Australia Reviews Pacific and Southeast Asia Impact of US Aid Cuts

"We Judge Ourselves to Be in a Permanent State of Competition with China in the South Pacific"

Australia has decided to review the geopolitical impact of the United States' aid cuts to the Pacific and Southeast Asia regions.

Penny Wong, Australian Minister for Foreign Affairs. Photo by AFP Yonhap News

According to Bloomberg News and Australian ABC Broadcasting on the 26th (local time), Penny Wong, Australia's Minister for Foreign Affairs, recently instructed the Foreign Ministry to examine potential vulnerabilities in the Pacific and Southeast Asia if the U.S. foreign aid cuts are finalized.

ABC reported that if the Donald Trump administration reduces aid in the region, Australia is considering strengthening its own aid instead.

In the foreign policy document "2025 Snapshot" released the previous evening, Minister Wong detailed the Australian government's key strategies and principles, warning that "international security is becoming increasingly fragile." A government official stated that Australia and other Western allies view themselves as being in a permanent state of competition with China in the South Pacific.

China is expanding its influence in the Pacific by providing infrastructure investments and other support to Pacific island nations, such as signing a cooperation agreement with the Cook Islands, a New Zealand territory in the South Pacific, in mid-June. In response, the Australian government under Anthony Albanese has also signed cooperation agreements with countries like Tuvalu, Nauru, and Papua New Guinea to counter China's moves.

ABC reported, "While the U.S. has the largest amount of foreign aid globally, Australia's aid volume in the Pacific is much larger than that of the U.S.," adding that some Pacific island nations are likely to request funding support from Australia related to programs cut by the U.S.

Additionally, ABC reported that the Australian government is firmly committed to continuing participation in "freedom of navigation" exercises against China in disputed waters such as the South China Sea, following China's recent display of naval power by conducting live-fire drills for two consecutive days in waters near Australia.

The Trump administration issued an executive order late last month to suspend spending on overseas aid programs for 90 days and is pushing for a restructuring that effectively dismantles USAID.

The U.S. State Department decided to terminate 5,800 of the 6,200 multi-year contracts USAID has with external organizations, saving $54 billion in budget, and to eliminate 4,100 of the 9,100 State Department grants, saving $4.4 billion, according to the Associated Press.