Ibn Khaldun and the Dynamics of Civilization: Social, Economic, and Political Transformation

September 2, 2025

Ibn Khaldun, an eminent medieval scholar, made significant contributions to history, sociology, and economics. Dr Kalim Siddiqui examines Ibn Khaldun’s model on the development of civilization through the interplay between urban and rural dynamics, both essential for long-term progress. According to Ibn Khaldun, civilization advances through the interaction of two key actors: urban populations, who adopt new skills, technologies, and ideas, and nomadic groups, whose cohesion and solidarity provide the military strength and unity to establish or conquer new regions. In his Muqaddimah, he developed a sophisticated interdisciplinary model linking asabiyyah (group solidarity), economic production, and political power. His work offers a powerful framework for understanding the rise, flourishing, and eventual decline of civilizations, providing enduring insights into the challenges societies face across time.

I. Introduction

Ibn Khaldun (1332–1406) was a scholar, historian, sociologist, and economist who combined scholarly work with judicial service, leaving a profound intellectual legacy in the Middle Ages. He analysed the development of civilization through the dialectical relationship between urban and rural dynamics, both of which he considered indispensable for long-term progress. According to Ibn Khaldun, civilization advances through the interaction of two key actors: the urban population, capable of adopting new skills, technologies, and ideas, and nomadic groups, whose solidarity and cohesion provide the military strength and unity necessary to establish or conquer new regions. Tribal cohesion, in particular, forms the foundation of strong military and political power (Ibn Khaldun, 2005).

When civilization reaches that goal, it turns towards corruption and starts being senile, as happens in the natural life of living beings

Yet, for Ibn Khaldun, the very process of advancement also sows the seeds of decline. As he observed: “The goal of civilization is sedentary culture and luxury. When civilization reaches that goal, it turns towards corruption and starts being senile, as happens in the natural life of living beings” (Ibn Khaldun, 2005:296). Thus, the rise and fall of civilizations are determined by complex social and political dynamics, rooted in shifting forms of group solidarity (asabiyyah) (Acemoglu and Robinson, 2012).

This study examines the significant contributions of Ibn Khaldun, a pioneering thinker whose work prefigured modern social science fields such as history, anthropology, economics, and sociology. Long before these disciplines existed, he explored fundamental concepts including production, markets, trade, and the division of labour. This paper also explores his analysis of the fourteenth-century decline of dynasties in Moorish Spain and North Africa, linking his theories directly to the historical crises of his time.

Khaldun’s innovative framework, particularly his theory of asabiyyah (social cohesion), was remarkably advanced for his era. His key concept of asabiyyah (social cohesion) explored the interplay of solidarity, economics, and power. The study situates his theories within his era’s crises while highlighting their broader relevance to patterns of societal development and decline. He emphasized the interplay of group solidarity, economic activity, and political power in shaping the life cycle of states (Ibn Khaldun, 2005).

This article demonstrates the power of his ideas through a specific case: his analysis of the fourteenth-century decline of dynasties in Moorish Spain and North Africa. We situate his thought within the historical crises of his time while showing how his reflections—which described the North African “Moors” as largely Berber (Amazigh) communities—also revealed universal patterns of state formation, social cohesion, and civilizational change. His conceptual framework, particularly the theory of asabiyyah (social cohesion), was remarkably advanced. He focused about the interplay of group solidarity, economic activity, and political power in shaping the societies (Ibn Khaldun, 2005).

Ibn Khaldun’s intellectual outlook was profoundly shaped by his direct experience with civilizational crisis and renewal. Born in Tunisia to a family of Andalusian aristocrats exiled from Spain, he inherited a deep understanding of the Moorish rulers’ weaknesses. He complemented this lived knowledge with rigorous study of the Iberian Peninsula’s decline. His life was further framed by epochal disasters: he witnessed the Black Death of the 1340s, which decimated populations across the Mediterranean and Europe, and he lived in the shadow of earlier catastrophes, such as the Mongol destruction of Baghdad in 1258. Furthermore, the persistent political instability of North Africa, intensified by the lingering effects of the crusades, provided him with a continuous case study in the fragility of power. Witnessing these events firsthand granted Ibn Khaldun a unique perspective on history’s cyclical nature, which he would later articulate in his revolutionary theories on the rise and fall of civilizations, masterfully compiled in his Muqaddimah.

In his book Muqaddimah, Ibn Khaldun directly addresses the question of why Islamic societies faced persistent challenges. His analysis is both original and wide-ranging, tracing how moral, political, social, economic, demographic, and institutional factors interact to shape the progress or decline of nations. He pays close attention to modes of subsistence, production, and economic organization, emphasizing that differences in institutions and conditions among societies stem from the ways people earn their livelihood. For example, peasants and Bedouins often lacked complex social relations because the economic surplus they generated was largely controlled by households and tribal leaders. Nevertheless, they adhered to their traditions and employed the division of labour to produce goods. Despite their relative isolation, these groups were not completely detached from urban centres and often adopted aspects of urban culture.

Central to his analysis is the role of people, whose actions determine the rise and collapse of dynasties. He linked these dynamics to a combination of socio-economic, political, demographic, and institutional factors. This emphasis on human agency resonates with Quranic teachings: “God does not change the condition of a people until they change their own inner selves” and “Corruption has appeared everywhere because of what people have done” (cited in Chapra, 2008:840). These verses underscore humanity’s responsibility in shaping economic and social outcomes, including both prosperity and decline. Ibn Khaldun’s theory of the rise of great powers or dynasties rests on the principle of asabiyyah. He argued that solidarity among people motivates them to support a ruler, enabling the formation of larger armies and the pursuit of military campaigns. Economic expansion then generates revenue, which rulers partly allocate to military growth and luxury consumption. To sustain this cycle, governments resort to new forms of taxation.

Multiple factors contributed to the decline of Islamic dynasties in the thirteenth and fourteenth centuries. As Chapra (2008:838) explains: “Most of these are moral degeneration, loss of dynamism in Islam after the rise of dogmatism and rigidity, the decline in intellectual and scientific activity; internal revolts and disunity along with continued external invasions and warfare which ravaged and weakened the country, created fiscal imbalances and insecurity of life and property, and reduced investments and growth; decline in agriculture, crafts and trade; exhaustion or loss of mines and precious metals and natural disasters like plague and famine which led to a decline in the overall population and demand followed by the weakening of the economy.”

The successful development of economies and nations has long intrigued scholars who seek to identify the primary drivers behind prosperity or decline (Kennedy, 1987; Acemoglu and Robinson, 2012). Development economists typically emphasize economic variables along with historical, social, technological, and institutional factors. Others adopt a more heterodox, multidisciplinary perspective, incorporating broader indicators such as human well-being, literacy rates, and the treatment of minorities (Siddiqui, 2020a). Ibn Khaldun’s thesis reflects such a heterodox approach, combining political, social, economic, and moral dimensions to explain societal transformation (Toynbee, 1957; Kennedy, 1987).

However, Ibn Khaldun’s model was necessarily grounded in the largely agrarian economy of the fourteenth century. He did not anticipate the transformative effects of large-scale capital accumulation, which emerged with the Iberian conquest of the Americas (Amin, 1976; Siddiqui, 2024). This influx of wealth disrupted the cyclical patterns he described, inaugurating a linear, expansive, and increasingly global system of economic and political exploitation (Siddiqui, 2018a). In this way, while Ibn Khaldun’s insights remain foundational for understanding premodern societies, subsequent historical developments reveal both the strengths and the limitations of his framework.

Understanding such changes requires attention to both development and justice. Development, ideally, should enhance people’s socio-economic conditions. In its absence, states are compelled to import artisans, technology, and capital in order to expand their economies, trade and increase productivity. Neglecting these factors leads to stagnation, diminished skills, and eventual economic decline, undermining the foundations of prosperity.

II. The Contribution of Ibn Khaldun

Ibn Khaldun is widely regarded as a pioneering figure in sociology, political science, and historiography. He sought to explain the rise and fall of dynasties by analysing developments in the Iberian Peninsula and North Africa, using a rational and systematic approach to social and historical change.

His developmental model integrates both economic and non-economic factors, giving equal importance to material and moral dimensions of progress. According to Ibn Khaldun, economic development cannot be sustained by focusing solely on economic variables. Social, moral, political, legal, cultural, institutional and security-related factors are equally critical to improving people’s well-being. In particular, adherence to the rule of law and justice is essential for fostering long-term investment and economic growth. Justice, and the protection of property, he argued, directly influence investment, entrepreneurship, and innovation—conditions necessary for the prosperity of society (Ibn Khaldun, 2005).

The state, in his view, plays an active but limited role in economic transformation. Good governance, enforcement of contracts, and supportive policies toward business have long-term positive effects on economic development. This requires safeguarding private property to encourage investment and entrepreneurship. As Chapra (2008:842) notes: “This means it was recognised [that] private property and respect for individual freedom within the constraints of moral values is a part of Islamic teachings and has always been prevalent in Muslim thinking. The job of the state …, is in addition to defence and maintenance of law and order, to ensure justice, fulfilment of contracts, removal of grievances, fulfilment of needs and compliance with the ruler’s behaviour… the state must do things that help people carry on their lawful businesses more effectively and prevent them from committing excesses and injustice against each other.”

Ibn Khaldun opposed excessive state involvement in commerce, warning that direct state control or monopolies would undermine private investment and profitability. At the same time, he rejected a laissez-faire approach, advocating instead for a balanced role in which the state provides essential support and regulation while allowing private enterprise to flourish. Higher incomes and profits, he argued, would generate more savings and investment, thereby expanding the economy.

In the Muqaddimah, Khaldun also addressed themes such as private ownership, labour relations, profit-making, and trade through the division of labour. He observed that competition among producers often eroded profits and depleted financial resources: “Competition between them already exhausts, or comes close to exhausting, their financial resources” (Ibn Khaldun, 2005). For him, uncompetitive firms faced bankruptcy due to weak demand, rising labour costs, and heavy taxation. He highlighted that the price of goods consisted of three elements—wages, profits, and taxes. If taxes remained constant, fluctuations in wages could trigger economic downturns. In periods of high demand for labour, wages rose, workers became arrogant and less productive, and businesses suffered.

Furthermore, Ibn Khaldun cautioned against rulers hoarding tax revenues. If the wealth of officials and courtiers—who constituted a key segment of consumers—declined, their reduced expenditures would suppress demand, slow business activity, and ultimately diminish both profits and tax revenues.

III. Role of Government, Division of Labour, and Economic Development

Ibn Khaldun acknowledged the crucial role of government in fostering economic growth. He argued that public expenditures stimulate the economy by raising incomes, which are further amplified through a multiplier effect. However, excessive taxation discourages business activity, leading to economic stagnation and a reversal of the same multiplier process. Welfare programs for the poor, he maintained, are beneficial provided they do not place an unsustainable burden on the treasury. For this reason, governments must use tax revenues wisely to improve the living conditions of their citizens.

Economic development, in Ibn Khaldun’s view, also rests on the division of labour and specialization. Greater specialization enhances efficiency and productivity, thereby generating higher growth rates, rising wages, improved living standards, and broader prosperity. He emphasised the importance of well-regulated markets and exchange. As he observed: “Individual human beings cannot by themselves satisfy all their needs. They must cooperate for this purpose in their civilization. The need that can be satisfied by the cooperation of a group exceeds many times what they can produce individually… [The surplus] is spent to provide the goods of luxury and to satisfy the needs of inhabitants of other cities. They import other goods in exchange for these. They will then have more wealth… Greater prosperity enables them to have luxury and the things that go with it. Consequently, industry and crafts thrive.” (cited in Chapra, 2008:843)

A central aspect of Ibn Khaldun’s developmental vision is education. He emphasized that education should not be reduced to the passive acquisition of information, but must instead cultivate critical thinking, scientific inquiry, and independent reasoning. For him, knowledge was both a tool for personal development and a foundation for societal progress, enabling communities to enhance productivity, engage with broader intellectual traditions, and adapt to changing conditions.

