise, the Biden Administration marshalled a Root Causes Strategy for Central Americans, pledging USD 4 billion over four years to reduce irregular migration from El Salvador, Guatemala and Honduras. Largely managed by USAID, the initiative targeted “corruption, violence, trafficking, and poverty”.

There is little doubt that widespread aid cuts have already begun to profoundly affect recipient communities. Critical services such as food distribution, shelter, access to livelihoods, health care and psycho-social support face abrupt suspension. Alongside shrinking resettlement opportunities and tightened border security, these dynamics create a perfect storm of heightened and protracted vulnerability, reduced protection and escalating risks for vulnerable populations, including many refugees and migrants.

Foreign aid cuts by the US and other major donors are being felt most immediately in the large refugee-hosting countries, where humanitarian budgets already struggle to meet basic needs. Reduced food rations, health services and protection programming increase their vulnerability, especially for refugees in camp settings who are structurally dependent on external support and lack opportunities to generate their own income. While such cuts are already deepening hardship and risk eroding stability in host states, they most likely will not automatically translate into more long-distance migration, since refugees who rely on aid typically lack the resources needed to finance irregular journeys requiring smugglers and significant payments upfront. Thus the impact on large-scale onward movement or secondary migration to distant destinations is likely to remain limited. Instead, the more probable outcomes are deepened hardship, rising tensions with host communities and the erosion of stability in host states. In some instances, refugees may also be forced to return to their countries of origin, despite it not being safe to do so, as it is no longer viable for them to survive in host countries.

Recent examples highlight the severity of the situation: in Kakuma refugee camp in northern Kenya, cuts have led to the discontinuation of food distributions and health services, triggering hunger, unrest and decisions by at least 6,000 people to leave.

The more than 1 million Rohingya population living in camps in and around Cox’s Bazar has relied mostly on US funding for basic services. With US funding reduced from USD 300 million to USD 12 million, the consequences are multiple and dire. In terms of education alone, half a million Rohingya children are set to lose access to schooling due to aid cuts which have forced the closure of learning centres across Bangladesh.

The effect of aid cuts has also been visible for those still on the move. In the Americas, these cuts, along with political pressures, have forced some migrant shelters at the US-Mexico border to close or significantly scale back. Combined with the suspension of the CBP One App and Safe Mobility Offices, thousands of migrants are stuck in limbo unable to change course and, in some cases, having expended all their resources to fund journeys north. In Southern Mexico, for example, more than 270,000 migrants waiting in a virtual queue for asylum appointments were left stranded in chokepoints such as Tapachula, near the Mexico-Guatemala border, when the Trump administration closed it down. Across the region, the scale of assistance has also collapsed: support for Venezuelan migrants and refugees has shrunk from USD 2.34 million to just USD 577,700.

In many lower and middle income countries – typically, migrant-sending – aid cuts will likely exacerbate economic, social and environmental pressure, if they haven’t already done so. Reduced funding for livelihood, education, health care and climate adaptation will leave households with fewer resources to cope with shocks, increasing precarity.

At the same time, the broader geopolitical turbulence compounds the effects of aid retrenchment. Reduced investment in conflict prevention and peacebuilding, combined with the retrenchment of US engagement in Africa and other regions, diminishes the capacity for early action to mitigate emerging crises. The Danish Refugee Council’s recent forecasting work underlines the risk of new and escalating conflicts in precisely those contexts where humanitarian need is greatest and international engagement is shrinking, estimating that US aid cuts alone could contribute to an additional 3.95 to 7.85 million people living in displacement in 2025.

These risks are magnified by the massive surge in defence spending agreed by NATO countries and others. Not only does increased investment in the arms industry risk fueling new conflicts and displacement – since the weapons these countries produce are used in conflicts that drive displacement – but many of the same companies profiting from weapon sales are also central players in the migration control industry, benefitting from both the production of displacement and the containment of displaced people. Cuts to aid, therefore, carry a dual danger: on the one hand, weakening the resilience of displaced populations while, on the other, contributing to fresh displacement when crises are left to erupt without early prevention and mitigation. On top of that, global security investments actively drive even further instability and more displacement. The likely outcome, though – in line with the notion above on onward movement of refugees – is not necessarily a surge in long-distance irregular migration, but rather the fact that more people will be forced from their homes and left stuck in situations of protracted displacement with fewer resources to cope, both for themselves and for the communities hosting them.

Cuts in funding to address climate change risk exacerbating mobility pressures, particularly in fragile and climate-vulnerable contexts. As MMC and others have consistently underlined, climate-related mobility overwhelmingly occurs within countries or across neighbouring borders, rather than driving large-scale, long-distance international migration. Yet, by reducing resources for mitigation-, adaptation- and resilience-building, foreign aid cuts may leave communities more exposed to environmental shocks and less able to cope locally. The likely outcome is an increase in short-distance displacement and greater strain on already fragile systems of support.

