The story so far
On January 20, 2025, his first day in office for a second term, U.S. President Donald Trump put in place a 90-day freeze on foreign assistance. The executive order read: [There will be a] “90-day pause in United States foreign development assistance for assessment of programmatic efficiencies and consistency with United States foreign policy.” Consequently, personnel of the United States Agency for International Development (USAID) were stopped from disbursing assistance across the world. By late last week, the website of USAID also wiped content, leaving just a message that all USAID personnel (about 10,000 globally) would be placed on administrative leave, with a few exceptions for mission-critical personnel. Shortly before the plans to scale back personnel were to take effect, a federal judge issued a temporary restraining order till February 14, but that does not extend to the freeze on funds disbursal.
What is Elon Musk planning?
Elon Musk, head of the Department of Government Efficiency (DOGE), has threatened that the agency would be shut down, while Secretary of State Marco Rubio who is now the acting administrator of USAID, has talked about ‘restructuring’ it.
What is the USAID?
The U.S. Agency for International Aid was set up as an independent agency, through an Act of Congress in 1961. It was an attempt to align all U.S. efforts to administer civilian foreign aid and development assistance. Its mission is “to promote and demonstrate democratic values abroad and advance a free, peaceful, and prosperous world” while advancing the U.S.’s security and prosperity. In pushing this agenda, it provides financial aid across various sectors in over 100 countries worldwide. Broadly, it works in the sectors of economic development, health, education, food security, humanitarian assistance, climate change, and democracy and governance.
It works in partnerships with governments, NGOs, businesses, and other international organisations, primarily providing grants, technical assistance, and funding for development projects that are in sync with its goals. Notable among its flagship schemes are the President’s Emergency Plan for AIDS Relief (PEPFAR), Feed the Future (addressing hunger and food security issues), Power Africa (expanding access to electricity across Africa) and Water for the World Act (improving water, sanitation, and hygiene services).
It receives funding allocated in the U.S. budget. In 2024, USAID received a total of $44.20 billion, which is 0.4% of the U.S. federal budget for FY 2024 (as per the official website USAspending.gov). In the same year, the agency had distributed $44.20 billion among its four sub-components. Media reports claim it contributed to nearly 42% of all humanitarian aid tracked by the United Nations in 2024.
How will this impact countries?
According to the official U.S. foreign assistance website, the top countries the USAID engages with are Ukraine, Ethiopia, Jordan, Somalia, Congo (Kinshasa), Afghanistan, Nigeria, Syria, Yemen and South Sudan.
The withdrawal of these funds, arising out of a decision born out of petulance, might severely impact the fortunes of these nations, as a number of projects will have to be dropped, in the light of aid being stopped. This will have an impact not only on the quality of life of beneficiaries of these schemes, but may even pose a danger to life in these nations.
Media reports stated that while a freeze was ordered on the $13.3 million in aid for Haiti, the U.S. State Department issued a waiver, allowing $40.7 million in foreign assistance for the nation’s police department. Also, the agency has said, in its note on the website, that exceptions would be made for “mission-critical functions, core leadership and specially designated programs”, but no details are available yet on what these may be or the grounds for exception.
Meanwhile, foreign agency reports speculate that only 294 employees of the total of 10,000 would remain, including 12 in the Africa bureau and eight in the Asia bureau, because these are areas that are critical to combating poverty, disease, and conflict.
While Mr. Rubio has told the media that “this is not about ending foreign aid, but about structuring it in a way that furthers the national interests of the United States,” there are not too many takers for this defence. Mr. Trump has made no secret of the fact that he has always advanced his point of view of America, a stand his critics see as rendering the nation in isolation from the rest of the world. Even as a front-runner for the President’s seat, he said: “We’re rebuilding other countries while weakening our own. Ending the theft of American jobs will give us the resources we need to rebuild our military, which has to happen and regain our financial independence and strength.” His trusted aide Mr. Musk poured vitriol over USAID, calling it a ‘criminal organisation’ and ‘a viper’s nest of radical-left Marxists who hate America’.
Andrew Natsios, former USAID administrator, in an interview with PBS News Hour, said USAID was one of the great humanitarian powers in the world, to protect the U.S. and people in the developing world from hunger and disease. “The programmes they are attacking now are Biden-era programmes,” he said, hinting at political vengeance being the driving force behind the move. The withdrawal, he claimed, would be a “disaster for the U.S. and for the Global South”.
Will projects in India suffer?
In India, the quantum of funding has reduced over the years, with the government of India objecting to certain aspects of the conditions for the agreement for grants. In the last decade, India is said to have received around $1.5 billion from USAID (about 0.2 % to 0.4 % of USAID’s total global funding (as per the foreign assistance website).
The association between India and USAID began in 1951 when President Harry Truman signed the India Emergency Food Aid Act. Over the decades, USAID’s role has evolved from food aid to infrastructure development, capacity building, economic reforms, and more.
In the early years, the agency weighed in strongly in the education sector, immunisation and health care. While health remains the main sector where USAID has been involved in India (including HIV/AIDS, TB, maternal and child health, and immunisation programmes) with a funding of $79.3 million in 2024, it also has interests in economy, energy, water supply and sanitation, and environmental health.
In this sense, pundits in the development sector feel that the withdrawal of USAID’s funding may not affect India in a major way. However, it remains to be seen how these existing projects, particularly in healthcare fare now, and whether Central or State governments will be able to pick up the tab to keep these projects, and beneficiaries going.
Meanwhile, USAID has directed all organisations implementing projects in India to suspend operations for the time being.
Published – February 08, 2025 10:06 pm IST