In this framework, higher incomes and profits contribute to increased tax revenues, allowing the government to expand expenditures and provide greater relief to the population. Rising incomes also attract immigration and skilled labour, further enhancing productivity and expanding production and economic growth. At the same time, population growth stimulates domestic demand for consumer goods and food commodities, which in turn encourages investment in industry and agriculture.

Nevertheless, Ibn Khaldun warned that if supply fails to keep pace with rising demand, inflation—particularly in food prices—can undermine prosperity. Since food prices tend to rise faster than those of luxury goods, and more steeply in urban than in rural areas, this dynamic may impose hardship on the population, hinder demographic growth, and ultimately slow down economic development.

Unlike neoclassical economists, Ibn Khaldun did not attribute the rise and decline of dynasties primarily to economic variables. Instead, he adopted a multidisciplinary and flexible framework that emphasized the interplay of social, political, cultural, moral, historical, and demographic factors (Siddiqui, 2020a). This holistic approach, which resonates with contemporary ideas of circular causation in development studies, underscores the interdependence of various dimensions of societal change (Chapra, 2008).

Ibn Khaldun’s intellectual breadth has drawn admiration from modern historians. Toynbee, for example, praised the Muqaddimah for its “breadth and profundity of vision as well as sheer intellectual power,” calling it “undoubtedly the greatest work of its kind ever created by any mind in any time or place” (Toynbee, 1957:331–332). While Toynbee primarily analysed Ibn Khaldun’s historical narratives, the present study aims to go further by situating his political theories within, and sometimes against, the Eurocentric frameworks that shaped much of modern historiography. To do so, it is necessary to integrate more recent scholarship that explores, among other themes, Ibn Khaldun’s theoretical understanding of religion and its role in the state.

By emphasizing honesty, the rule of law, and high moral standards, Islam laid the moral and institutional foundations that enabled social cohesion, economic expansion, and intellectual flourishing

This emphasis on knowledge and moral discipline gains greater meaning when contrasted with the conditions of pre-Islamic Arabia. Before the 6th century, the Bedouin people lived under harsh circumstances marked by poverty, scarce resources, feuds, and violence, while also being overshadowed by the powerful Byzantine and Sassanian empires. In such a context, opportunities for sustained development were limited. Yet, with the emergence of Islam in the early 7th century, profound transformations took place. As Toynbee (1957) observed, Islam represented an “extraordinary deployment of latent spiritual forces by which Islam transformed itself, and thereby transfigured its mission, in the course of six centuries.” By emphasizing honesty, the rule of law, and high moral standards, Islam laid the moral and institutional foundations that enabled social cohesion, economic expansion, and intellectual flourishing (Gibb, 1982).

Ibn Khaldun also linked economic development to the production process and the division of labour. Using bread production as an example, he illustrated how multiple tasks are divided among workers who cooperate under the direction of business owners. The production process, he argued, is inherently social: owners hire workers to produce beyond subsistence needs, with the surplus sold in domestic and foreign markets. Surplus production and international trade thus became central to development, accumulation, and societal change. Long before Karl Marx. Lenin and Rosa Luxemburg, Ibn Khaldun emphasized the importance of overseas markets in sustaining economic expansion (Siddiqui, 2021).

The contrast between Ibn Khaldun and Marx highlights the originality of his framework. Whereas Marx identified class struggle, rooted in contradictions between productive forces and relations of production, as the motor of historical change, Ibn Khaldun emphasized the role of tribal isolation, distance from rulers, and the formation of new solidarities as drivers of institutional transformation. Unlike Marx, he did not conceive of history as structured around class conflict (Siddiqui, 2021).

IV. Political Institutions, Justice, and Decline

Politically, Islam introduced a system of governance led by a khalifah (caliph), elected through the people’s pledge of allegiance. This framework upheld the rule of law, property rights, dignity, and equality before the law. The judiciary was made independent to safeguard property and ensure individual security. Under these circumstances, motivation to invest, take risks, and pursue entrepreneurship flourished. Improved law and order facilitated the large-scale movement of labour, skills, goods, and services, and expansion of markets. As a result, the exchange of ideas, knowledge, and innovations enhanced productivity in agriculture and handicrafts, generating greater efficiency, rise in productivity, output, and trade (Siddiqui, 2018b).

On the social front, the status of women improved significantly. Caliph Umar (reigned 634–644 CE) was a close companion of the Prophet Muhammad, and a key figure in early Islamic history. His rule was marked by vast territorial expansion, including victory over the Persian Empire and Byzantium. Caliph Umar is also known for good governance and establishing justice and rule of law. He also built efficient administrative and legal systems and provided leadership. As acknowledged: “During the pre-Islamic period (al-Jahiliya), we did not consider women to be anything. However, after the coming of Islam, when God Himself expressed His concerns for them, we realised that they also had rights over us. During the Prophet’s days, they played an important role in all different activities, including the war effort… They were accorded property rights not equalled in the West until modern times.” (cited in Chapra, 2008:847)

According to Ibn Khaldun, the eventual downfall of Islamic dynasties stemmed from political illegitimacy. A decisive turning point occurred in 679 when Muawiyah appointed his son Yazid as successor, thereby inaugurating hereditary dynastic rule. Prior to this, successors to the Prophet Muhammad had been chosen by consensus, not heredity. Ibn Khaldun viewed this as a clear violation of Islamic principles. He criticized the decline of the caliphate and its transformation into kingship, remarking: “You have seen how the form of government got transformed into kingship…. The characteristics and traits of the Khalifah disappeared and only its name remained. The form of government became kingship pure and simple. Acquisition of power reached its extreme limit and force came to be used for serving self-interest through arbitrary gratification of desires and pleasures.” (cited in Chapra, 2008: 848)

Over time, favouritism and despotism began to dominate governance, undermining earlier ideals of accountability and justice. As Chapra (2008:848) explains: “The governments became more and more absolute and arbitrary with the passage of time… Accountability of the rulers and political elites, equality before the law, and freedom of expression began to decline in clear violation of the Shariah… State resources began to be misused for the luxury of the royal court and taxes rose gradually beyond the ability of the people to bear. Justice and development accordingly became the worst victims, and solidarity, which previously prevailed between the people and the government deteriorated. The people suffered and their incentive to work, produce, and innovate was adversely affected.” Thus, for Ibn Khaldun, the erosion of justice, accountability, and consensus-based leadership weakened the very asabiyyah that had once enabled the rise of Islamic dynasties.

V. Cyclical Stages of Dynastic Rise and Decline

Ibn Khaldun recognized that nations and their institutions are not static but evolve over time. As he observed: “Old Persian nations … were succeeded by the later Persian, then the Byzantines, and then the Arabs. The old institutions changed, and former customs were transformed … Then, there came Islam. Again, all institutions underwent another change, and for the most part assumed the forms that are still familiar at the present time as the result of the transmission from one generation to the next.” (Ibn Khaldun, 2005:25)

These transformations, he argued, produce new realities and generate new rules and institutions. For Ibn Khaldun, the key driver of such change is contact with other groups, particularly through social interaction, exchanges, and communication with other communities and nations. This interaction can destabilize existing dynasties while simultaneously paving the way for the rise of new, and often stronger, political orders.

Ibn Khaldun famously explained the rise and fall of dynasties in five distinct stages:

Establishment of Authority: The founding stage begins with the overthrow of a dynasty and the creation of new authority. The ruler collects taxes, while the army safeguards property. Ibn Khaldun emphasizes that ‘lower taxes stimulate economic activity’, thereby broadening the tax base and ultimately increasing revenues.
Consolidation of Power: Once authority is secured, the ruler strengthens his grip and begins to claim success exclusively for himself. Ibn Khaldun warns that this exclusionary behaviour creates a rift between ruler and people: “[The] ruler gains complete control over his own people, claims royal authority all for himself, excluding them, and prevents them from trying to have a share in it.” (Ibn Khaldun, 2005:141)
Such self-centred governance undermines solidarity and invites discontent, sometimes leading to rebellion and the eventual rise of a new order.
Leisure and Construction: In the third stage, the dynasty reaches stability. secures power, then rulers turn to leisure, luxury, and monumental construction, such as new cities and buildings.
Stagnation: The fourth stage is marked by complacency. The rulers imitate their predecessors’ policies out of fear that innovation might threaten their security. Ibn Khaldun describes this stage as one of “contentment, peacefulness, and imitation.”
Wasteful Policies and Decline: In the final stage, rulers adopt wasteful and arbitrary policies, alienate capable advisors, and erode the asabiyyah that once sustained the dynasty. As Ibn Khaldun notes: “The loss of the group feeling on which superiority has been built … Thus, the dynasty came to belong to people other than those who had established it. Power went to people other than those who had first won it.” (Ibn Khaldun, 2005:146)

At its height, a dynasty’s strength is reflected in expanding revenues and prosperity. Yet over time, extravagance and excess spending corrode the fiscal base. As expenditures grow, rulers and their courts set standards of consumption that spread to society at large, further straining resources. Ibn Khaldun warned: “The expenditures of the ruler and the people of the dynasty in general grow… [as] extravagant expenditures mount. It spreads to the subjects because people follow the [ways] and customs of the dynasty.” (Ibn Khaldun, 2005:232) From his perspective, sound economic policy requires moderation—low taxes, productive activity, and trade expansion. Only such policies can ensure sustained prosperity and prevent the decline that inevitably follows dynastic extravagance.

VI. Ibn Khaldun’s Economic Philosophy

Ibn Khaldun provided an extensive analysis of economic activity, discussing business growth, markets, income, employment, government spending and overall economic development. He emphasized that the price of a product consists of three components: wages, profits, and taxes. Rising wages, driven by high labour demand stemming from increased product demand, can make labour more expensive. This, in turn, raises production costs, potentially forcing producers to scale down operations or incur losses, contracting overall production and business activity.

Conversely, Ibn Khaldun highlighted the critical role of consumer demand. If wages are too low, workers may not afford goods, reducing sales, profits, and incentives for producers to invest or expand. In such circumstances, economies may stagnate or even enter recession.

Productivity and technological advancement were central to Ibn Khaldun’s economic thought. He observed: “Civilization and its well-being, as well as business prosperity, depend on productivity and people’s efforts in all areas for their interests and profits. When people no longer engage in business for livelihood, and when they cease all productive activity, civilization declines, and everything decays.” (Ibn Khaldun, 2005:365)

For Ibn Khaldun, labour is the primary source of value and profit. Declining profits reduce incentives for risk-taking and investment, slowing economic growth. He also addressed the effects of competition, noting that excessive rivalry could depress prices and diminish profits, threatening the survival of many businesses, particularly smaller enterprises.

Labour, according to Ibn Khaldun, generates surplus production, which can be exported to generate additional revenue for investment in skills, technology, and military capacity. He notes: “The [available] labour is more than is needed. Consequently, it is spent to provide the conditions and customs of luxury and to satisfy the needs of the inhabitants of other cities. They import from those who have a surplus through exchange or purchase. Thus, they [people who have a surplus] acquire a good deal of wealth.” (Ibn Khaldun, 2005:273)

Profits and capital accumulation, he argued, arise only from human labour. Output exceeding basic needs generates surplus, which, after deducting production costs and consumption by business owners, can be reinvested to expand the economic base and increase revenues. He stressed: “It should be known that treasures of gold, silver, and precious stones are no different from other minerals acquired, such as iron, copper… It is civilization that brings them forth, with the aid of human labour, and causes them to increase or diminish.” (Ibn Khaldun, 2005:302)

Ibn Khaldun emphasized that product prices reflect production costs, including labour, transportation, taxes and profits. As population increases, the labour supply grows, allowing more workers to produce luxury goods, thereby expanding national wealth beyond subsistence production (Ibn Khaldun, 2005:415). He also recognized the role of money in facilitating trade, observing that the quantity of money in circulation depends on the wealth produced by the economy (Siddiqui, 2019).

