27-02-2025
Development Institutions Prepare for ‘a World Without the US'
(Bloomberg) -- The Trump administration's suspension of large parts of the US aid budget and its exit from global climate and health pacts has thrown the world's development finance institutions into disarray — now they're preparing to press ahead without the world's biggest economy.
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The US government and its branches have been largely absent from the Finance in Common Summit, an annual gathering of public development banks with $23 trillion in assets known as FICS that this year took place alongside a meeting of the finance ministers of the Group of 20 large economies in Cape Town. That comes as the country's secretaries of State and Treasury skipped the G-20 gatherings this month in South Africa amid a broader withdrawal of US global leadership.
'Everyone has to plan for a world without the US,' said Damilola Ogunbiyi, chief executive of the United Nations' Sustainable Energy for All institute, which promotes energy access, in an interview in Cape Town on Thursday. 'The world is not just the US.'
Since taking office on Jan. 20, President Donald Trump has dismantled the United States Agency for International Development, which has a $40 billion annual budget. That, among other impacts, has disrupted life-saving HIV/Aids treatment programs in countries from Nigeria to South Africa and ended an energy access program in Africa that was set up by former US President Barack Obama.
His attack on renewable energy and climate programs, and appointment of a vaccine skeptic as health secretary, have sown uncertainty in the development finance world as to whether the US will honor funding commitments it's already made or provide money for climate, health and humanitarian initiatives in the future.
Trump's actions come at the same time that many wealthy European nations are slashing their aid budgets, including major donors like the UK, France and the Netherlands.
'Everything is up in the air,' Rémy Rioux, CEO of Agence Française de Développement and current chairman of FICS, said in an interview. 'There's a huge gap that I think I don't see anybody completely filling.'
Still, 'in these times multilateralism has to reinvent and to deepen,' he added. 'We want to stick to the sustainable and inclusive development agenda.'
China's Opportunity
Washington's absence also creates an opportunity for its geopolitical rivals to build influence.
'We at the Asian Infrastructure Development Bank are based in Beijing but our heart goes to all the people in the world,' Jin Liqun, the AIIB's chairman, said at a press conference at FICS. 'Free trade and cross-border investment is important. People will quickly find that by shutting yourself off from the rest of the world you will suffer.'
In a draft final communique the FICS group said it represents 536 public development finance institutions and public development banks and stressed that the conference had attracted a record 2,500 delegates.
'Everyone here is willing to cooperate on the global challenges — climate change, biodiversity, health, creation of jobs, reduction of inequalities,' said Audrey Rojkoff, the AFD's regional director for Southern Africa. Even if the US is unwilling, 'the others are cooperating,' she added.
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