When Development Cooperation Becomes Strategic
In Asureti, a village outside Tbilisi, Nato Altunashvili makes wine. A few years ago, she made sales largely on the terms offered by local middlemen. Today she sits on the board of a wine union representing 22 producers. Her wine has not changed. Her position has.
A modest Swiss-supported project helped producers organize, giving them greater bargaining power with suppliers and buyers and improving their economic prospects. It sounds like a small development story. But it raises a much bigger question: What does Switzerland lose when it withdraws from work like this?
The question has taken on a new urgency. In June 2026, the Federal Council announced a reorganization of Switzerland's international cooperation model: a clearer division of responsibilities between the Swiss Agency for Development and Cooperation (SDC) and the State Secretariat for Economic Affairs (SECO), as well as greater weight for humanitarian aid and savings to the federal budget. Bilateral development cooperation is set to fall by roughly 23 percent by 2030, while responsibility for the EU, the Western Balkans and parts of Asia is intended to shift from SDC to SECO.
Switzerland is not abandoning international cooperation, and changing instruments can be sensible. But the central question is whether it can distinguish a successful exit from a premature strategic withdrawal — and preserve the relationships, capabilities and institutional knowledge that remain valuable precisely as Eastern and Southeastern Europe and the South Caucasus enter a period of renewed geopolitical competition.
We approach the question of Switzerland's loss when it withdraws from development cooperation from different perspectives. Matthias Herr oversees Helvetas' work across the region. Zenebe Uraguchi views it through the lens of an economist whose research has focused on how markets and institutions evolve during periods of political change. What concerns us both is the timing and strategic direction of Swiss engagement.
A region moving again
Russia's war against Ukraine has upended political and economic relationships across the region. Russia remains influential, while China, Turkey and the Gulf states have expanded their economic and political footprint. Their engagement often comes without the governance conditions attached to European or American support — and does not necessarily advance European interests. The United States, having largely closed its democracy and governance programs in 2025, has also stepped back from long-term institution-building, even as it re-engages selectively where security interests are at stake.
Europe is making moves, too. EU enlargement has regained momentum in the Western Balkans, while Moldova and Ukraine push through reforms under exceptionally difficult conditions. Georgia and Armenia have, to some extent, swapped roles in their alignment with the EU, and the South Caucasus remains volatile. Civic space is under pressure: The CIVICUS Monitor downgraded both Georgia and Serbia to “repressed” status in 2024-2025. Governance and integrity remain major constraints to the transition, with most countries performing poorly on Transparency International's Corruption Perceptions Index. Reform trajectories increasingly diverge, unresolved conflicts persist, and outward migration continues to drain skills and confidence from parts of the region.
From Brussels or Bern, this looks like geopolitics. From Asureti, Chisinau or Kosovo, it is more concrete: whether a producer can reach a new market, a municipality can manage public money, or a business can meet European standards. European integration is negotiated through treaties and chapters, but it succeeds or fails through institutions, firms and local actors. This is where development cooperation enters the story — and where Swiss interests converge with those of the region.
The budget question
The debate about development cooperation usually begins in Bern with a simple question: Why keep spending abroad when public finances are under pressure at home? With competing demands for defense, healthcare, pensions, education and infrastructure, development cooperation can appear to be one of the easier areas to cut. That is a legitimate debate. But it treats official development cooperation mainly as an annual expense.
Much of the value created by long-term development cooperation is cumulative. Organizations, relationships, bargaining power, administrative capability, trust and institutional memory are built over years and can continue producing value long after an individual program ends. When municipalities learn to manage public resources differently, businesses establish links to new markets, or public agencies develop durable ways of working with local partners, the investment does not disappear with the final project payment.
When viewed this way, some spending on development cooperation is better understood as an investment in institutional capacity and regional stability — a more stable and prosperous European neighborhood in which Switzerland also has a direct stake. The relevant question is therefore not only what a program costs, but what would be lost if it disappeared.
What the money builds
The answer becomes clearer when we follow Swiss-supported programs on the ground. The figures below come from monitoring systems that are externally reviewed and, in several cases, independently certified.
Let’s return to Georgia. Through a Swiss-funded local economic development program, producers who once negotiated largely alone now have an organization through which they can work together. Nine locally trained consultants provide services designed to reach 20 to 30 winemakers a year on a commercial basis. At the same time, a regional wine union has drawn interest from around 70 producers across three municipalities. More important than the numbers is the structure that remains: a mechanism for sharing information, representing interests and dealing collectively with buyers and public institutions.
In Kosovo, years of support through DEMOS — co-funded by Switzerland, Sweden and the EU — helped municipalities develop systems that link public funding to performance. The approach is now integrated into the Ministry of Local Government Administration's assessment of municipalities, while a complementary social audit process gives citizens and civil society groups a structured role in scrutinizing local performance. Across Helvetas' governance work in the region, 577,887 people gained access to improved public services in 2025 through more than 600 partner institutions.
In Moldova, EU integration is practical for small businesses. But access to European markets depends on standards, certification and institutions that help firms navigate them. The Swiss-supported OPTIM program has worked with business organizations, finance providers and certification bodies to tackle these barriers, including a group-based GlobalG.A.P. certification that makes European retail standards more affordable for smaller producers. Since 2023, 388 private-sector actors have been supported to enter higher-value markets, and their cumulative turnover has increased by 45 percent.