Ibn Khaldun astutely identified the mechanisms of economic contraction, warning that rising competition, increasing wages, and higher production costs could collectively erode profits and, by extension, diminish state tax revenues. He observed a vicious cycle: as productivity declines amid rising labour costs, profit margins are squeezed, leading to a broader slowdown in economic activity. Compounding this, he highlighted the critical role of governance; political instability and a weakened rule of law can shatter producer confidence, triggering business closures and widespread unemployment.

Conversely, Ibn Khaldun championed the stabilizing role of the state. He argued that effective government policies—such as strategic public spending, tax reductions, and support for domestic industries—could stimulate economic growth, spur investment, and generate employment. This prescient advocacy for counter-cyclical fiscal policy finds a direct parallel in the Keynesian economics that dominated the post-World War II “Golden Age of Capitalism” (1945-1980), where deficit spending was used to counteract recessions in advanced economies (Siddiqui, 2023).

Furthermore, the enduring relevance of his insights is powerfully demonstrated by the 20th-century developmental successes of Japan, South Korea, and Taiwan. Their models, based on strong state support for selected industries to promote exports, drive investment, and fuel income growth, serve as a modern validation of Ibn Khaldun’s foundational theories on strategic governmental intervention (Siddiqui, 2009).

VII. Asabiyyah and Economic Production

The nature of asabiyyah is distinct from that of brotherhood. While brotherhood is grounded in principles such as justice, faith, and shared values, asabiyyah is often tied to distinctions of race, language, or physical attributes. For Ibn Khaldun, it was less about individual ties and more about the cohesion of entire social groups.

A key concept in his thought is asabiyyah (group solidarity), which he linked directly to the rise and decline of civilizations. Dynasties, according to Ibn Khaldun, flourished through strong social cohesion, economic prosperity from business growth, supportive governance, and relatively low taxation. Yet, he also argued that as education and knowledge expanded—cultivating higher levels of culture and civilization—asabiyyah tended to weaken. In his view, education played a critical role in transmitting values and sustaining cultural continuity, shaping both individual character and collective identity.

Ibn Khaldun also reflected on imperial expansion and the domination of other nations. As he noted: “Whenever we observe people who possess group feeling and who have gained control over many lands and nations, we find in them an eager desire for goodness and good qualities, such as generosity, the forgiveness of error, tolerance towards the weak, hospitality towards guests….” (Ibn Khaldun, 2005:112)

Ibn Khaldun underscored the critical role of the state in stimulating economic activity. He identified two principal flows in the economy: taxes and expenditures. State spending, he argued, generates demand and sustains economic vitality, akin to water nourishing soil: “The only reason [for the opulence of cities] is that the government is near them and pours it many into them, like the water (of a river) that makes green everything around it and fertilizes the soil adjacent to it, while in the distance everything remains dry […]. The tax money reverts to the people. Their wealth, as a rule comes from their business and commercial activities. The ruler pours out gifts and money upon his people, it spreads among them and reverses to him and again forms him to them. It comes from them through taxation and the land tax, reverts to them through gifts.” (Ibn Khaldun, 2005:430)

During economic slumps, declines in profits and revenues reduce public expenditure, which in turn depresses demand and lowers tax income. Ibn Khaldun’s recognition of the relationship between government spending, aggregate demand, and economic performance anticipates, by several centuries, core insights of Keynesian economics.

His theory also highlights the hierarchical circulation of wealth. Ibn Khaldun observed: “Cities with highly developed civilizations and prosperous inhabitants owe this status to the dynasty, which collects subjects’ property and spends it on its inner circle and their influential associates. Money circulates from subjects to the ruling dynasty and then among its connected inhabitants.” (Ibn Khaldun, 2005:426-427) Labour, he argued, is the source of profits, and differences in people’s economic conditions arise from the ways in which they earn their livelihoods (Ibn Khaldun, 2005:263). Surplus production allows for domestic and international trade, generating wealth and sustaining economic development.

Ibn Khaldun’s theory of the monetary circuit is founded on several key principles. Foremost, he emphasized production over mere exchange, viewing economic activity as a flow between social groups rather than isolated individual transactions. He recognized the pivotal role of money, noting that firms require credit to finance production and investments—a perspective that contrasts sharply with microeconomic theories focused solely on firm behaviour.

VIII. Beyond Khaldun’s Model and its Limitations

While Ibn Khaldun’s framework was groundbreaking, it could not anticipate the emergence of the global capitalist system that transformed Iberian Peninsula and other European countries from the 15th century onward. The Iberian Peninsula, particularly Spain and Portugal, gained immense wealth from the conquest and plunder of the Americas beginning in the late 15th century. Vast amounts of gold, silver, and other resources were extracted, enriching royal treasuries and financing imperial expansion. This influx of wealth fuelled European trade, stimulated banking and commercial growth, and strengthened monarchies, enabling them to wage wars and consolidate power. The riches also supported cultural and scientific advancements during the Renaissance, though they came at the expense of indigenous populations, whose labour and lives were brutally exploited.

The immediate influx of gold and, most significantly, silver from treasures (like the Aztec and Inca) and mines (like Potosí) made the Spanish Crown immensely wealthy overnight. This financed:

Exogenous Capital Injection: In the Muqaddimah, wealth is largely finite, derived from agriculture, taxation, and control of trade routes, with luxury consumption (tarf) leading to moral and military decay. The discovery of the Americas, however, introduced vast inflows of gold and silver into Europe, dramatically expanding capital.
Military and Technological Advantage: Looted wealth financed advanced firearms, cannons, and warships, granting European states permanent military superiority over non-European powers.
State-Bureaucracy and Centralization: European monarchs, such as Ferdinand and Isabella, harnessed the asabiyyah of the Reconquista through centralized bureaucracies, professional armies, and sophisticated tax systems, creating more durable and organized power structures than the tribal dynastic solidarity described by Ibn Khaldun.
Institutional Innovation: The management of overseas plunder and trade led to modern banking, credit systems, and joint-stock companies (e.g., Dutch and British East India Companies), institutionalizing capital accumulation, colonisation and expansion.
Triangular Trade and Exploitation: The Atlantic system, involving manufactured goods from Europe to Africa, enslaved Africans to the Americas, and raw materials back to Europe, created a self-perpetuating cycle of wealth generation that lay entirely outside Ibn Khaldun’s agrarian-based paradigm. (Siddiqui, 1989).

In short, while Ibn Khaldun offered a pioneering analysis of economic development—highlighting money circulation, labour, entrepreneurship, and state expenditure—his framework paid little attention to external forces such as the expansion of international trade, the inflow of global capital, and the institutional innovations of early modern Europe. These developments generated dynamics that far exceeded the scope of the Muqaddimah and shaped the trajectory of the modern world economy in ways Khaldun could not have anticipated (Siddiqui, 2022).

IX. Conclusion

Revenue from thriving businesses enabled rulers to expand armies, consolidate power, and strengthen empires.

Ibn Khaldun endeavoured to explain historical development by identifying the mutually interrelated causes behind the rise and fall of rulers and dynasties. He emphasized that dynastic ascent and decline are interconnected phenomena. Dynasties rose through asabiyyah—group solidarity—combined with wealth generated from business growth, state support, and low taxes. Revenue from thriving businesses enabled rulers to expand armies, consolidate power, and strengthen empires.

More than six centuries ago, Ibn Khaldun recognized the importance of acquiring skills, training, and knowledge to enhance labour productivity, thereby increasing economic surplus and profits. He observed: “Civilization and prosperity depend on productivity and human effort.” (Ibn Khaldun, 2005:238) International trade, he argued, stimulates job creation, output, wages, and profits, fostering wealth accumulation in exporting countries. Increased investment and economic growth generate higher labour demand, raising incomes and boosting consumer demand. On militarism, Ibn Khaldun noted that conquest and plunder required strong unity and patriotism under tribal or religious solidarity. Yet once military campaigns drained resources, businesses weakened, tax revenues fell, and group cohesion eroded, initiating the decline of dynasties.

While Ibn Khaldun’s analysis accurately captures the internal decadence and fragmentation of Al-Andalus, it could not anticipate the rise of centralized, bureaucratic, maritime empires such as Portugal and Spain. These states harnessed the principles of asabiyyah differently, coupled with technological innovation, mercantile capitalism, and new administrative structures, breaking the cyclical patterns of rise and decline described in the Muqaddimah.

However, Ibn Khaldun’s framework had limitations. In discussing the fall of the Moorish rule, he failed to anticipate the vast scale of capital accumulation and the unprecedented plunder carried out by European powers following the discovery of the Americas. This influx of wealth allowed European states to modernize armies, expand trade, and establish global dominance—developments beyond Khaldun’s medieval framework. Moreover, the Atlantic slave trade and colonial exploitation created a vast, external source of wealth that reshaped global economic dynamics, inaugurating the modern capitalist world-system (Siddiqui, 2020b).

In short, Ibn Khaldun presented a dynamic, multidisciplinary theory of development. He argued that the rise and fall of dynasties and economies depend on the complex interplay of political, social, demographic, historical, economic and educational factors over time. Ibn Khaldun also advocated for legitimate governance, emphasizing the importance of democracy, independent judiciaries, accountability, and effective institutions to combat corruption and nepotism. Investments in education, healthcare, infrastructure, and skills development would, in his view, foster entrepreneurship, innovation, and sustained economic development. By implementing such measures, countries could reverse negative cycles and promote long-term prosperity.

Ibn Khaldun’s contribution remains monumental. He developed a sophisticated, interdisciplinary model linking asabiyyah, economic production, importance of education, and political power. His work provides a powerful framework for analysing the rise, maturation, and eventual decline of civilizations, offering enduring insights for understanding the challenges faced by societies both past and present.

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About the Author

Dr. Kalim Siddiqui is an economist specializing in International Political Economy, Development Economics, Trade and Economic Policy. Since 1989, he has been teaching economics at various universities in Norway and the UK. Dr. Siddiqui’s research interests encompass a wide range of topics, including political economy, international trade, and economic history, South Asia, and emerging economies. He has presented papers at international conferences across numerous countries, reflecting his global engagement in the field. His scholarly pursuits span six broad domains: Political Economy, Development Economics, Economic History, Economic Policy, Globalization, and International Trade. Dr. Siddiqui has made significant contributions to research in areas such as trade policy, globalization, and political economy. His work has been published in chapters of edited books and articles published in peer-reviewed journals. For inquiries, Dr. Siddiqui can be reached at: [email protected]

References

Acemoglu, D. and Robinson, J. (2012) Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Cambridge: Cambridge University Press.
Amin, S. (1976) Unequal Development: An Essay on the Social Formations of Peripheral Capitalism, New York: Monthly Review Press.
Chapra, M.U. (2008) “Ibn Khaldun’s Theory of Development: Does it Help Explain the Low Performance of the Present-Day Muslim World” Journal of Scio-Economics 37:836-863.
Gibb, H.R. (1982) “The Islamic Background of Ibn Khaldun’s Political Theory,” in Shaw, S.J. and Polk, W.R. (Eds) Studies on the Civilization of Islam, Stanford: Princeton University Press.
Ibn Khaldun, A. (2005) The Muqaddimah: An Introduction to History, [1377] Princeton: Princeton University Press.
Kennedy, P. (1987) The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500-2000, New York: Random House.
Siddiqui, K. (2024) “The Multinational Corporations, Capitalism, and Imperialism: The Case Study of East India Company” World Financial Review, July.
Siddiqui, K. (2023) “Marxian Analysis of Capitalism and Crises” International Critical Thought 13(4):525-545.
Siddiqui, K. (2022) “Capitalism, Imperialism, and Crisis” European Financial Review, June/July.
Siddiqui, K. (2021) “The Study of International Political Economy” World Financial Review, July/August.
Siddiqui, K. (2020a) “The Study of Economic History and the Importance of Understanding the Past” World Financial Review, November/December.
Siddiqui, K. (2020b) “The Political Economy of the Slave Trade, Capital Accumulation and the Rise of Britain” World Financial Review, January/February.
Siddiqui, K. (2019) “The Political Economy of Essence of Money and Recent Development” International Critical Thought 9(1):85 – 108.
Siddiqui, K. (2018a) “Imperialism and Global Inequality: A Critical Analysis” Journal of Economics and Political Economy, 5(2):266-291.
Siddiqui, K. (2018b) “Capitalism, Globalisation and Inequality” World Financial Review, November/December.
Siddiqui, K. (2009) “Japan’s Economic Crisis” Research in Applied Economics, 1(1):1-25.
Siddiqui, K. (1989) “Colonialism, Hunger and Backwardness in the Developing Countries” Materialisten, (in Norwegian) no.3-4:111 – 135, Oslo.
Toynbee, A. (1957) A Study of History, London: Oxford University Press.

