For more than 60 years, the United States Agency for International Development (USAID) was the backbone of American development diplomacy. Today, it is gone.
But the most immediate consequence is not what many assume. It is not simply the loss of funding. It is the collapse of coordination — the quiet system that aligned the United States with allies and partners across the developing world.
I have seen how that system works from the inside. And when it breaks, the effects are immediate.
In March 2025, the US administration dismissed most remaining staff and formally notified Congress of plans to dismantle the agency and absorb limited functions into the State Department.
What had once been the world’s premier development institution is rapidly being hollowed out. This may appear to be a mere bureaucratic shift in Washington, but it is not.
For decades, USAID served as a central node connecting the US with other major development actors, including Japan, South Korea and Australia. Through formal coordination and daily operational engagement, these partnerships aligned priorities, avoided duplication and amplified collective impact.
When that node disappears, coordination does not simply continue. It fragments, projects overlap, standards diverge, strategic focus weakens and US competitors gain space — not just because they invest, but because others fail to act together.
This matters most in the Indo-Pacific. From Southeast Asia to the Pacific Islands, development assistance is not peripheral — it is strategic infrastructure. It shapes governance, builds economic ties, and influences political alignment.
Australia has long understood this, using development assistance as a central pillar of its engagement in the Pacific. Japan and South Korea have done the same across Asia and beyond.
Their own development trajectories reinforce this approach. Once aid recipients, they transformed their economies through strategic investment and long-term planning.
Today, through institutions such as the Korea International Cooperation Agency, the Japan International Cooperation Agency, and Australia’s development programs—historically led by AusAID — they are major development actors in their own right.
I have worked alongside these institutions in the field. In Paraguay and Iraq, I saw firsthand how these partnerships function — not as abstract policy, but as daily coordination across governments, agencies, and technical teams.
That coordination is not easily replaced. And China understands this. Its development model does not depend on coordination with others. It is centralized, state-driven and executed through aligned financial and operational institutions.
Where Western approaches fragment, China’s often appear more coherent and decisive. This is the strategic risk. The dismantling of USAID does not create a neutral space – it creates a vacuum in coordination, one that competitors are well positioned to exploit.
The question is not whether allies such as Australia, Japan and South Korea will step forward. They already are. The question is whether they will do so together.
For decades, development cooperation functioned as one of the quiet pillars of the international system. It strengthened alliances, reinforced shared standards and enabled collective action.
That system is now under strain, if not broken. What replaces it will shape not only development outcomes, but the future balance of influence across the Indo-Pacific.
Steven E. Hendrix is a former senior US diplomat and development official who served as the USAID senior coordinator for foreign assistance at the US State Department. As the State Department managing director for planning, performance and systems, he oversaw global strategies across US foreign assistance, including for the Asia-Pacific region.
He has coordinated closely with international development agencies, including the Korea International Cooperation Agency (KOICA), the Japan International Cooperation Agency (JICA) and Australia’s former development agency, AusAID. He is an attorney in the United States, Bolivia, Guatemala and Ghana.
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