The U.S. is still the largest provider of international aid in the world, delivering humanitarian, development, and security assistance to further its strategic goals, blunt the rise of powers like China and Russia, and confront key regional actors from the Gulf, notably Saudi Arabia and the UAE. These hostile states are poised to fill the power deficit, which could result from U.S. retrenchment from global assistance.

American foreign policy in the past few years has taken a dramatic turn. The reorientation of the ideological foundations overseeing international aid is now clear by the drastic reduction in USAID funding a shift ironically inspired by the likes of Elon Musk. That represents a break from longstanding humanitarian commitments in favor of transactional models. Models. This pullback is a policy change with heavy reporting costs, but it is also part of a longer narrative extending into bigger chapters that rewrites the role of America in the world.

Historically, President John F. Kennedy created USAID in 1961 during the Cold War as an independent agency to counter Soviet influence. Over the decades, USAID became crucial in regions like the Horn of Africa where countries such as Ethiopia, Somalia, and Sudan have long dealt with ethnic conflict, weak governance, and severe effects of climate change. Foreign assistance has historically been vital to building democratic institutions, expanding humanitarian efforts, and spurring economic development. As China now undertakes its broad Belt and Road Initiative a global aid and infrastructure-investment effort the current U.S. retrenchment risks leaving unmet needs that may ultimately transfer strategic influence to China in regions like the Horn of Africa. A reduced USAID presence could undermine U.S. credibility and push regional allies toward alternative sources of support.

President Trump’s approach to foreign aid was perhaps the most vivid example of this new paradigm. He famously declared, “WE SHOULD NEVER GIVE MONEY ANYMORE WITHOUT THE HOPE OF A PAYBACK, OR WITHOUT ‘STRINGS’ ATTACHED. THE U.S. SHOULD NO LONGER BE ‘STUPID’!” His words summed up a new, conditional-based approach to foreign aid, one where money is spent only if there’s an immediate return rather than as a carte-blanche investment in global stability. During his administration, USAID financed nearly 80% of maternal health programs and drought relief support in Somalia critical programs for staving off hunger, controlling diseases such as malaria and HIV, and dealing with the impacts of climate change.

Critics have said USAID’s effectiveness has been hampered by bureaucratic inefficiencies and corruption scandals. Supporters of Musk’s action argue that a very small percentage of funding makes it to intended communities and maintains that much assistance is wasted, becoming “DEAD AID.” While reform in the distribution of aid is indispensable, a total freeze disregards the exigent needs of vulnerable peoples and proposes nothing of a substitute for ongoing humanitarian assistance.

Some see a different solution that private-sector investments and conditional trade agreements will be better alternatives to help at-risk countries by offering more sustainable long-term benefits than traditional foreign aid. Yet these alternatives fail to address the systemic political instability and infrastructure gaps that dissuade investors from committing to regions such as the Horn of Africa without significant government intervention.

Another critical consideration is the cost-effectiveness of humanitarian aid, especially when evaluating its impact on American taxpayers. In reality, the federal government allocates less than 1% of its budget to such aid yet this modest expenditure is a matter of life and death for vulnerable populations in developing nations. Sustained humanitarian assistance not only mitigates mass migration and global instability but has historically provided life-saving relief in periods of crisis and reinforced the USA’s role as a superpower.

The erosion of democratic governance in the Horn of Africa is not solely about declining U.S. assistance; it is also about inherent local and regional factors. Many countries in this region have long struggled with fragile institutions, ethnic discord, and broad governance challenges. Cuts to USAID funding will only deepen these challenges, stripping governments and civil society organizations of support to promote democratic values, hold free and fair elections, and protect human rights. In Ethiopia, where the politics are deeply ethnic and fraught with internal power struggles, U.S. aid has typically supported democratic processes. In the wake of recent retrenchment, there is a greater risk that the Ethiopian government will attempt to consolidate power through repressive means, further ostracizing disenfranchised communities and entrenching conflict.

Likewise in Somalia, a country that has long aspired to the benefits of stable governance the decline in foreign aid poses a major challenge to state-building efforts. Somalia, heavily dependent on international assistance to defeat terrorism, deliver essential services, and promote economic development, is left with diminished governance capacity. This decline threatens not only internal stability but also presents wider implications for regional security, as instability can quickly reverberate across borders.

Power struggles in the Horn of Africa are complex, with no clear winner or loser. The withdrawal of U.S. aid exacerbates these dynamics, denying key stakeholders of instability and political reconciliation the resources they need to engage diplomatically. In a region marked by constant re-evaluations of political legitimacy, the lack of American support increases local competition and helps create conditions in which extremist groups can capitalize on disorder, perpetuating cycles of violence.

At the same time, the United States’ retreat from its historic role as an aid provider creates opportunities for external powers chiefly China and Russia. China’s investments, including a $400 million Djibouti Free Trade Zone, rapidly convert the area into a strategic military and economic cul-de-sac. The Russian presence has grown, in places like Sudan, this is not only a blow to U.S. credibility in the region but also risks restructuring power balances towards regimes that care more about strategic leverage than governance by the will of the people.

Given these challenges, the U.S. must reassess its aid approach in the Horn of Africa. Policymakers should consider a hybrid model that meets humanitarian needs across all sectors while simultaneously investing in long-term sustainable development, strengthening democratic institutions, and actively countering rival powers’ influence. Musk’s USAID shutdown represents a more significant U.S. foreign-policy shift than even its decision to support Saudi Arabia in the Yemen civil war, with serious consequences yet to play out for the Horn of Africa.

If local governments and communities attempt to navigate an increasingly delicate balance between ethnic tensions, political fragmentation, and outside meddling without significant American support, the region may tilt further toward instability. To avoid a humanitarian catastrophe and maintain its global influence, the United States needs to develop a balanced, hybrid approach like public-private partnerships and governance reforms to foreign aid that combines short-term relief with long-term sustainable economic growth, strengthens democratic institutions, and rejects the hegemonic ambitions of rival powers.

By Surafel Tesfaye, Horn Review,Researcher