Financing in Times of Conflict: The Role of Latin America in the Global Reconfiguration

In recent years, the world has witnessed a significant increase in active armed conflict hotspots, particularly in Eastern Europe and, more recently, in the Middle East. The instability and armed conflict in the Gaza Strip, Israel, Iran, and Syria have led to a considerable rise in both bilateral and multilateral humanitarian aid aimed at addressing the basic needs of civilians affected during these conflicts. This increase has, to some extent, created greater strain on global cooperation and aid networks, which must allocate more funds to this particular region, either by increasing the budget for this purpose or by cutting resources from other areas or regions.

However, this cannot be classified as the cause of a potential direct decline in aid directed toward regions such as Latin America and the Caribbean (LAC); in fact, it can be considered as an additional factor within a preexisting trend of decreasing official development assistance. This means that both LAC and other parts of the world receiving international funds may face a new scenario in which it is necessary to deploy new strategies to address a more competitive cooperation ecosystem with fewer resources, in order to ensure that, regardless of the global context, the flow of resources and capital can continue to support meaningful projects within the region¹.

It is important to understand the difference between LAC and the Middle East when it comes to receiving international aid. LAC, while it does receive humanitarian assistance in the context of environmental crises or to address social issues such as Venezuelan migration, is a major recipient of development aid from various multilateral organizations, such as development banks or the European Union (EU). In fact, in 2022 it was the only region that experienced an increase in impact investments, with a 14.4% growth compared to other regions such as Africa and Asia². 

On the other hand, conflict zones in the Middle East, such as Syria and especially the Gaza Strip, have been almost exclusively recipients of humanitarian aid from both European and Arab countries, with one of their largest donors being Qatar, which allocated around USD 1,300,000 in aid to Gaza between 2012 and 2021³. Therefore, although both regions require international financing, the projects and contexts in which they operate are different: while LAC seeks funding for development projects, social cohesion, and poverty reduction, most of the aid directed to war-torn areas is exclusively humanitarian.

Moreover, the fact that conflict-affected territories in the Middle East receive mostly humanitarian aid is not solely a response to their current circumstances, but also part of a global transition trend that appears to reduce development funding and focus more on humanitarian assistance, both for donor and recipient countries⁴. In fact, while international aid for development projects has declined considerably in recent years, humanitarian assistance for refugees within developed countries has grown rapidly. 

In parallel, the only increase recorded in terms of official aid to developing regions such as LAC has come from multilateral donors, such as the EU, which accounted for around 40% of global multilateral aid. Likewise, another trend is the shift from development aid toward loans, which have nearly doubled over the last decade in LAC, reaching 49% in 2022, while grants fell by 8% with a downward trend projected for the coming years⁵. Finally, these trends are expected to continue declining, and international aid is likely to become increasingly immediate, with short-term solutions to meet basic needs in the face of humanitarian crises, moving toward a more transactional rather than altruistic form of assistance.

However, this aid has never been entirely altruistic: organizations such as USAID were created as foreign policy and soft power tools to expand U.S. influence during the Cold War⁶. Similarly, aid has historically been used to exert pressure on governments, condition relationships, and, in many cases, it does not reach the intended recipients; such is the case of aid sent to the Palestinian Authority in the West Bank, which ultimately ended up being absorbed by the Israeli economy⁷.

This has contributed to the perception, among more nationalist governments and the general public, that international aid does not work and merely represents an excessive use of taxpayers’ money, even though in most cases it does not exceed 1% of donor countries’ GDP⁸. This, in turn, increases the likelihood that programs aimed at overseas development, such as USAID or the United Kingdom’s Department for International Development, could be cut during times of adversity, such as the war in Ukraine or the migration crisis in the United States⁹.

These trends from the West present a challenging scenario for LAC, where it must rethink its position as a recipient of international aid, and where each actor in the process at the regional level must strategically coordinate to ensure that multilateral, private, or smaller funding sources choose the region for development and investment projects¹⁰. LAC has significant potential to attract international aid thanks to various factors, such as relative historical stability, which allows for a certain level of peace in the region and institutional and governmental solidity to ensure that aid reaches the intended recipients¹¹.

Likewise, it is important to have coordinated efforts to strengthen ties with development banks, funds dedicated to specific sectors such as climate change or the energy transition, and South-South cooperation with increasingly dominant actors like China. Finally, it is essential to maintain stable economies with solid investment ratings, enabling the reception of loans with lower interest rates and less impact on public finances, which are still recovering from the fiscal shocks experienced during the pandemic¹².

In conclusion, the instability in the Middle East is yet another factor within a series of global trends that are gradually limiting access to and availability of development aid for LAC, particularly from bilateral sources. However, this situation can—and must—serve as a turning point: the region needs to define its role in the international cooperation ecosystem, moving away from a logic of dependency and embracing a more diverse, resilient, and strategic architecture. Investing in regional alliances, South-South cooperation, innovative financing, and institutional coordination is not only desirable it is urgent: if international aid weakens, the challenge must focus on building new pathways to sustain social impact and transformation in the region.

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¹ Obrecht, A., & Pearson, M. (2025, 17 de abril). What new funding data tells us about donor decisions in 2025. The New Humanitarian. https://www.thenewhumanitarian.org/analysis/2025/04/17/what-new-funding-data-tells-us-about-donor-decisions-2025

² United Nations Conference on Trade and Development. (2024). Aid under pressure: 3 accelerating shifts in official development assistance. https://unctad.org/system/files/official-document/un-gcrg-oda-report_en.pdf

³ Shaban, O. (2022, 4 de agosto). International aid to the Palestinians: Between politicization and development. Arab Center Washington DC. https://arabcenterdc.org/resource/international-aid-to-the-palestinians-between-politicization-and-development/

⁴ What new funding data tells us about donor decisions in 2025. The New Humanitarian. https://www.thenewhumanitarian.org/analysis/2025/04/17/what-new-funding-data-tells-us-about-donor-decisions-2025

⁵ United Nations Conference on Trade and Development. (2024). https://unctad.org/system/files/official-document/un-gcrg-oda-report_en.pdf

⁶ David Pilling. (2025, marzo 4). Can international aid survive in a crumbling world order? Financial Times. https://www.ft.com/content/b3667445-a242-46fb-bcb3-0a21386ce355

⁷ Arab Center Washington DC. https://arabcenterdc.org/resource/international-aid-to-the-palestinians-between-politicization-and-development/

⁸ Financial Times. https://www.ft.com/content/b3667445-a242-46fb-bcb3-0a21386ce355

⁹ Sheldrick, M. (2025, 25 de febrero). Foreign aid is shrinking—What happens next? Forbes. https://www.forbes.com/sites/globalcitizen/2025/02/25/foreign-aid-is-shrinking-what-happens-next/

¹⁰ OECD, Economic Commission for Latin America and the Caribbean, CAF Development Bank of Latin America, & European Commission. (2024, diciembre 9). Latin American Economic Outlook 2024: Financing Sustainable Development. OECD Publishing. https://doi.org/10.1787/c437947f-en

¹¹ Aróstica Fernández, P. (2024). Latin America on a new geopolitical chessboard: Positioning and projections towards China, the European Union and the United States. EU‑LAC Foundation. https://eulacfoundation.org/en/latin-america-new-geopolitical-chessboard-positioning-and-projections-towards-china-european-union

¹² OECD Publishing. https://doi.org/10.1787/c437947f-en