Albania offers the clearest illustration of where this process should lead. RisiAlbania, a 12-year Swiss youth employment program, closed in 2025 not simply because funding ended, but because key functions were operating without it. Exporters now buy certification advice commercially from local consultancies; businesses and jobseekers routinely use the National Employment Agency's digital platform; and municipalities and universities have absorbed career services into their normal operations. The program ended because it had succeeded.
What Sustainability Looks Like
RisiAlbania’s results show how program-supported services can become embedded in public, academic and private-sector institutions:
- 29,742 people have used new or improved career-guidance services; 83% report being satisfied with them.
- Tirana’s first municipal career office has operated since December 2020 with a sustainable career guidance structure; Elbasan, Lushnje and Berat have been developing services based on the Tirana model.
- Five universities offer career services to students and alumni, while two private providers have introduced specialized career guidance services.
- Through improved employment intermediation, 9,986 people found jobs and 1,725 businesses used improved job-matching services. The National Employment and Skills Agency also consolidated vacancies from major private platforms into the national puna.gov.al portal.
The point is not that external support should continue indefinitely, but that the functions it helped establish can increasingly be carried out by Albanian institutions and market actors.
Georgian wine, Kosovar municipalities, Moldovan certification and Albanian employment services may look like unrelated development stories. But they illustrate the same principle: The most valuable result is not the activity financed by the donor, but the capacity that remains when the donor eventually leaves. Counting projects and annual expenditure tells us what Switzerland spends. Looking at what remains afterwards tells us what Switzerland has helped build.
A changing model — and the costs we rarely calculate
Switzerland cannot compete with the EU or China on the volume of its financing — and does not need to. Its comparative advantages have been patience, technical credibility, political neutrality and relationships built over time across government, business and civil society. A strong emphasis on locally anchored institutions has long been a feature of Swiss development cooperation.
The reorganization announced in June changes the way that engagement is delivered. The overall international cooperation envelope remains close to CHF 2.4 billion a year, but bilateral development cooperation is being reduced, while the share of humanitarian aid rises from around 26 to 40 percent. The official narrative is one of continuity: Switzerland remains engaged, but responsibilities shift between agencies.
On the ground, however, mandates are easier to transfer than relationships, institutional knowledge and ways of working. SDC governance and its civic space program — among the least economic in nature and therefore the least readily transferable to an economically focused SECO — are being phased out over the next two to three years. The future of some economic programs also remains uncertain as SECO expands its presence, adopts a different mandate and thematic focus, and operates within a smaller bilateral development envelope.
This matters because the region may not bear the familiar label of a “fragile” context in Bern, yet signs of fragility are increasingly visible: institutional weakness, democratic backsliding, a contested geopolitical orientation and shrinking civic space. Patient work on institutions and governance is most critical before deterioration becomes crisis.
None of this means existing program or institutional arrangements should be preserved indefinitely. Policymakers should ask whether programs still serve their purpose, whether responsibilities sit in the right place, and whether public money can be used more effectively. The harder question is what happens during the transition. A mandate can move from one institution to another on paper; relationships with municipalities, businesses, civil society organizations and public agencies cannot be transferred so easily. Their value lies partly in continuity.
Timing is therefore critical. Switzerland is redesigning its instruments just as the region is being reshaped by war, EU enlargement, economic competition and political uncertainty. The test is not whether the old model survives; it is whether the new model serves Switzerland's strategic interests and preserves the capabilities required to pursue them, while allowing activities that have genuinely served their purpose to end.
This is not a uniquely Swiss debate. Several European bilateral donors are reducing or restructuring their engagement under pressure from domestic budgets and changing politics. Yet where Western engagement recedes, other actors are positioned to expand — not simply filling a funding gap, but potentially shaping institutions, elites and reform trajectories in different directions. For a region the EU increasingly treats as a security priority, that is not a minor side effect of a domestic budget decision. It is part of the strategic risk that decision creates.
The value of staying — and of leaving at the right time
There is a cost calculation that public budgets capture poorly. The savings from ending a program is immediate and visible in the next budget. The cost of leaving is delayed. Relationships and institutional memory built over a decade do not simply pause and resume later on the same terms; they may have to be rebuilt, often after the political or economic opportunity that justified the original investment has passed.
Nato Altunashvili's wine union will not decide Georgia's future any more than one municipal system in Kosovo or one certification scheme in Moldova will. But large transitions are built from exactly this kind of small change: A treaty can open a door, but businesses still have to meet the standard on the other side; a reform can change the rules, but municipalities still have to make them work. This is the quiet work Swiss development cooperation has spent decades supporting. Brussels does not automatically replace Bern when that work ends. Sometimes no one does. Sometimes the space is occupied by actors with very different interests.
Continued funding is not an end in itself. Some programs should close. RisiAlbania shows that good development cooperation can make a program unnecessary. The question is whether Switzerland can distinguish a successful exit from a premature withdrawal. Leaving once an institution can stand on its own is success; leaving while it is still finding its feet, at the very moment competing powers are ready to fill the space, can turn an apparent savings into a strategic loss.
Switzerland therefore needs to reconsider its strategic interests in Eastern and Southeastern Europe and the South Caucasus and ensure it retains a sufficiently broad set of instruments to pursue them. That means continued commitment where it adds value, collaboration across government, business and civil society, and the discipline to exit when locally rooted systems can carry the work forward.
Sometimes leaving saves money. Sometimes staying longer protects an investment — and Switzerland's strategic interests along with it. Knowing the difference is the choice facing Switzerland now.
