In June 2024, Lee Jae-myung, then the leader of the Democratic Party of Korea, declared that under then-President Yoon Suk-yeol “$10 billion in aid to Africa eventually disappears into thin air.” More than criticizing the Yoon administration, Lee was signaling a sharp break from South Korea’s steadily expanding development aid commitments. Following Yoon’s impeachment, Lee’s successful 2025 presidential campaign proposed repurposing foreign aid money to “promote the Korean wave,” suggesting using the funds to spread cultural influence – a notable shift from traditional humanitarian aid priorities.
Two months into the Lee administration, South Korea’s official development assistance (ODA) faces unprecedented scrutiny. In July 2025, the administration launched a comprehensive investigation into the country’s development aid programs and examined reports of corruption within the Korea International Cooperation Agency (KOICA), part of a broader probe into Yoon’s alleged fund misuse. The presidential office is reportedly considering slashing portions of the 6.5 trillion won ($4.8 billion) aid budget to fund defense spending increases as a part of recent “package deal” negotiations with the United States.
As the Lee administration confronts growing domestic pressures, the current rerouting of aid and investigation of development assistance funds can be seen as part of the ongoing attempt to draw a line under the political and ethical fallout of the Yoon government. Yet at stake is the long-term trajectory of South Korea’s long-trusted development model, the billions committed in funding tangible development needs, Seoul’s credibility in the Global South, and the very identity of the country’s recipient-turned-donor middle-power diplomacy. Whether Lee’s international development strategy will mean a strategic retrenchment or a fundamental reimagining of South Korea’s development role remains to be seen.
From Yoon’s Global Pivotal State to Lee’s Pragmatism
ODA was a critical pillar of Yoon’s Indo-Pacific Strategy. Yoon positioned South Korea as the “global pivotal state” that “advances freedom, peace, and prosperity through liberal democratic values and substantial cooperation,” and expanding aid commitments was part of Yoon’s vow to strengthen Seoul’s diplomatic contributions. Under Yoon, ODA funding increased dramatically to 6.3 trillion won in 2024, a 31.1 percent jump, and the ODA-to-GNI ratio reached 0.21 percent, the highest level since South Korea joined the OECD Development Assistance Committee (DAC) in 2010. Of particular note, Yoon hosted the first-ever summit with leaders of 48 African nations, pledging $10 billion in development aid to Africa by 2030 alongside $14 billion in export financing to boost Korean business in Africa.
But Yoon’s declaration of martial law in December 2024 led to his impeachment, and the changes at the top of the government have impacted foreign aid. Under then-Acting President Choi Sang-mok, the 2025 ODA budget was held to 6.5 trillion won, only a modest 3.8 percent increase over the previous year. In July 2025, with Lee in office, a mid-year supplemental budget cut 7.4 billion won from ODA allocations, officially citing “shifting conditions in recipient countries” for scaling back or suspending some projects.
Lee’s government also launched a sweeping investigation into development aid practices, targeting Yoon-era programs. A special prosecutor’s probe into former First Lady Kim Keon-hee reportedly revealed allegations that a senior member of the Unification Church, a controversial religious group, may have bribed Kim with luxury gifts to secure favorable treatment in development projects. Investigators are examining, for instance, whether this supposed influence had any role in the June 2022 decision to double Cambodia’s loan ceiling through the Economic Development Cooperation Fund (EDCF), one of the two acting agencies of ODA besides KOICA, from $700 million to $1.5 billion.
Development assistance has thus become highly politicized in Seoul’s domestic arena. The National Assembly’s budget committee in July froze a total of 80 billion won ($58 million) in concessional loans for some overseas infrastructure deals amid allegations that these were influenced by controversial groups tied to the previous administration. These included the cancellation of a planned rural development loan to Cambodia and other Yoon-era programs, which the Democratic Party characterized as either wasteful spending or tainted by undue influence. The Lee administration, meanwhile, has officially ordered a sweeping review of development aid programs as a whole. As Lee remarked in a Cabinet meeting, “There are many projects that are hard to justify,” signaling the administration’s intent to reassess the purpose and transparency of South Korea’s multibillion-dollar aid portfolio.
Reform or Retrenchment?
Despite the current shake-up in South Korea’s foreign aid apparatus, thus far, no systemic policy for ODA reform has been announced beyond the investigations and budget tweaks. The Fourth Comprehensive Strategy for Development Cooperation, which will encompass the administration’s development assistance strategies for the upcoming five years, is yet to be established, although it’s expected later this year. South Korea’s Independent Board of Audit and Inspection also has not yet announced any new comprehensive ODA audits beyond its regular reviews. Unless the government institutes lasting improvements – for example, stricter project appraisal processes, more transparency in aid contracting, or better monitoring and evaluation – the anti-corruption drive might just be a means of short-term political score-settling.