When the Lights Go Out: America’s Retreat from Global Humanitarian Aid

September 2, 2025

By Patrick Reichert and Vanina Farber

This piece explores the ripple effects of America’s retreat from humanitarian aid and what it means for fragile states, global stability, and future financing models for the sector.

In 2023, the United States accounted for 42% of global humanitarian aid.

On July 1^st, 2025, the United States Agency for International Development (USAID), for decades a cornerstone of global relief and development, officially shut its doors. Funding to thousands of life-saving aid programs was terminated. Local clinics, food distribution centers, refugee camps, and education projects lost critical support. In total, close to $40 billion in annual assistance evaporated with the agency’s closure, leaving a gaping void in the global humanitarian landscape.

The decision to shutter USAID wasn’t made in a vacuum. For years, foreign aid faced mounting criticism over failed projects, excessive overhead, and programs that created dependency rather than development. Critics also pointed to the system’s over-reliance on a single donor—a structural vulnerability that aid experts had long warned about.

With the wholesale shutdown of USAID, that structural vulnerability has been laid bare in the starkest terms. Whatever the system’s flaws, it had become the backbone of global emergency response. Furthermore, the majority of that response had clear, measurable impact. Emergency food assistance, vaccine distribution, HIV treatment, disaster relief: these are not experimental programs but proven interventions with well-documented results.

Although shortcomings in the humanitarian system have become increasingly apparent, reform should strengthen the foundation, not bring the whole structure down. This crisis has exposed the urgency to establish a new architecture: one that breaks down silos between humanitarian, development, and peacebuilding efforts; reduces dependency on any single state donor; and fosters collaboration among governments, international organizations, private philanthropy, and local communities. Instead, what we are seeing is not transformation but outright dismantling — leaving millions to bear the cost while the sector scrambles to rebuild from the ground up.

Unfortunately, last month, that void has deepened.

On July 17^th, 2025, Congress passed the Rescissions Act of 2025, eliminating an additional $9.4 billion in unobligated foreign assistance and public broadcasting funds. Nearly $8.3 billion of that came directly from international aid budgets, slashing planned spending on humanitarian relief, health programs, democracy promotion, and economic support. Despite bipartisan concern, the bill passed narrowly along party lines and was swiftly signed into law. Though narrower in scope than the USAID shutdown, it reinforces a troubling trajectory: the dismantling of foreign aid as we know it.

It’s hard to overstate how disruptive USAID’s closure is to the humanitarian sector. In 2023, the United States contributed~$68 billion the world’s humanitarian aid. Of that, USAID’s direct spending accounted for about $40 billion, around 59% of the U.S.’s total humanitarian aid effort.^[1]The agency is being folded into the state department, where it is to be replaced by a successor organization called “America First.”

With the funding cuts, humanitarian operations worldwide came to a standstill. For these programs, and the communities that depend on them, the opportunity to secure new resources and either complete, hand over, or responsibly close out their work is vanishing fast.

For implementing partners already reeling from USAID’s collapse, the Rescissions Act is a double-whammy. In some cases, planned back-up funding is now gone. In others, program transitions that were expected to be gradual are being aborted. And for fragile states that depended on American assistance—from Ukraine to Sudan, Congo to Gaza—the risk of a full-blown humanitarian collapse is growing by the week.

Amidst this uncertainty, we conducted a targeted analysis of USAID’s final funding obligations to understand where the gaps are sharpest—across geographies, sectors, and delivery partners. Our goal was to identify the most exposed communities and programs, and to help inform decisions about where resources and attention are most urgently needed.

Where the Gaps Are Sharpest: Who and What Is Most Affected?

Analysis of USAID’s FY2024 obligations reveals the scale and scope of the disruption. Across more than 24,000 funding records, more than $35 billion had been committed globally. With many of these activities now paused or cancelled, critical humanitarian services face an existential threat.^[2] At an average cost of $4,500 to save a life through proven global health interventions like malaria treatment or child illness prevention, the $35 billion lost from USAID’s shutdown represents an opportunity cost of over 7.7 million lives.

Many of the hardest-hit countries include Ukraine, the Democratic Republic of Congo, and Ethiopia: each expected to receive $1–6 billion in assistance. This funding spanned emergency food aid, healthcare, economic support, and more, all of which now faces uncertainty. Ukraine alone accounted for ~$6 billion of assistance in 2024, largely to bolster its war-torn economy and public services. Likewise, critical humanitarian and health programs (from emergency food aid to HIV/AIDS treatment) comprised some of the largest slices of the USAID portfolio.

Map of USAID 2024 Funding Obligations

USAID 2024 Obligations by International Sector & Implementing Partner

Ukraine: A Wartime Lifeline Cut Off

For Ukraine, USAID’s closure could not have come at a more precarious time. Ravaged by ongoing conflict and economic strain, Ukraine had become the single largest beneficiary of U.S. foreign aid via USAID in 2024, receiving roughly $6 billion. This figure included nearly $3.9 billion in direct budget support to keep the Ukrainian government and essential services running, as well as hundreds of millions for infrastructure and energy repairs to keep the lights on during wartime.

That lifeline has now been severed. The macroeconomic support that helped Ukraine pay salaries, stabilize its currency, and maintain critical public utilities is gone. Likewise, USAID-funded projects shoring up Ukraine’s electricity grid and heating systems have been left in limbo. The consequences are already looming. Without USAID, Ukraine faces a massive budget shortfall in the midst of a costly war and humanitarian crisis. Funds that had been sustaining hospitals, schools, and social safety nets have dried up. While European and other allies may try to fill some gaps, the sudden loss of U.S. economic support poses risks to Ukraine’s stability and its ability to provide basic services during the conflict.

Democratic Republic of Congo: Humanitarian Lifelines Severed

In the Democratic Republic of Congo (DRC), home to one of the world’s most complex and protracted humanitarian crises, the end of USAID funding has been devastating. With more than $1.3 billion in USAID obligations in 2024, the DRC now faces funding shortfalls for programs including food aid, healthcare, and conflict mitigation for millions of Congolese civilians and refugees from abroad.

Aid agencies on the ground warn of immediate and life-threatening impacts. According to Manenji Mangundu, Oxfam’s country director, “USAID cuts will have an immediate and devastating impact on millions of the world’s most vulnerable people who depend on humanitarian aid for survival.”^[3]In eastern Congo’s conflict zones, where over half a million people were already desperate for food, water, and shelter, the sudden funding halt means relief efforts are grinding to a halt.

USAID-funded food convoys and nutrition programs are being suspended, and NGO-run health clinics are running out of supplies. Agencies that relied on U.S. funds for everything from cholera prevention to support for displaced families now find themselves without resources, forced to make decisions about who gets help and who is turned away.

The loss of U.S. aid is also causing chaos for the organizations themselves. Most humanitarian groups in DRC depended heavily on USAID grants; without them, many programs face closure and staff layoffs. Oxfam estimates that the health of up to one million people is now at risk in DRC due to cuts in vital clean water and sanitation services, heightening the threat of disease outbreaks like cholera and measles.^[4]

The Scale of Human Impact: Food, Health, and Fragile States

Of all the sectors upended by USAID’s closure, emergency food aid may be the most immediately consequential. The shock comes at a time when global hunger was already at record highs. The U.N. World Food Programme (WFP) – the world’s largest hunger relief agency, has sounded alarm bells about a massive funding shortfall. In March 2025, WFP warned that 58 million people worldwide are at risk of extreme hunger or starvation unless urgent funding is secured, after seeing drastic donor shortfalls this year (including the loss of U.S. contributions). The agency’s donor income in 2025 is projected to be 40% lower than the year before, a gap that “threatened feeding programmes in 28 crisis zones around the world” from Congo to Sudan, Syria to Yemen.^[5]

The United States has long been WFP’s largest donor, so the abrupt halt of USAID-administered food funding forced WFP to contemplate deep cuts. With donor budgets shrinking and U.S. foreign aid in flux, the agency faces tough choices about where – and whether – it can deliver food aid. WFP’s own estimates show it may receive only about $8 billion of the $16.9 billion it needs to assist 123 million people in 2025.^[6] The funding shortfall comes even as private donations have tripled since 2019. However, private donations only account for ~3.5% of WFP’s funding, nowhere near enough to compensate.

Even before the USAID shutdown, WFP and other agencies had begun rationing aid due to funding gaps. For example, in East Africa, refugees in countries like Ethiopia and Kenya saw their food rations cut by up to 40% in 2023–2024 because donor money wasn’t keeping up.^[7] WFP officials are prioritizing “the worst-affected regions and stretching food rations” as far as possible, but they acknowledge that they are approaching a funding cliff with life-threatening consequences.^[8]

Programs in Sudan, South Sudan, DRC, Palestine, Syria, Yemen, and other hotspots are at risk of suspension in the coming months if new funding doesn’t materialize. In humanitarian terms, this means millions of hungry people could be cut off from food assistance. The most vulnerable – including children, displaced families, and refugees – will feel it first. Already, in Bangladesh, WFP has had to reduce rations for Rohingya refugees due to lack of funds.^[9]In Afghanistan, Yemen, and Syria, programmes to prevent child malnutrition are being scaled back and could halt entirely. The USAID freeze adds immense pressure to an already strained system. The coming months will determine whether stopgap measures can avert the worst outcomes, or whether 2025 will see a dramatic spike in famine and undernutrition because the world’s largest donor stopped feeding the hungry.

Health Programs in Peril: The case of HIV/AIDS

The human impact of the aid cutoff is equally stark in the health sector, particularly for disease-specific programs that had depended on U.S. leadership. One of the most illustrative is the fight against HIV/AIDS. For two decades, the U.S. (through U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) and contributions to the Global Fund) led a global campaign that saved millions of lives and brought AIDS under control in many countries.

However, when the U.S. government paused all foreign assistance, it caused an instant rupture in HIV services: deliveries of life-saving HIV medicines were interrupted, and prevention programs for at-risk populations were halted across dozens of countries.^[10] Millions of people who depend on consistent antiretroviral treatment and outreach support were suddenly and abruptly cut off, left without care from one week to the next.

UNAIDS, the United Nations agency leading the global HIV response, has issued dire warnings. According to UNAIDS projections, if U.S. support for HIV programs is not quickly restored or replaced, the world could see an additional 6 million new HIV infections and 4 million AIDS-related deaths between 2025 and 2029.^[11]“This is not just a funding gap. It’s a ticking time bomb,” said UNAIDS Executive Director Winnie Byanyima, noting how services have “vanished overnight” in some places and health workers have been sent home. The progress of the last decades is at risk of unraveling: before the crisis, global HIV infections and deaths had been steadily declining (new infections were 40% lower in 2024 than in 2010), but that hard-won progress could reverse if treatment and prevention stall out now.

Amid this bleak outlook, there was one notable exception. Following bipartisan pushback, the Senate amended the Rescissions Act of 2025 to preserve PEPFAR funding, stripping out a planned $400 million cut.^[12] This move protected a cornerstone of the global HIV/AIDS response, ensuring that key services—such as antiretroviral distribution and testing—can continue in the short term.