Since substantial aid cuts were announced at the beginning of President Trump’s second term, some analysts have been quick to claim that the result will be new migration movements, particularly onward movement to Western countries.

Indeed, for decades, donors have worked from the premise that aid can reduce migration, often under the ‘addressing the root causes’ approach that has shaped much of development and aid spending. The logic is, thus: improve livelihoods, reduce migration pressures. Yet the relationship between aid and migration is far more complex. Research on ‘migration transition’ shows that emigration rates tend to rise as countries develop economically – typically, until reaching GDP per capita of USD 8,000-USD 10,000 purchasing power parity (PPP). By this reasoning, aid and development assistance may actually increase migration, rather than prevent it, because more people will have more resources to finance expensive, long-distance irregular migration journeys – a notion that has been at the heart of much of the critique of the ‘root causes’ approach. Conversely, funding cuts could actually constrain people’s ability to move, at least in the short run, and, instead, lead to situations of immobility rather than mass onward migration.

In reality, development aid has done little to transform overall income levels in lower- and middle-income countries, so aid cuts are unlikely to dramatically affect international migration numbers. Instead, the impact is felt most acutely in daily life: the loss of funding for livelihoods, health, education and climate adaptations strips vulnerable communities of crucial resources. Combined with trade restrictions or weak local economies, these dynamics risk worsening poverty, fuelling tensions and eroding stability in host and origin countries alike. The paradox is clear: as aid shrinks, more people may need or want to move, but fewer may have the resources to do so, leaving populations trapped in precarious conditions, whether at home or along migration routes.

In the Americas, this dynamic is already unfolding. Under the Trump administration, restrictive measures sharply reduced migration, both at the US southern border and further south, along key transit routes such as the Darién Gap. At the same time, significant cuts were made to “root causes” development aid funding that had been intended to reduce the pressures driving people to migrate in the first place. This creates a double bind for migrant-sending communities: not only are opportunities to leave curtailed, but so, too, are resources for addressing poverty, insecurity and lack of opportunities at home. While remittances often provide a more substantial flow of income than official development assistance or foreign investment, they cannot fully substitute for lost aid, especially when stricter enforcement, mass detention and deportations in the US also threaten to reduce remittance flows. The result is a scenario where families and communities across the region risk being doubly impoverished – cut off from both the possibility of mobility and from the financial and developmental support that once sustained them.

Foreign aid has long been defended, not only on humanitarian and development grounds, but also as a tool of soft power – a way for donor states to cultivate influence and secure cooperation from partners. This dimension has become increasingly visible in the migration sphere, where aid allocations are tied to migration management, return agreements and broader security concerns. In this context, migrants are often instrumentalised as bargaining chips, with aid offered or withheld depending on the willingness of sending and transit countries to align with donor priorities.

If aid budgets are cut, donor states may lose some leverage. It is equally plausible, however, that the reduced aid that remains will be further politicised and targeted almost exclusively at migration control. These risks narrow the scope of aid even further away from genuine development objectives, reinforcing a shift toward a transactional, securitised model of cooperation that undermines both long-term development and principled humanitarian action.

Dwindling aid budgets, coupled with increased migration deterrence priorities, will likely increase the bargaining power of strategically significant countries along the routes towards the Global North. Countries such as Türkiye, Tunisia, Egypt or Mexico, for example, may further leverage their strategic value to extract concessions from Western governments keen to curb irregular arrivals. While these concessions may not take the form of traditional development funding, they will come through enhanced security cooperation agreements – already in place, but poised to grow under current circumstances (see also The erosion of migration multilateralism and the ‘new world order’).

Non-strategically placed countries affected by aid cuts have few options. Some may turn (further) towards non-traditional donors such as China, Gulf States or Russia, for investment and development financing.

An especially troubling development in the current landscape is the increasing resort to deportations to third countries – where migrants have no prior connection – by the United States. Recent cases involve transfers not only to regional states such as El Salvador and Panama, but also to countries further afield, including Uganda, South Sudan and Rwanda. While details remain opaque, it is difficult to separate these practices from the broader context of shrinking aid budgets and conditionality.

For recipient states facing the prospect of steep aid cuts, cooperation on such deportation schemes may be seen as a way to secure concessions: lower reductions in assistance, alternative financial benefits or the avoidance of additional punitive measures such as trade tariffs. If they refuse, the risk of further cuts or economic pressure looms. Conditionality in aid allocation linked to migration cooperation is not new – Europe has long tied development support to return agreements – but the US appears to be pushing this logic further, institutionalising deportation-to-third-country arrangements as part of its externalised migration control toolkit. In a context of massively reduced aid, the leverage of donor governments increases, raising the likelihood that more states may acquiesce to such deals in order to salvage limited aid flows or shield themselves from other sanctions.