Lee’s pragmatic turn could be the start of improving the efficiency of Korean ODAs in the long run, addressing longstanding structural problems. For example, Korean ODA has been unusually loan-heavy and tied to Korean contractors. South Korea historically maintained a high ratio of “tied” aid compared to other DAC member states, as 33.6 percent of bilateral ODA is contractually obliged to be spent on goods and services from Korea, despite DAC policy urging full or near-full untying. Such tied aid has been found to increase project costs by 10–15 percent and restrict the recipient country’s agency, thereby decreasing the overall effectiveness of aid.
In addition, audits of Korean ODA have frequently found poor needs assessment and underutilized projects. A state audit in 2024, for example, found significant inefficiencies, as 17 out of 19 KOICA-funded IT projects had dismal usage rates due to poor planning. In one case, a $8 million payment system in Cambodia, a project from 2015 to 2021, reached only 0.004 percent of its target usage because locals preferred an existing mobile app. Lee’s skepticism toward blank-check aid, as shown in his past remarks and the current investigations, could push agencies to tighten oversight and ensure that greater preliminary diligence is followed to avoid impractical projects.
Although it is unclear whether Lee would continue slashing the ODA budget, it is certain that he is considering ODA hand-in-hand with his cultural diplomacy. His 2025 campaign not only suggested leveraging the development assistance budget as a means of spreading cultural influence but also proposed a “Live Aid K-POP Concert” that would donate proceeds to global relief organizations. That recalls the 1980s Live Aid model, which development experts have noted served to reinforce donor-recipient hierarchies rather than equal partnerships.
Plans for implementation are underway for one of the first development assistance projects under the Lee administration, as the Ministry of Agriculture is reportedly pursuing ODA-leveraged K-Food overseas expansion, using development assistance to support Korean food exports.
Lee’s current proposal to channel a chunk of aid toward cultural promotion comes with its own strategic risks, considering that South Korea’s current aid portfolio is still largely concentrated in tangible development sectors. The largest share of South Korea’s bilateral ODA has gone into infrastructure: 43.4 percent of all ODA is devoted to transport and storage projects (roads, rail, ports). Development analysts warn that replacing some of these programs with “cultural ODA” may not address recipients’ pressing needs. Worse, it could exacerbate Seoul’s already problematic reliance on tied aid, as it would inherently promote Korean products and services.
Soft Power in Hard Times
South Korea is indeed not alone in reassessing its development assistance agenda. Large donor nations, including the United States, Germany, the United Kingdom, and France, have substantially slashed their ODA budgets between 2023 and 2025. Within a few weeks of U.S. President Donald Trump’s inauguration, his administration announced the dismantling of USAID and the suspension of 83 percent of its programs. Likewise, the United Kingdom stated that it would be lowering its ODA-to-GNI ratio from 0.5 percent to 0.3 percent from 2027. Overall ODA from the 17 major DAC donor countries is trending downward from $198.7 billion in 2024 to $167.6 billion in 2025, a cut of more than 15 percent.
This global retrenchment from development assistance, however, could paradoxically present South Korea with a unique opportunity. Seoul could fill the vacuum and strengthen its position in the Global South – if it chooses to do so. South Korea holds a unique edge in the international development community as the first former aid recipient to become a major aid donor, and this status has already been well-recognized. International Crisis Group President Comfort Ero, during her visit to Seoul in May 2024, officially praised South Korea’s experience overcoming poverty and war, and its democracy-based growth path as lending strength to solidarity with Global South nations.
Indeed, Korean aid has often been packaged as sharing the “Korea development model,” emphasizing that Seoul understands the developing countries’ needs because it was once in their shoes. But if ODA budgets are slashed or visibly shift to prioritizing Korean culture and branding, recipient nations might start to view Korean aid as a self-serving form of cultural export rather than a genuine partnership.
The Lee administration, currently preoccupied with pressing domestic and trade agendas, has yet to fully flesh out what the “pragmatic” ODA strategy will look like in practice. Will Lee’s development assistance mean short-term scrutiny, resulting in a smarter, leaner aid program that still wins hearts and minds? Will it mark a full retreat from the global responsibilities Seoul once eagerly embraced with pride? Or will development funds under Lee start functioning as vehicles of cultural diplomacy? The answer will unfold as Lee provides details for how far he’s willing to go beyond his predecessor’s vision of South Korea as a global pivotal state, and whether he views development assistance as essential to the vision or as an expensive distraction from more pressing national interests.