However, the safeguard appears to apply only to PEPFAR. Other HIV/AIDS initiatives, particularly those funded through USAID or routed through broader global health platforms, were not exempted. With nearly $8 billion in international assistance rescinded overall, the fallout for HIV programs outside the PEPFAR umbrella is significant. Community-based prevention efforts, health systems strengthening, and cross-cutting support services are among the casualties, leaving dangerous service gaps in many countries.

On the ground, the disruption also entails knock-on effects. In countries like Mozambique, more than 30,000 health personnel (many of them involved in HIV and TB programs) have lost their jobs as U.S.-funded projects shut down.^[13]Such losses not only hurt HIV treatment delivery but also weaken healthcare overall, as these workers also handle maternal health, vaccinations, and more.

Beyond HIV/AIDS, other health initiatives are suffering a similar fate. Tuberculosis clinics and outreach programs, some funded through USAID’s global health security efforts, are reporting shortages of medicines and diagnostic kits.^[14] Malaria control programs that depended on U.S. funding for bed nets and spraying have scaled back, even as cases surge in places like Ethiopia.^[15] Maternal and child health programs, from vaccine campaigns to nutrition for pregnant women, are likewise facing gaps.

In summary, the global health safety net has unraveled. The sudden withdrawal of the world’s largest donor is being measured in clinic closures, medicine stock-outs, and lives at risk. Whether it’s an HIV-positive mother in Kenya, a malaria-stricken child in Ethiopia, or a TB patient in Ukraine, vulnerable people are seeing their lifelines weakened. Health experts fear that without an urgent solution, the coming years could see resurgences of epidemics that had been under control, and a loss of confidence in health systems in some of the world’s poorest countries.

Can the Void Be Filled?

The closure of USAID’s programs in 2025 sent shockwaves through the humanitarian sector. The passage of the Rescissions Act of 2025 has now cemented a broader shift: a systemic retreat of the United States from its long-held role as the world’s leading humanitarian donor. Together, the agency’s shutdown and the rescissions mark an abrupt and ideologically driven pivot in U.S. foreign policy, one that deprioritizes humanitarian principles in favor of short-term domestic optics.

Front-line services have been disrupted, implementing partners destabilized, and local capacity gutted. In conflict zones and refugee camps, people who yesterday had food, medicine, or shelter provided by an American-funded project are waking up today to nothing. The ripple effects will not stop here. With each round of funding clawbacks, the humanitarian landscape becomes more fragile, more reliant on fewer actors, and more vulnerable to political shocks. The instability has rippled through organizations as well – tens of thousands of aid workers have lost employment globally due to the cuts, undermining local capacities built up over years.^[16]It is a stark reminder of the interdependency and fragility of the humanitarian system and how quickly gains can be reversed.

Yet, amid the uncertainty, there are seeds of adaptation. Other nations and international institutions are under pressure to step up their contributions, even as many face their own budget constraints. Philanthropic actors, exemplified by Project Resource Optimization (PRO)^[17], are innovating to plug critical gaps, however modestly. And affected communities and governments are striving to do what they can to fill the void – whether it’s health ministries reallocating scarce domestic funds to keep HIV clinics open, or local NGOs rallying volunteers to continue aid distribution on a shoestring. These efforts highlight the resilience and resourcefulness within the humanitarian sector.

Still, the road ahead remains challenging. The scale of disruption, $30+ billion annually, is not something that can be easily or quickly patched. The worry is that without prompt action to restore funding streams, today’s cutbacks will become tomorrow’s full-blown catastrophes – be it famine, disease outbreaks, or instability from unaddressed crises. The international community is therefore at a crossroads. Will new coalitions of donors emerge to restore at least a portion of the lost aid? Will cost-effective initiatives like PRO inspire more strategic giving to soften the blow? Can some projects spin-off into revenue-generating programs? Or will the world’s vulnerable populations simply be left to bear the brunt of a political decision beyond their control?

The 2025 USAID closure has infused a sense of urgency and clarity about what is at stake. This moment demands not just emergency stopgaps, but a fundamental rethinking of how global aid is structured, financed, and sustained. The old model—with its heavy dependence on a single donor and rigid institutional silos—has proven dangerously fragile. The new architecture must be more resilient: distributed across multiple funding sources, integrated across sectors, and rooted in partnerships that strengthen rather than replace local capacity.

The hope is that this crisis will catalyze not just a restoration of funding, but a reimagining of the humanitarian response itself. The Rescissions Act should be a rallying cry for systemic change. The world cannot afford for the lights to go out, but neither can it afford to simply flip the same old switches. The system holds—until it doesn’t. Now it’s time to build one that will.

This article was originally published in The European Business Review. It can be accessed here: https://www.europeanbusinessreview.com/when-the-lights-go-out-americas-retreat-from-global-humanitarian-aid

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About the Authors

Patrick Reichert is the Associate Director & Research Fellow at the elea Chair for Social Innovation at IMD. Patrick conducts research at the intersection of entrepreneurship, finance and social impact, with a particular focus on the mechanisms and practices that investors use to seed investment in social organizations.

Vanina Farber is the elea Professor for Social Innovation and Dean of the EMBA Programme at IMD. Vanina is a macroeconomist and political scientist specializing in humanitarian finance, impact investment, and social innovation, with more than twenty years of experience in research, teaching, and consultancy. At IMD, Vanina designs and directs the Driving Innovative Finance for Impact (DIFI) program, equipping leaders with tools to drive sustainable financial solutions.

References

^[1] https://www.theguardian.com/commentisfree/2025/feb/13/donald-trump-elon-musk-usaid-soft-power?

^[2] Analysis draws upon data from the official US foreign assistance website: https://foreignassistance.gov/

^[3] https://www.oxfam.org/en/press-releases/oxfam-reaction-usaid-funding-cuts-drc

^[4] https://www.oxfam.org/en/press-releases/oxfam-reaction-usaid-funding-cuts-drc

^[5] https://www.reuters.com/world/uns-wfp-says-58-million-face-hunger-crisis-after-huge-shortfall-aid-2025-03-28

^[6] https://executiveboard.wfp.org/document_download/WFP-0000161321

^[7] https://www.theguardian.com/global-development/ng-interactive/2025/feb/21/the-impact-has-been-devastating-how-usaid-freeze-sent-shockwaves-through-ethiopia

^[8] https://www.reuters.com/world/uns-wfp-says-58-million-face-hunger-crisis-after-huge-shortfall-aid-2025-03-28

^[9] https://www.reuters.com/world/uns-wfp-says-58-million-face-hunger-crisis-after-huge-shortfall-aid-2025-03-28

^[10] https://www.unaids.org/en/impact-US-funding-cuts

^[11] https://healthpolicy-watch.news/millions-at-risk-of-hiv-infection-and-death-after-us-funding-cuts-warns-unaids

^[12] https://www.theguardian.com/us-news/2025/jul/17/us-senate-passes-aid-public-broadcasting-cuts-victory-trump

^[13] https://healthpolicy-watch.news/millions-at-risk-of-hiv-infection-and-death-after-us-funding-cuts-warns-unaids

^[14] https://www.unaids.org/en/impact-US-funding-cuts

^[15] https://www.theguardian.com/global-development/ng-interactive/2025/feb/21/the-impact-has-been-devastating-how-usaid-freeze-sent-shockwaves-through-ethiopia

^[16] https://www.globalpolicyjournal.com/blog/10/06/2025/cuts-usaid-fallout-continues-part-2

^[17] Project Resource Optimization (PRO) is an independent initiative formed in 2025 with a singular mission: to channel resources to the most urgent and effective aid programs left stranded by USAID’s shutdown. PRO uses rigorous analysis, sector expertise, and a “living” database of projects to guide donors. It scours the list of cancelled or paused USAID programs to identify those that are high-impact, cost-effective, and time-sensitive – for example, a partially completed health clinic that just needs a few months of funding to finish, or a food aid program mid-way through feeding a community. These vetted opportunities are then shared with philanthropies, charities, and even high-net-worth individuals who are eager to step in and contribute funding.

Court Rules Trump Overstepped Authority on Global Tariffs

September 1, 2025

President Donald Trump’s trade strategy suffered a major setback after a federal appeals court ruled that most of his “reciprocal tariffs” were imposed illegally.

In a 7-4 decision on Friday, the U.S. Court of Appeals for the Federal Circuit said Trump exceeded his authority when he announced sweeping levies on nearly every trading partner during his April 2 “liberation day” address. The court ruled that the 1977 International Emergency Economic Powers Act (IEEPA), which Trump cited to justify the tariffs, does not grant the president authority to impose such duties.

“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the judges wrote.

The duties, which cover more than 60 nations and in some cases reach as high as 50%, will remain in place until Oct. 14 while the administration appeals to the Supreme Court. Before the ruling, Trump’s tariffs were on track to affect nearly 70% of all U.S. imports. If struck down, they would cover only about 16%, according to the Tax Foundation.

The court also rejected Trump’s justification for tariffs on China, Mexico and Canada, which the administration said were necessary to combat fentanyl trafficking. Those levies, along with the broader reciprocal tariffs, were deemed unlawful.

Trump responded by vowing to fight the decision. “If allowed to stand, this Decision would literally destroy the United States of America,” he wrote on social media.

If the Supreme Court upholds the ruling, Trump could still seek other legal avenues, such as the 1974 Trade Act. But that law limits tariffs to 15% for 150 days unless Congress extends them, significantly narrowing his options.

Not all of Trump’s trade measures were struck down. His sector-specific tariffs on steel and aluminum remain untouched because they were imposed under separate presidential authority known as Section 232. Earlier this month, those duties were expanded to cover more than 400 additional products. Trade lawyers say such targeted tariffs are less vulnerable to legal challenges.

Levies first imposed on China during Trump’s first term and later maintained by Joe Biden also remain intact. In addition, the administration’s elimination of the “de minimis” exemption on imports under $800 — a move that hits small and medium-sized businesses — is unaffected by the appeals court ruling.

Related Readings:

Trump Imposes New Tariffs on Over 90 Countries

Trump Announces Trade Pact With Indonesia, Slashes Tariffs

Trump’s Tariffs Threats Against the Global South, ASEAN and the Philippines

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How Ukraine Lost its Future: From China’s Bridge to US Military Hub

September 1, 2025

Silhouettes of a soldiers and a main battle tank on a battlefield with Ukraine flag against the sunset.

By Dan Steinbock

As the endgame looms over the proxy war in Ukraine, the catastrophic costs of the unwarranted conflict continue to soar. There was an alternative future for Ukraine, based on development. But it was purposely denied.

The war in Ukraine was not only avoidable but there was an alternative and more peaceful future.

Since the onset of hostilities in Ukraine three years ago, I have argued that, whatever its stated rationales, the war would “penalize severely Ukraine, Russia, the US and the NATO, Europe, developing economies and the global economy.”

The war in Ukraine was not only avoidable but there was an alternative and more peaceful future. It was purposely collapsed because it did not fit the neoconservatives’ plans for Ukraine.

Zelensky’s dream of Ukraine as China’s bridge to Europe

Even as Ukraine-Russian tensions began to escalate a decade ago, trade ties between Ukraine and China expanded after President Viktor Yanukovych’s state visit to Beijing in 2013. Four years later, Ukraine, now under President Poroshenko, joined China’s Belt and Road Initiative (BRI). And in 2019, China bypassed Russia as Ukraine’s biggest single trading partner.

Together, China, Ukraine’s new economic partner, and Russia, its historical trade partner, absorbed a fourth of Ukraine’s exports. That figure was over six times the share of the US.

In June 2021, China and Ukraine signed a deal to strengthen cooperation in multiple areas, particularly in infrastructure financing and construction. In 2021, overall trade boomed to $19 billion, having soared 80% since 2013. To Ukraine’s President Zelensky, the BRI meant an alternative future that would be more stable and prosperous. And so, in a phone conversation with President Xi Jinping, he called China “Ukraine’s No. 1 trade and economic partner in the world.” expressing hope that Ukraine could become “a bridge to Europe for Chinese business.”

