How Switzerland is managing foreign aid at a time of global upheaval

Switzerland, like other rich donors, is slashing its aid budget and recasting its international assistance priorities in response to a world in crisis – and its own national interests.

European countries began cutting spending on international cooperation in 2024, partly to justify increased defence spending after Russia’s full-scale invasion of Ukraine. Switzerland announced a CHF431 million ($539 million) drop in funding for 2025-2028.

Then came United States President Donald Trump’s decision in early 2025 to do away with USAID, at that point the world’s richest aid agency. By the end of that year, official development assistance had experienced its sharpest global decline on record (-23.1%) and a second consecutive annual contraction, the OECD reported. The world’s five biggest state donors – the US, Germany, Britain, Japan and France – accounted for most of the decline.

Switzerland has since announced further cuts. To save CHF20 million a year, it’s slashing the development assistance budget by nearly a quarter and shifting some of the money to humanitarian aid. Foreign Minister Ignazio Cassis defended the move by pointing to budget constraints and global “realities”, such as wars and other crises, giving rise to greater emergency needs.

How does Switzerland define foreign aid?

Switzerland uses the term “international cooperation” to encompass humanitarian aid, development assistance, economic development cooperation, and the promotion of peace and human security. The total budget for international cooperation in 2026 amounts to CHF2.4 billion.

The share of humanitarian aid in this budget is set to increaseExternal link from 26% to 40% as the government shifts its priorities to responding to crises and conflicts. The focus of the Swiss Agency for Development and Cooperation (SDC) will be narrowed to support low-income countries in the areas of health, rule of law, climate and migration. To save some CHF113 million between 2027-2030, the SDC will shed around 100 posts.

A win for the Swiss private sector

Other planned changes suggest a greater emphasis on domestic interests. While the Swiss Agency for Development and Cooperation (SDC) will focus on low-income countries, the economic arm SECO will partner with middle-income nations to, in the words of the government, “create favourable conditions for trade and investment in order to generate shared prosperity”.

Funds will help not just foreign countries, but also Swiss exporters. SECO is already doing this in places like Peru, where it’s supporting agroforestry projects to secure access to sustainably grown cocoa for Switzerland’s chocolate industry.

The Alpine country’s strategy will also help domestic businesses keen to invest in Ukraine’s reconstruction. Bern has set aside CHF500 million so Kyiv can buy goods and services from Swiss suppliers through public tender. A deal signed by the two countries was criticised as reviving so-called “tied aid” that had been phased out since the 1980s because of accusations that it put donor interests above those of recipients and overall impact.

Aid groups also argued it diverts money from scarce development assistance to businesses. In all, Switzerland is allocating CHF1.5 billion of the 2025-2028 budget to Ukraine, making the Eastern European country the biggest recipient of its aid.

Private sector involvement doesn’t end there. To attract more capital to development, the Swiss are relying increasingly on mechanisms like blended finance that use public money to cover risks and encourage businesses to invest in unexplored markets. Globally this approach has resulted in some additional $260 billion but remains controversial. Critics allege taxpayers are footing the bill to reduce costs and boost profits for businesses, which tend to opt for more lucrative middle-income countries rather than the poorest.

Poorer countries, education and culture on the losing end

As it cuts costs, the Swiss government is phasing out long-standing bilateral development commitments in Latin America, as well as Bangladesh, Albania and Zambia, prompting consternation among NGOs. Talha Paksoy of Solidar Suisse said there was “no justification” for leaving Bangladesh after a half-century of engagement in “a very battered country” suffering from political instability, climate change and dire conditions in its Rohingya refugee camps.

Some sectors are suffering more than others. Bern is gradually ending funding for literacy and numeracy, focusing instead on vocational training and education in emergencies, such as conflict zones. Also axed are programmes that help Swiss cultural institutions financially so they can bring Global South artists to perform or train in Europe.

These decisions come even as studies show such investments pay off. Supporting creatives from poorer regions in a sector dominated by rich countries produces benefits beyond their own pocketbook. In addition to creating jobs, the SDC said in a past report, boosting access to culture enables democratic participation and social cohesion at a time of “increasing authoritarianism”.

As for basic education, the International Monetary Fund estimates that giving it to every child would raise world economic output by $700 trillion over the rest of this century.

Public support remains high despite cuts

On such benefits, the Swiss population needs no convincing. In recent surveys carried out by the federal technology institute ETH Zurich, respondents said they wanted aid money to be used for basic needs such as education and health. Some 86% are in favour of helping lower-income nations. Majorities in France (64%), Germany (59%) and Britain (51%) also support assistance, despite their governments’ cuts.

In the wake of this shrinking aid purse, attention is turning to other sources of income, such as private charities and development banks, which offer favourable investment loans to lower-income nations. Many Swiss local and regional governments, meanwhile, are maintaining their partnerships with cities in the so-called Global South, particularly to tackle common challenges like climate change and urban development.

While these donors, by their own admission, can’t make up for the historic decline in aid among the world’s richest countries, they are seeking greater impact with the dollars and expertise that they are able to offer.

Edited by Tony Barrett/vm/ac