The consequences of sweeping US foreign aid cuts are hitting close to home for Australian development agencies, as vital projects across the Pacific grind to a halt.
From peacebuilding programs in Papua New Guinea to water and sanitation work in Fiji and Samoa, agencies are now left scrambling to protect the region’s most vulnerable communities after USAID funding was abruptly cut.
Tribal Conflict in PNG Escalates Amid Aid Cuts
In the highlands of Papua New Guinea, tribal violence has claimed hundreds of lives. In early 2024, 49 people were killed in a gunfight between clans in Wabag, Enga Province. The violence—rooted in land disputes and intensified by the influx of modern firearms—has displaced thousands.
To address this, Conciliation Resources, a Melbourne-based peacebuilding organisation, had launched a targeted project in Hela and Morobe provinces, equipping local leaders to mediate conflict and support young men at risk.
But that effort was suddenly derailed when a “stop work” letter from the US government arrived.
“It was quite blunt. There was no wind-down. Just ‘stop work’,” said Ciaran O’Toole, the regional director.
The funding halt came after former US President Donald Trump issued an executive order in January 2025 to pause and review all foreign aid—a decision that effectively cancelled around 90% of USAID’s $53 billion annual budget.
Devastating Ripple Effects Across the Pacific
Australian organisations are now tallying the damage. A survey by the Australian Council for International Development (ACFID) estimates that at least $400 million in projects supported by US aid have been defunded, a figure likely to grow.
In the Pacific alone, losses total around $113 million, affecting programs focused on:
• Climate resilience and disaster preparedness
• Women’s health and gender equity
• Nutrition and education in Timor-Leste
• Water, sanitation, and hygiene (WASH) initiatives in Fiji and Samoa
Dan Skehan from Caritas Australia confirmed that critical WASH projects were disrupted. Though the organisation was able to redirect some internal support, the aid cutbacks have still forced Caritas to shed hundreds of jobs globally and reduce program scale.
“Vital water hasn’t been delivered to communities. We’ve had to make tough decisions just to finish activities,” said Skehan.
The Bigger Picture: A Shrinking Global Aid Landscape
The United States is not alone. The UK slashed aid by 40% in April, and New Zealand followed with a $91 million cut to climate-related support. Aid agencies fear this global retrenchment is creating a domino effect.
“The US pulling back gave permission to other governments to do the same,” said O’Toole.
“We’re all feeling the hurt.”
Will Australia Step Up?
So far, Australia has made modest increases in its aid budget under Prime Minister Anthony Albanese. Development leaders are calling for stronger action, especially in light of the growing gap left by global donors.
ACFID CEO Matthew Maury says Australia has both a legacy and a responsibility in the Pacific:
“Communities are losing access to healthcare, education, and food.
Restoring our aid to 1% of the federal budget would reaffirm Australia’s leadership in regional development.”
With rising global crises from climate change to conflict the pressure is mounting for Australia to play a greater role.
Source: https://nit.com.au/30-06-2025/18826/australian-agencies-count-cost-of-us-pacific-aid-axing
