Foreign aid is a double-edged sword. Touted as a way to alleviate poverty and foster development, foreign aid has become a tool for surreptitious influence and corruption. The mechanics of how that takes place, along with the unsavory consequences, are the topic of a recent research paper out of Guatemala.
Earlier this year, US President Donald Trump sparked a heated debate to shut down the United States Agency for International Development (USAID). Counter to stated intentions, poorly managed aid often misallocates resources, weakens institutions, and fosters dependency. Even more troubling, though, is that foreign aid often serves as a vehicle to advance hostile political ideologies from donor countries.
The study “Foreign Aid: An Ideological Hobby” by Olav Dirkmaat—who holds a PhD in economics from Rey Juan Carlos University—explores how international aid can shape the political landscape in recipient countries. Published by Francisco Marroquín University’s Public Policy Analysis Center (CADEP), the report focuses on Guatemala, where at least 450 nongovernmental organizations (NGOs) receive foreign funding.
Identifying the Aid Network
Dirkmaat conducted a deep network analysis to track the flow of funds between 250 international and local organizations involved in Guatemala’s civil society. As a result, he uncovered intricate financial relationships connecting major governmental agencies such as USAID and private foundations like Open Society Foundations and the Ford Foundation to various local NGOs.
The study’s lens is public-choice economic theory, which assumes that political actors pursue their own interests, just like market actors do. Dirkmaat argues that donor countries and organizations use foreign aid to promote their ideologies rather than simply provide humanitarian or development assistance.
Political Influence in Guatemala
In 2024, the United States provided $28 million in humanitarian aid to Guatemala—14.3 percent more than to Honduras ($24 million) and more than double the amount sent to El Salvador ($13 million). This aid supports a range of projects, including human-rights advocacy, governance, and transparency. Beneficiaries include nonprofits like Plaza Pública (journalism) Fundación Myrna Mack (human rights), and Acción Ciudadana (transparency).
However, the report highlights this funding is far from politically neutral. One of the most revealing findings is the significant influence of USAID in shaping Guatemala’s political landscape. According to Dirkmaat, USAID’s funding extends to political parties, civil organizations, and media outlets, raising concerns about interference in national politics.
A particularly concerning issue is the relationship between foreign aid and Movimiento Semilla, the political party of Guatemalan President Bernardo Arévalo. Guatemala’s Decree 10-04 prohibits political parties from receiving direct funding from foreign entities, except for educational purposes and with mandatory reporting to the Supreme Electoral Tribunal.
Dirkmaat’s analysis shows a correlation between foreign NGO funding and Semilla’s electoral success, suggesting that organizations receiving international aid have played an active role in boosting the party’s position: “Politicians who are better connected and more aligned with the structure of foreign aid, along with their political positions and ideology, are favored.” This assertion underscores the notion that foreign aid targets not just development, but political influence.
The Semilla Party’s Ties to International Aid
Source: Foreign Aid: An Ideological Hobby
Foreign Funding for Media Coverage
The report also examines how foreign aid has influenced media coverage in Guatemala. According to Dirkmaat, media outlets such as Plaza Pública, No Ficción GT, and Prensa Comunitaria GT receive substantial foreign funding. This funding may generate or at least reinforce biases in news coverage, especially on topics related to politics, justice, and human rights.
For instance, the report suggests that these media outlets often adopt a critical stance toward conservative and business interests. On the other hand, the same foreign-aid-backed outlets show lenience toward groups aligned with the international progressive agenda, such as the socialists Puebla Group and Progressive International. This bias has profound implications for public opinion and democratic discourse.
Dirkmaat contends that reducing or eliminating foreign aid would mitigate external interference and foster organic political and institutional development. Without the influence of foreign money, local populations would have greater autonomy to shape their future without external agendas driving political narratives.
A Similar Case of Mismanagement
Guatemala is not an isolated example. Similar concerns about foreign aid manipulation have emerged in Ecuador.
From 2013 to 2018, the Fondo Socio Bosque program—funded by European countries, the World Bank, and the UN Development Programme—aimed to incentivize forest conservation by compensating indigenous and rural communities. However, a 2019 report by the Ecuadorian Comptroller General’s Office (CGO) found significant irregularities. Of nearly US$1 million transferred to the Shiwiar Nationality in the Amazon, $160,000 could not be accounted for due to missing invoices and documentation. According to the CGO, this lack of transparency jeopardized the protection of more 182,233 acres of rainforest and raised concerns about corruption and mismanagement.
Rethinking Foreign Aid
While foreign aid is often portrayed as a benevolent tool for development, Dirkmaat’s research aligns with the reality that aid serves as a self-interested strategic mechanism for promoting the donor countries’ political agendas. His work is historic, although it likely only scratches the surface of the problem, given limited publicly available data. In the case of Guatemala, the entanglement of international aid with biased NGOs and media outlets raises serious questions about national sovereignty and democratic integrity.
Unless transparency and accountability are secured, foreign aid will continue to be a double-edged sword. It may offer temporary relief, but the price is long-term institutional independence. As Dirkmaat concludes: “Ending this practice would avoid interference in sovereign political processes and reduce the self-inflicted dependence on aid, allowing for a more organic economic and institutional development.”