The funding crisis facing UNHCR and IOM has profound implications for global migration governance. With shrinking resources, both agencies might face reduced capacity to deliver protection, assistance and durable solutions at scale. At the same time, their heavy dependence on a small group of major Western donors – all migration destination countries experiencing strong political pressure to reduce irregular migration – makes them increasingly vulnerable to political conditionalities attached to funding. This risks aligning agency priorities more closely with donor governments’ domestic anti-migration agendas rather than with principled protection mandates. We already see this in the growing emphasis on route-based or ‘whole of route’ approaches – very much embraced by some states and agencies but criticised by many others for instrumentalising aid in the service of migration control, with some calling it “deterrence humanitarianism”. Similarly, UNHCR’s cautious endorsement of return hubs has raised concern that protection standards are being compromised under donor pressure. In this way, aid cuts do not just weaken operational capacity, but also shift the governance architecture toward securitised, donor-driven agendas, potentially at the expense of broader humanitarian and development objectives.

Looking ahead, the challenge is to prevent aid cuts from translating directly into heightened vulnerability for migrants, refugees and displacement-affected communities. While donor budgets are unlikely to rebound in the near term, there is scope to rethink how existing resources are allocated and to protect core humanitarian and protection programming from being crowded out by narrowly securitised objectives.

As formal aid structures contract, communities are increasingly having to turn to alternative survival strategies. Migrant- and refugee-led grassroots organisations already operating on shoestring budgets are working to fill these gaps, while diaspora networks and remittances are relied upon more heavily. Crowdfunding platforms and informal mutual aid networks have surged, trying to provide vital stopgaps. However, while community-led responses are essential for long-term sustainability, without systemic supports they cannot substitute for the scale and predictability of formal budgets. Stronger investment in locally-led responses could help stretch reduced funding further, empowering community-based actors and migrant and refugee-led organisations which are often more agile and cost-effective than large international structures. Equally, strengthening remittance systems and lowering transaction costs could provide an important buffer for families, in the absence of more traditional forms of aid.

At the same time, moments of disruption can also create opportunities for overdue reform. A recalibration of migration governance could help shift the emphasis back towards protection, solutions and resilience, rather than containment. More honest recognition of the limits of aid as a migration management tool might pave the way for approaches that are both more principled and more effective. Partnerships that prioritise shared responsibility – between donors, host states and affected communities – could lay the foundation for more sustainable responses, even within tighter fiscal constraints. In short, while the risks of aid retrenchment are substantial, the current turbulence also offers a chance to innovate and to re-anchor migration and displacement governance in long-term, rights-based and locally-grounded strategies.

New institutions are showing promise in supporting cooperation among Global South countries on more equitable terms than those donors may be providing. The BRICs New Development Bank, for instance, promotes equal governance power among its members, provides lending free of conditionalities and has grown its portfolio to USD 40 billion. While not yet focused on migration, it could eventually develop concessional financial windows to support refugees and host communities, helping governments reduce debt burdens and increase their autonomy in designing integration policies.

For donor countries, maintaining foreign aid at reduced levels also carries risks that go beyond humanitarian fallout. By withdrawing support, they risk fuelling instability in fragile states, creating larger humanitarian crises that, ultimately, demand more expensive emergency interventions later. They also weaken their own influence and credibility in global governance, ceding space to other actors who may fill the vacuum with very different agendas. Finally, by instrumentalising the remaining aid narrowly for migration control, donor states risk undermining trust with partners in the Global South, entrenching resentment and reducing cooperation in the long run. In short, underfunding today may buy short-term political gains domestically, but it risks producing greater insecurity, displacement and diplomatic costs for donor countries themselves in the future.

Bram Frouws

Author

Bram Frouws is the Director of the Mixed Migration Centre (MMC) and a migration researcher with extensive experience across Africa, Asia, and Europe. He writes widely on migration and displacement, and tweets from @bramfrouws
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Jennifer Vallentine

Author

Jen is a Senior Research and Policy Consultant with the Mixed Migration Centre’s global team. She has over 15 years of experience in the migration and refugee sector in research, programme management, and policy, and previously led MMC’s Asia Hub.

Rose Worden

Author

Rose Worden is a freelance researcher and writer. She worked as a research associate for the Migration, Displacement, and Humanitarian Policy program, supporting Jeremy Konyndyk and Patrick Saez’s work on humanitarian policy and system reform. Prior to joining CGD, she conducted evaluations of development and humanitarian response programs in Somalia. Worden has also supported the work of UNDP’s Bureau for Crisis Prevention and Recovery, and an independent policy working group on conflict-affected states. She earned an MA in International Affairs focused in development from The New School in New York City and a BA in International Studies focused in global security from the University of Wisconsin, Madison.