In just a year, major Chinese companies started operations in construction, food and telecoms. New contracts signed by Chinese companies in the Ukrainian engineering market exceeded $2 billion for two consecutive years.

But this was not the future that was planned for Ukraine in the White House.

Hammering Ukraine into a military-industrial hub

From 1991 to 2014, the US flooded Ukraine with $4 billion in military assistance , even though it wasn’t a NATO member. By 2021, over $2.7 billion was added to the figure, plus over a billion provided by the NATO Trust Fund.

To Erik Prince, it heralded a great money-making opportunity, Iraq déjà vu. As the founder of the private US military contractor, then known as Blackwater, Prince had long supplied mercenaries to the CIA, Pentagon and State Department for covert operations, including torture and assassinations. In early 2020, Prince outlined a roadmap for the creation of a “vertically integrated aviation defense consortium” that could bring $10 billion in revenues.

Prince desperately needed the Motor Sich factory, which already had a deal with Beijing Skyrizon Aviation. The Chinese company had bought its 41% stake already in 2017. However, Biden’s election win undermined Prince’s plan. Moreover, his Ukrainian partners got under criminal investigation for alleged efforts to sway the 2020 presidential election and the investigation included President Biden’s son and his stakes in Ukraine. Washington blacklisted the Chinese firms involved, then Ukrainian court froze their holdings for reasons of “national security” and Chinese companies and dealmakers were sanctioned.

Nonetheless, the idea of a Ukrainian military-industrial complex remained attractive to the US and Ukraine, where the state-controlled defense sector employed more than 1 million people and had been moving, with rising US influence, toward military procurement since 2014. To the Biden administration, it offered a massive military-logistical hub that could serve both the US and NATO.

Yet, by late fall 2022, even European Commission President Ursula von der Leyen acknowledged Ukraine’s losses in the war with Russia amounted to 100,000 soldiers and 20,000 civilians.

Today, three years later, the total cost of reconstruction and recovery in Ukraine is estimated at $524 billion over the next decade – almost three times Ukraine’s GDP 2024.

The military aid has brought neither peace nor security. But it has prolonged Ukrainians’ suffering.

The military aid has brought neither peace nor security. But it has prolonged Ukrainians’ suffering. To date, the US alone has provided $67 billion in military assistance since February 2022 and $70 billion in military assistance since 2014. These have been coupled with military assistance via the presidential emergency authority by up to $32 billion from Pentagon’s stockpiles.

That’s a total of $167 billion – in wasted lives, economic prospects and global prospects.

Economic and human costs of the avoidable war

After the end of the Cold War, the peaceful rise of Ukraine was the prevailing reality. But as the plans of development and welfare were replaced with those of geopolitics and warfare, Ukrainian GDP has suffered a drastic plunge (see black line in the below figure). Assuming incremental trends in the next half a decade, Ukrainian GDP is anticipated to reach $283 billion in 2030. But if the hostilities of 2022-25 had been avoided, this figure could have been $372 billion (light-blue line). And if all these hostilities since 2014 had been avoided and if Ukraine had been able to continue Zelensky’s infrastructure modernization with Chinese development, Ukraine’s GDP could have soared to $482 billion in 2030.

The fall of Ukrainian GDP, current prices, 1990-2030 — *Ukrainian GDP, current prices, 1990-2030*
*Source: IMF, WEO Outlook Database*

These missed opportunities reflect a catastrophic collapse of a future that Ukraine could have had, if it had been allowed to build on development and prosperity. Had that peaceful trajectory prevailed, Ukraine’s economy in 2030 would be 70% larger than what it is likely to be.

The demographic collapse is even worse. As the NATO expansion intensified in Eastern Europe and geopolitical tensions substituted for peaceful development, Ukraine’s population has declined from 51 million in 1990 to just 34 million people.

Ukraine has lost over 33% of its population since the end of the Cold War; and 9 million in just three years. Due to migration, the final toll is even worse. Since spring 2022, millions of Ukrainians have fled the country, with nearly 7 million Ukrainian refugees living abroad.

Since the onset of hostilities, total Ukrainian casualties amount to 400,000.

The demise of Ukraine?

In spring 2022, the West promised Ukraine freedom and democracy, security and prosperity. Today, most freedoms have been compromised under the fog of war. Democratic institutions are overshadowed by external interests and domestic oligarchs. Many national assets have been mortgaged to Western interests for years to come.

Had Ukraine followed the development trajectory, its economy would not be the size of Algeria in 2030. It would be a half-trillion-dollar economy, like Iran or South Africa. Per capita income would be more than 40% higher than today. Economic opportunities might have reversed some of the migration flows back to Ukraine, which would have over 10 million more inhabitants than today.

And if the war is allowed to fester further, global economic prospects will be penalized even worse.

The proxy war between the US-led West and Russia in Ukraine has proved just as catastrophic as projected in 2022 and thereafter. It has contributed to secular stagnation in the US and particularly in Europe where the misallocation of scarce allocations from welfare to rearmament is compounding a series of cost-of-living crises. Coming at the heel of the global pandemic, the consequent food and energy crises have severely aggravated the challenges of the Global South. And if the war is allowed to fester further, global economic prospects will be penalized even worse.

What happens in Ukraine will not stay in Ukraine. As long as aggressive geopolitics is favored at the expense of proactive international diplomacy, even promising futures can turn into dark wastelands.

The original commentary was published by China-US Focus on August 28, 2025.

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About the Author

Dan Steinbock is an internationally renowned visionary of the multipolar world and the founder of Difference Group. He has served at India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/

The New Rules of Global Business: Why Geopolitics Now Dictates Where and How Companies Operate

August 31, 2025

Global management team business people meeting silhouettes rendered with computer graphic.

By Srividya Jandhyala

Global businesses are navigating unprecedented geopolitical shifts that redefine market access, competition, and investment security. Srividya Jandhyala examines how structural changes in trade and regulations are reshaping corporate strategies worldwide. Her insights help executives understand geopolitical risk and adapt operations for long-term resilience in an increasingly fragmented global economy.

Today’s business leaders are facing a complex geopolitical landscape. From trade wars and sanctions, to supply chain disruptions and political conflict, they must navigate a world they are not always prepared for.

How can companies, managers, and employees of global businesses make sense of our rapidly evolving world? How can they assess whether their risk is increasing or decreasing?

Traditionally, the assessment of geopolitical risk was centered around specific events. For example, a global company will expect geopolitical risk to be high if war breaks out between two countries it has operations in, and the risk to be low when the two countries establish a military alliance. But this approach does not account for structural changes that are likely to remain even as the intensity of an event itself dies down. Another issue with the traditional approach is that it fails to help companies determine how geopolitical events will affect their businesses. If strategic rivalry between the world’s biggest economies is an important geopolitical event, what are the implications for a company’s strategy and operations? Are there specific dimensions of a company’s operations and profitability that will be impacted?

The biggest risk for companies is that the institutional scaffolding that supports cross-border trade and investment is being reshaped. This means global companies have to find alternatives or learn to manage in a world where they have less confidence in their ability to transact across borders. Here are four ways geopolitics is reshaping global businesses.

Geopolitics shapes where you can compete. In years past, global companies found new markets as countries opened up. Liberalization and privatization were buzzwords that provided new market opportunities for internationalizing firms. Today, global companies can no longer take access to international markets for granted. Many governments are imposing increasingly stringent conditions and requirements for firms to access their domestic markets. This restricts the number and type of firms that can operate in a given country or sell their products/services there. When Indian firms learnt of the 50% tariff rate imposed on their products by the US, they quickly realized that this wasn’t just a tax; rather, their market access had been cut. In a sector like textiles, where margins are low, Indian firms would have to sell below cost just to continue operations in the US, or risk losing the market to other competitors.

Geopolitics influences how level the playing field is. In an ideal world, companies from around the world would compete on attributes like innovativeness, efficiency, and product quality. In other words, the rules of the game would level the playing field, no matter where in the world your company came from. Today, however, companies have to recognize that a level playing field is a myth. Domestic firms have an advantage over foreign rivals because of policy and regulatory advantages. Courts are more likely to rule in favor of domestic firms. Local companies also receive subsidies and other forms of support from their home governments. Germany’s largest semiconductor manufacturer, Infineon Technologies, received a nearly 1 billion euros subsidy for the construction of a new semiconductor manufacturing plant in Dresden.

At the same time, the playing field is also not level among foreign companies. India’s shrimp farmers are worried about losing market share to their Ecuadorian competitors because of differential tariffs; 50% for India and 15% for Ecuador. Brazilian products face 50% tariffs while their counterparts in other countries have a lower tariff rate. The fundamental principle of the World Trade Organization, the Most-Favored-Nation clause, is increasingly challenged or ignored.

Geopolitics shapes how secure a company’s foreign investments are. A central concern for any company investing abroad is that their physical assets and human capital will be safe. But investing in a foreign market is increasingly fraught because of geopolitical tensions. Carlsberg, the Danish brewer, assessed its Russian assets to be worth roughly $1 billion in 2023, but agreed to sell them for roughly $320 million as when it sought to exit the country in late 2024. Wells Fargo, an American bank, reportedly suspended all travel to China after a senior executive faced an exit ban and was blocked from leaving the country. Companies are left wondering how to ensure that investments are protected, guarantee the safety of employees or expatriate managers, or repatriate profits.

Geopolitics determines the technical and operational standards. Werner von Siemens, the founder of the eponymous German conglomerate, is said to have noted that “He who owns the standards, owns the market”. Some companies appear to have learnt this lesson well; American technology companies like IBM and Qualcomm earned hundreds of millions from licensing their intellectual property. But today’s geopolitical contestation is also about controlling standards in new technologies. New 6G standards adopted by the International Telecommunication Union were championed by the Chinese Academy of Sciences and China Telecom. BYD’s new megawatt chargers, which can add up to 400 kilometers of range in just five minutes, could set new standards in electric vehicles. Companies that license such technologies may wonder if geopolitical competition would lead governments to turn on and off access.

Global businesses need to adapt

Major geopolitical events like military conflicts and trade wars are forcing companies to evaluate how their businesses will be impacted. While such events no doubt have an immediate impact, managers must also understand how the structural factors enabling cross-border trade and investment are changing. The challenge for global businesses is to figure out an alternate system to support their international operations.

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About the Author

Srividya Jandhyala is an Associate Professor of Management at ESSEC Business School. She is the author of the bestselling book The Great Disruption: How Geopolitics is Changing Companies, Managers, and Work.

Essential Tips For Keeping Your Produce Fresh This Harvest Season

August 29, 2025

August marks the start of the peak harvest season in the UK, which continues through September and into October. It is typically the busiest period of the year for farmers, who often work around the clock to harvest the crops they have been growing throughout the year. This stage is so important, as the success of the entire year’s efforts depends on the timing and management of the harvest. In this article, we will explore some of the key challenges farmers face during this period, along with effective strategies for maintaining produce at its freshest.

The Importance of Freshness During Harvest Season

The freshness of produce is important for several reasons, all of which underscore the fact that fresher produce equates to higher quality.

Market Value

Whether produce is sold to wholesale markets, retailers, or directly to consumers, its quality determines the price. In wholesale and retail settings in particular, food is graded according to quality, with prices set accordingly, making freshness a key factor in maximising value.

Reputation and Repeat Business

For farmers who are more consumer-facing, such as those operating farm shops or selling at local markets, the freshness of their produce directly reflects the quality of their farm and brand. It plays a vital role in customer satisfaction and can be a deciding factor in whether customers choose to buy from them again.

The Biggest Challenges to Keeping Produce Fresh

There are many challenges that can affect the freshness of harvested produce, and it is important to be aware of these in order to identify and implement effective solutions.

Time Pressure After Picking

As soon as crops are harvested, they begin to lose their freshness immediately. It is therefore essential to carry out harvesting promptly and to have appropriate storage arrangements in place for the produce once it has been gathered.

