The freeze in USAID funding has created an opportunity for other nations to expand their influence through foreign aid. After the abrupt 90-day suspension of over $60 billion in U.S. foreign assistance, countries such as China, Russia, Turkey, the Gulf States, and the United Kingdom are stepping in to strengthen their diplomatic and economic foothold in developing nations.
For decades, USAID has been a key instrument of U.S. soft power, providing humanitarian aid and infrastructure investment to foster alliances. In the Philippines, U.S. assistance helped rebuild after World War II and supported economic growth through various development projects.
Similarly, Japan’s International Cooperation Agency (JICA) has played a crucial role in the country’s development, funding infrastructure, disaster resilience, and capacity-building initiatives. These two countries have built goodwill in the Philippines and are among the closest allies of the Philippines – a clear effect of soft power.
Soft power—the ability to influence others through cultural, economic, and diplomatic means rather than military force—has long shaped international relations. Nations use aid programs to gain goodwill, secure trade routes, and reinforce alliances.
While beneficial in promoting development, soft power can also create dependency and lead to geopolitical maneuvering.
China has been the most aggressive in leveraging aid to expand its influence. Through the Belt and Road Initiative (BRI), Beijing has pledged $51 billion over three years in loans and aid across Africa, Southeast Asia, and Latin America.
In the Philippines, China has increased funding for infrastructure projects, including the Agricultural Technical Cooperation Program, which has received 500 million PHP. Russia has deepened its presence in the Middle East and Africa by focusing on energy and security cooperation.
Turkey has strengthened trade ties with Gulf nations, with trade volumes reaching $22 billion and plans to triple this within five years. Despite budget cuts, the UK continues investing in development through its Foreign, Commonwealth & Development Office (FCDO).
Developing countries must navigate new power dynamics with these nations, increasing their aid commitments. While cooperation can drive growth, it also raises concerns over sovereignty and exploitative agreements. If unchecked, this shift could reshape alliances, with the Global South becoming a battleground for competing influences.
As the U.S. steps back, other nations are using financial diplomacy to alter the balance of power.
