Australia is adjusting its foreign aid strategy to prioritize its neighboring regions in Asia and the Pacific islands, following the United States’ significant cuts to development and humanitarian aid worldwide.
The Australian government plans to allocate three-quarters of its total overseas development aid to the Indo-Pacific region, marking the highest share in 40 years. This change in distribution is outlined in documents reviewed Wednesday.
The budget for aid in the fiscal year starting July 1 will rise modestly by 136 million Australian dollars ($86 million), reaching a total of AU$5.097 billion ($3.22 billion).
Although neither Foreign Minister Penny Wong nor Minister for International Development and the Pacific, Pat Conroy, commented on the potential U.S. cuts, they emphasized the importance of focusing on regional stability.
Wong stated that Australia’s development program is crucial for regional stability and security. In these uncertain times, more development assistance is being directed toward the Pacific and Southeast Asia, areas crucial to Australia’s interests.
Despite a focus on direct bilateral aid agreements, Conroy reassured that Australia remains committed to multilateral aid channels. However, Australia plans to postpone or suspend AU$119 million ($75 million) in contributions to organizations like the U.N. Development Program and the Global Fund targeting HIV, Malaria, and TB.
Conroy emphasized the need for flexibility in the budget to safeguard regional stability and enhance Australia’s role as a reliable partner for its neighbors.
The U.S. had recently declared its intent to slash over 90% of the U.S. Agency for International Development’s contracts, totaling a $60 billion reduction in global humanitarian and developmental assistance. This decision signifies its retreat from a broad array of foreign aid commitments.
Riley Duke, a researcher with the Lowy Institute, highlighted that Australia’s adjusted aid budget appears to be a strategic response to anticipated cutbacks from the U.S. and Europe in Pacific aid spending.
Duke observed that by cutting and delaying payments to multilateral organizations, Australia is preparing to fill the gaps potentially created by the rapid U.S. aid reduction. The focus on Pacific neighbors means a substantial portion of Australia’s aid budget is being allocated there, now nearing 40% of the total.
This foreign aid plan aligns with a broader national economic framework proposed in the Parliament earlier in the week.
According to Duke, this shift reflects Australia’s growing need to be more proactive in the Pacific to achieve favorable outcomes. The reduction in U.S. support for programs tackling HIV and family planning may lead Australia to step in and cover these critical areas.