Temperature Control Gaps

Inconsistent or delayed cooling after harvest can quickly cause produce to lose moisture, texture, and flavour. Maintaining the right temperature from field to storage is essential to slowing natural deterioration.

Damage During Transportation

Even minor bumps, or abrasions during handling and transit can compromise the integrity of produce and accelerate spoilage, which is why using a reliable courier is so important.

Slow and Unreliable Logistics

Delays in transporting produce from farm to destination can significantly compromise its freshness. In many cases, the decision to harvest may only be made on the day itself, meaning courier arrangements must often be made at short notice. Having a reliable courier service that can be booked last-minute and deliver quickly is therefore essential.

Unpredictable Weather

Both droughts and heavy rainfall can affect the freshness and harvestability of produce, influencing the precise timing of when it is harvested.

Strategies Farmer’s Can Use to Keep Produce Fresh

By its very nature, farming is subject to various factors that can affect crops, many of which are beyond control. However, the following are some of the most effective measures you can take to help preserve the freshness of your produce.

Harvest At An Optimal Time

Plan harvesting to coincide with peak ripeness while factoring in weather conditions. Picking too early or too late can affect both flavour and shelf life.

Have A Cooling Strategy

Introduce cooling measures immediately after harvest to slow the natural deterioration process. Whether using cold storage, refrigerated transport, or other cooling methods, it’s essential to keep temperatures cool.

Use a Reliable Same Day Courier

Partner with a dependable same day courier service like Speedy Freight who is capable of last-minute bookings, fast delivery and has a reliable reputation that they won’t let you down. This ensures produce reaches its destination quickly, preserving quality and reducing the risk of spoilage.

Maximising The Success Of Your Harvest

By prioritising timing, temperature control, efficient logistics, and being aware of potential challenges, farmers can significantly extend the freshness of their harvest. Implementing these measures will increase quality and protect market value, ensuring that the hard work invested throughout the growing season delivers the best possible returns.

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The Obliteration Doctrine in Gaza – And Beyond

August 28, 2025

The destruction of Omar Al-Mukhtar Street in central Gaza and the rubble of Al-Shorouk Tower

By Dan Steinbock

Israel’s Obliteration Doctrine was first tested already two decades ago, without subsequent international intervention. It has precursors, but the total devastation achieved in Gaza is world historical. As a blueprint, it is a prelude to much worse.

Not so long ago, UN Secretary-General António Guterres warned that “nothing can justify the obliteration of Gaza that has unfolded before the eyes of the world.”

Just days ago, Israel’s National Security Minister Itamar Ben Gvir, a disciple of the late far-right rabbi Meir Kahane notorious for his promotion of racism and ethnic cleansing, visited an Israeli prison where he had a large photo of the obliteration in Gaza hung for Palestinian security prisoners to see. In a video, Ben Gvir points to the obliteration: “This is how it’s supposed to look.”

Israeli Minister Ben-Gvir and the footage captioned: “The Israel Prison Service placed photos of destroyed Gaza in the terrorists’ wings — so they understand that you don’t mess with the people of Israel!”
Source: (Screen capture/ Courtesy Office of National Security Minister Itamar Ben Gvir)

As I show in my new book The Obliteration Doctrine, the ultimate objective of obliteration is the total destruction of something so that nothing of it remains.

But actually, this hellish nightmare was first tested already two decades ago.

The test laboratory of Dahiya, Beirut

The pioneering Obliteration Doctrine was first outlined in 2005 by Gadi Eizenkot, former chief of General Staff. Interestingly, he is no extremist. Subsequently an influential Israeli military leader and politician, Eisenkot supports Israeli democracy and a two-state solution. But as a military strategist, he opened the Pandora’s Box that both Israel’s right-wing Likud and Messianic far-right would subsequently embrace – and he resigned from Netanyahu’s war cabinet only after its darkest destruction.

Two decades ago, Eisenkot’s strategy was based on the idea that the Israel Defense Force (IDF) would have to severely damage Dahiya to create effective deterrence against Hezbollah in southern Lebanon. His predecessor had been compelled to quit for having been “too cautious.” The assumption was that the deployment of disproportionate power would end Hezbollah for good, or at least for a sustained period.

When the IDF embraced the nascent Obliteration Doctrine, the Cold War was history and ad hoc international criminal tribunals had been set up. The Genocide Convention was in the Rome Statute of the International Criminal Court (ICC) and the UN even had its special adviser with a mandate for warning the UN on the Prevention of Genocide. So, ostensibly, things were in place to deal with a military doctrine that explicitly targeted civilians and civilian infrastructure.

Yet, when Eisenkot stated in public that Israel would embrace a new military doctrine—that of extreme disproportion which virtually ensured genocidal atrocities—there was no consequential international outcry, not to speak of intervention. It was this silence that made a war of total obliteration a matter of time rather than a matter of principle.

Piloting the Obliteration Doctrine in Dahiya, Beirut
Source: Wikimedia

Civilian devastation as strategic objective

Armed with the Obliteration Doctrine, the IDF deliberately targeted civilian infrastructure to wreak massive suffering on the civilian population, presumably seeking to establish an effective deterrence. Following the 2006 Lebanese War, the doctrine was deployed again in the 2008–2009 Gaza War, which caused the deaths of 1,200–1,400 Palestinians. Over 46,000 homes were destroyed, making more than 100,000 people homeless. As Eisenkot saw it:

What happened in the Dahiya quarter of Beirut in 2006 will happen in every village from which shots will be fired in the direction of Israel. We will wield disproportionate power and cause immense damage and destruction.

After these efforts, the Obliteration Doctrine was effectively in place. Civilian devastation was no longer unfortunate collateral damage, but the very focus of a new military doctrine. So, 17 years before October 7, 2023, there was a broad public consensus among both the Israeli military and political elites that “in the next war the IDF would deploy disproportionate force” and feature heavy firepower and “immense destruction.”

Oddly enough, the very public launch of and debate on what was then described as the Dahiya strategy attracted little attention from international bodies and authorities ostensibly dedicated to genocide prevention.

“Exterminate all the brutes!”

Nonetheless, after just one month of the Gaza War, Eisenkot charged the Netanyahu cabinet for “near-criminal behavior” as the PM tried to hide protocols, leak lies to media and sway war goals to appease the Messianic far-right. With advancing obliteration, Eisenkot had lost his own son and two nephews in a war he now opposed. Yet, the doctrine that was foundational to the Obliteration Doctrine was to a great extent his handiwork.

These arguments unleashed a broad Israeli and international condemnation, but they were aligned with the strategic objectives of the Obliteration Doctrine.

In November 2023, Major General (Res.) Giora Eiland, former head of Israel’s National Security Council, took the doctrine even further, arguing as the Messianic far-right had done since the days of rabbi Meir Kahane and the ultra-nationalist rabbis in the 1970s, that since most Gazans support Hamas, all Gaza women are the mothers, sisters, and spouses of Hamas murderers. So, Israel was not only entitled but morally obligated to ignore their pain.

In this view, collective punishment was not a violation of international law or a perverse moral code. Somewhat like Joseph Conrad’s Mr. Kurtz in The Heart of Darkness (1899), Eiland seemed to concur: “Exterminate all the brutes!”

It was the ultimate ethical dictum of inhumanity. Just as the Nazis evoked collective punishment against Jews, Poles, Communists and gypsies in the 1940s, Eiland seized on it to suggest that what the military might not achieve, biowarfare could: “Epidemics in the South [of Gaza] will bring victory closer and will decrease casualties among IDF soldiers.”

These arguments unleashed a broad Israeli and international condemnation, but they were aligned with the strategic objectives of the Obliteration Doctrine.

Origins of the Obliteration Doctrine

In historical view, the kind of obliteration seen in Gaza in 2023–2025 is reminiscent of scorched-earth policy, a longstanding military strategy of destroying everything that allows an enemy military force to fight a war, including the critical infrastructure, military and state institutions, buildings, crops, livestock, security and so on. 20^th century examples feature the American Civil War and American Indian Wars, and Nazi Germany’s war against the Soviet Union.

Yet, the Obliteration Doctrine goes further insofar as it aims at either devastating the entire infrastructure of the target population or destroying it, to achieve “voluntary” mass displacement, dispossession and ultimately extermination.

Another historical component of the Obliteration Doctrine is collective punishment, which violates the principle of individual responsibility since it targets individuals who are not responsible for the perpetrated acts. By the same token, it undermines modern legal systems, which restrict criminal liability to individuals. Yet, it has been widely deployed throughout history, particularly in postwar anti-colonial liberation struggles.

The third historical element of the Obliteration Doctrine is civilian victimization, or the purposeful use of violence against non-combatants in a conflict. It has featured lethal force, including killings, and non-lethal forms of violence, such as forced expulsion, torture, and rape, as evidenced by the US Strategic Hamlet program during the Vietnam War.

The deployment of scorched-earth policy against non-combatants is banned under the 1977 Geneva Conventions. Collective punishment is prohibited in both international and non-international armed conflicts. Civilian victimization is prohibited by the Geneva Conventions.

Yet, thanks to support by Washington and inactivity by Brussels, Israel has been able to ignore all these prohibitions.

Massive indiscriminate area bombardment

Since the postwar era, obliteration has also been accompanied by largely indiscriminate, massive area bombardment. In Gaza, one of the most densely inhabited areas in the world, it set a historical precedent. Since October 7, 2023, the US spent at least $22.8 billion on military aid to Israel and related US operations in the region.

Based on its historical precursors, massive bombardment and the deployment of artificial intelligence to maximize death and devastation, the result was the Obliteration Doctrine. By late April 2024, after barely half a year of hostilities, Israel had dropped over 70,000 tons of bombs over Gaza, surpassing the World War II bombing of Dresden, Hamburg, and London combined.

Scale of Gaza’s Obliteration = Hamburg + London + Dresden
Source: Wikimedia

The scale of destruction in Gaza has been viable only with the incessant flow of US weapons, guaranteed by U.S. military aid and funding to finance it. This aid is a result of half a century of bilateral military cooperation in the dark shadows of history, starting with Israel’s military ties with apartheid South Africa and participation in the US “Dirty Wars” in Latin America, sub-Saharan Africa, and even Asia since the 1970s and ’80s.

The scale of destruction in Gaza has been viable only with the incessant flow of US weapons, guaranteed by U.S. military aid and funding to finance it.

The targets in Gaza are typical of the kind of mass atrocities and infrastructural devastation that is covered by the Genocide Convention. Worse, by most accounts, more than two-thirds of the perished in Gaza are women, children and elderly – and the final figure is likely to prove significantly higher.

Erasing Gaza, expunging nations

As I demonstrate in The Obliteration Doctrine, the eradication of Gaza has been predicated on a deliberately targeted campaign with intent to destroy, in whole or in part, the Palestinians and the Palestinian people as a national, ethnical, and religious group. This purposeful obliteration ranges from physical devastation of critical infrastructure, urban hubs and settlements, public buildings and hospitals, to both combatants and non-combatants and the entire ecology of the environment, with Gaza devastated and uninhabitable and over 62,000 Palestinians killed and almost 160,000 injured.

Another aspect of the goal of obliteration suggests a more figurative eradication: removing something from memory. Hence, the Israeli obliteration of Palestinian museums, libraries, institutions of learning, arts and culture; or what Raphael Lemkin used to call “cultural genocide.” Out of sight, out of mind, gone forever.

Third, the Obliteration Doctrine has gone hand in hand with the concerted effort to curtail, reverse or undo future development, and thus entirely undermine all economic progress. The net impact has affinities with de-development and undevelopment, as evidenced by the plummeting of Gaza’s GDP by more than 80 percent already in mid-2024.

In the big picture, the obliteration of Gaza and the efforts to eradicate and cleanse its Palestinian residents in real time with “the whole world watching,” reflects the West’s long and dark track-record of neo-colonial mass civilian destruction.

But what has happened in Gaza won’t stay in Gaza. Left unrestrained, the Obliteration Doctrine is likely to serve as a prelude to new and far more destructive genocidal atrocities in the future.

A version of the commentary was published by TRT World on August 26, 2025. It features some excerpts from Dr. Dan Steinbock’s The Obliteration Doctrine.

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About the Author

Dr Dan Steinbock The author of The Fall of Israel (2024) and The Obliteration Doctrine (2025), Dr Dan Steinbock, a renowned visionary of the multipolar world, is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/

Fed to Honor Court Ruling on Trump’s Attempt to Remove Cook

August 27, 2025

The Federal Reserve said Tuesday it will follow any court decision on whether President Donald Trump has the authority to dismiss Board of Governors member Lisa Cook, who vowed to fight her removal in court.

In its first public response since Trump announced Monday night that he was firing Cook over alleged mortgage fraud, the Fed stressed that she plans to challenge the move. “Cook has indicated through her personal attorney that she will promptly challenge this action in court and seek a judicial decision that would confirm her ability to continue to fulfill her responsibilities as a Senate-confirmed member of the Board of Governors of the Federal Reserve System,” a spokesperson said.

The central bank avoided direct criticism of Trump but emphasized that Congress set long, fixed terms for governors and allowed removal by the president only “for cause.” The Fed noted such protections are crucial to keep monetary policy decisions focused on data and the long-term interests of Americans.

Trump told reporters Tuesday he will respect any judicial ruling on Cook’s future. “I abide by the court, yeah, I abide by the court,” he said, while adding he expects a majority of his nominees on the Fed board soon, which could help advance his calls for significant interest rate cuts.

Cook’s attorney, Abbe Lowell, said Trump “has no authority to remove” her and called the president’s attempt “illegal.” Lowell said a lawsuit will be filed to block the action, arguing the move relies on a “referral letter” without factual or legal merit. Cook said Monday she will continue working at the Fed despite Trump’s claim of removal. The Fed did not confirm whether she was working from its Washington, D.C. headquarters or remotely on Tuesday.

White House spokesman Kush Desai defended Trump’s move, saying the president acted lawfully under 12 U.S.C. 242. “The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” Desai said.

Any legal fight is likely to reach the Supreme Court, which could ultimately determine the limits of presidential power over Fed governors. The Fed, in its statement, reaffirmed its commitment to independence, transparency and accountability, noting it was established by Congress to promote maximum employment, stable prices and a sound financial system. “As always, the Federal Reserve will abide by any court decision,” the spokesperson said.

Related Readings:

S&P 500, Nasdaq Extend Gains as Fed Rate Cut Hopes Grow

Trump Ousts Labor Statistics Chief as Fed Sees Weak Job Market

Trump Pressures Powell Over Fed Costs During Rare Visit

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Powell Signals Possible September Rate Cut, Markets Surge

August 26, 2025

Federal Reserve Chair Jerome Powell boosted expectations of an interest rate cut this September, offering cautious reassurance to investors while addressing inflation risks tied to President Trump’s tariffs.

Speaking at the central bank’s annual symposium in Jackson Hole, Wyoming, Powell suggested borrowing costs may soon ease, a shift that sent U.S. equities sharply higher. The Fed’s benchmark rate currently stands between 4.25% and 4.5%.

“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation,” Powell said. He added that the inflationary impact of tariffs appears “clearly visible,” but he believes there is a “reasonable” case that price pressures will be “relatively short lived – a one-time shift in the price level.”

Powell avoided direct mention of political pressure from Trump, who has frequently demanded large rate cuts and hurled insults at the Fed chief, calling him a “numbskull” and a “stubborn moron.” The president has even floated removing Powell from his post, though legal authority for such a move remains unclear.

In his remarks, Powell stressed that monetary policy will depend solely on economic data. “Monetary policy is not on a preset course,” he said. “We will never deviate from that approach.”

Markets welcomed Powell’s comments. The S&P 500 jumped about 1.5% by the close of U.S. trading Friday. Analysts said the tone of the speech pointed toward a potential cut without fully committing.

“Chair Powell has shown he has an open mind to reading the data tea leaves,” said Brian Jacobsen, chief economist at Annex Wealth Management. Diane Swonk, chief economist at KPMG US, added, “Powell opened the door a little wider to a cut in rates in September,” though she warned that the Fed remains wary of persistent inflation.

Stephen Brown of Capital Economics said a September cut looks “almost nailed on” but noted that stronger job gains or troubling price data in August could cause a delay.

Powell’s appearance likely marks his final Jackson Hole address before his term ends in May 2026. He was appointed Fed chair by Trump in 2017. Since then, tensions between the two have escalated, with Trump recently calling for Fed Governor Lisa Cook’s resignation over alleged mortgage fraud. Cook has refused, saying she would not be “bullied” out of office.

Central banks typically cut rates to spur growth during periods of economic weakness, though they must balance that goal with keeping inflation under control. Powell reiterated that the Fed will continue weighing both risks carefully, emphasizing that decisions will rest on evidence rather than political demands.

Related Readings:

Trump Pressures Powell Over Fed Costs During Rare Visit

Powell Prepares Final Jackson Hole Speech Amid Political Pressure

Powell Warns Tariffs Will Raise Consumer Prices as Fed Hikes Inflation Forecast

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How One Financial Firm Won the Gen AI Adoption Battle

August 26, 2025

By Dr. Gleb Tsipursky

In today’s rapidly evolving financial landscape, the integration of Generative Artificial Intelligence (Gen AI) has become imperative for firms aiming to maintain a competitive edge. However, the journey toward AI adoption is often fraught with challenges, particularly concerning employee engagement and resistance to change. A mid-sized financial services firm recently embarked on this journey, implementing a comprehensive strategy to integrate Gen AI into its operations. This case study offers valuable insights into effective methods for engaging employees and overcoming resistance during such transitions.

Key Strategies for the Gen AI Adoption Battle

Leadership anticipated potential hurdles, including employee concerns about job security, the complexity of AI tools, and a general fear of change.

The firm acknowledged that to enhance service offerings and operational efficiency, embracing Gen AI was essential. However, leadership anticipated potential hurdles, including employee concerns about job security, the complexity of AI tools, and a general fear of change. These apprehensions are common in the financial sector, where AI adoption can be perceived as a threat to traditional roles and a challenge due to regulatory fears. That’s when they turned to me to guide them through this transition.

The first step we took was to design a holistic approach to engage employees in the learning process while addressing resistance head-on. To cater to the firm’s diverse employee base, I introduced a blend of interactive learning approaches:

Hands-On Workshops: These sessions were carefully designed to make Gen AI tangible and relevant to employees’ day-to-day tasks. For instance, during one workshop, we demonstrated how to use AI tools to generate customer insights and identify patterns in financial data. Employees worked through real-world scenarios, enabling them to see how the technology could augment their roles rather than replace them.
Gamified Microlearning: Drawing on the power of gamification, we broke complex AI concepts into bite-sized lessons. Modules included point systems, leaderboards, and rewards such as gift cards, creating a sense of achievement. This not only boosted participation rates but also made learning enjoyable, even for employees who were initially wary of technology.
Incentives and Recognition: To further motivate employees, we tied achievements in Gen AI learning to career advancement. Certificates, digital badges, and recognition in team meetings incentivized engagement. One employee remarked during a feedback session, “I initially saw AI as a threat, but now I see it as a skill I can use to grow my career.”

Another key strategy centered on fostering a community of practice within the organization. This involved setting up regular forums where employees could share their experiences with Gen AI tools, troubleshoot issues, and celebrate successes. Peer-to-peer learning proved to be a game-changer, as employees felt supported and encouraged by colleagues who were on the same journey.

To sustain engagement, I also recommended the creation of an internal online platform. Employees could post questions, collaborate on AI projects, and access additional resources such as video tutorials and step-by-step guides. Over time, this platform became a hub for innovation and collective problem-solving.

Addressing Resistance in the Gen AI Adoption Battle

Leadership transparency was central to our approach. Resistance to change often stems from fear of the unknown, so we prioritized clear and open communication. Together with the firm’s leadership team, I organized town hall meetings and Q&A sessions to address employee concerns directly. We clarified how AI would complement, not replace, human roles, while managing risks. We emphasized the training and support available for everyone.

Through these efforts, we unearthed specific fears, such as the worry of being left behind due to a lack of technical expertise. To mitigate this, I collaborated with the firm to design tailored training programs for employees at all skill levels. By meeting employees where they were, we reduced anxiety and built trust.

To further minimize resistance, we actively involved employees in the Gen AI adoption process. Focus groups and pilot programs allowed employees to test AI tools and provide feedback on usability. For instance, during the pilot phase, a group of employees from the customer service team used Gen AI to streamline routine inquiries. Their input helped refine the technology rollout and made them feel invested in its success.

This collaborative approach also created internal champions—employees who became advocates for Gen AI within their teams. These champions played a crucial role in shifting the organizational mindset from skepticism to excitement.

Newsletters, internal forums, and team meetings highlighted how AI was driving real, positive change.

Demonstrating the value of Gen AI through measurable success was another critical step. During the initial rollout, the customer service team used AI tools to analyze customer feedback and automate responses to common queries. The results were impressive: response times improved by 30%, and customer satisfaction scores rose by over 20%.

I worked with the leadership team to share these success stories widely within the organization. Newsletters, internal forums, and team meetings highlighted how AI was driving real, positive change. These stories helped build momentum and encouraged employees in other departments to embrace the technology.

Results and Key Metrics

Within nine months, the firm had achieved significant progress:

1. High Engagement:

82% of employees completed at least one Gen AI training module.
68% participated in ongoing peer learning initiatives, far exceeding initial expectations.

2. Adoption Rates:

By the end of the implementation period, 75% of teams had integrated Gen AI tools into their workflows.
Productivity improved by an average of 22% across AI-enabled tasks.

3. Reduced Resistance:

Surveys revealed a 40% drop in negative sentiment toward AI, with many employees reporting greater confidence in their ability to use AI tools.
No problems materialized with financial firm’s regulators.

4. Financial Impact:

Improved efficiency and client services contributed to a 5% increase in net income.

Insights for Leaders in Financial Services for the Gen AI Adoption Battle

This case study underscores several key insights for leaders in the financial sector considering Gen AI integration:

Customized Learning Approaches: Implementing diverse and interactive training methods can cater to different learning styles, enhancing engagement and comprehension.
Transparent and Inclusive Communication: Open dialogues about AI’s role and impact within the organization can alleviate fears and build trust among employees.
Employee Involvement in Implementation: Engaging employees in the adoption process fosters a sense of ownership and reduces resistance to change.
Showcasing Tangible Benefits: Highlighting early successes demonstrates AI’s value, encouraging broader acceptance and enthusiasm.

By adopting a comprehensive and employee-centric approach, financial services firms can successfully navigate the complexities of Gen AI integration, leading to enhanced operational efficiency and a culture of continuous innovation.

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About the Author

Dr. Gleb Tsipursky, called the “Office Whisperer” by The New York Times, helps SME leaders in professional and financial services transform AI hype into real-world results. He serves as the CEO of the future-of-work consultancy Disaster Avoidance Experts. Dr. Gleb wrote seven best-selling books, and his two most recent ones are Returning to the Office and Leading Hybrid and Remote Teams and ChatGPT for Leaders and Content Creators: Unlocking the Potential of Generative AI. His cutting-edge thought leadership was featured in over 650 articles and 550 interviews in Harvard Business Review, Inc. Magazine, USA Today, CBS News, Fox News, Time, Business Insider, Fortune, The New York Times, and elsewhere. His writing was translated into Chinese, Spanish, Russian, Polish, Korean, French, Vietnamese, German, and other languages. His expertise comes from over 20 years of consulting, coaching, and speaking and training for Fortune 500 companies from Aflac to Xerox. It also comes from over 15 years in academia as a behavioral scientist, with 8 years as a lecturer at UNC-Chapel Hill and 7 years as a professor at Ohio State. A proud Ukrainian American, Dr. Gleb lives in Columbus, Ohio.

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