US presidential order suspends USAID projects: Should we panic?
First of all, we need to stop politicising it. The executive order issued by US President Trump has nothing to do with Bangladesh or its government; neither does the government have anything to be credited or discredited for. USAID represents the interests of the US federal government. It goes through policy shifts depending on the priorities of the Republican or Democratic party and the incumbent US president. That there will be a major shift in USAID's funding policy was known. However, the scale, magnitude, and rapidity of the executive order that has now paused all ongoing projects of USAID around the world is one of a kind in the history of aid.
Which countries are affected?
For all latest news, follow The Daily Star's Google News channel. It is despicable that Indian media and some Bangladeshi media outlets are trying to pick a point here against the Bangladeshi government. The Trump administration issued the executive order shortly after taking the oath on January 20, 2025. Secretary of State Marco Rubio clearly explained that the stop-work order is to review all USAID projects across the globe to assess whether the projects are aligned with the "America First" policy and principles. Staff working on Diversity, Equity, Inclusion, and Accessibility (DEIA) have been sent on mandatory leave. The order exempts emergency food aid from the pause. USAID has obligated funding of $68 billion. Among South Asian countries, Afghanistan stands at the top with $886.5 million in obligated funding, while Nepal stands second with obligated funding of $696.1 million. Bangladesh has obligated funding of $487.5 million and India has obligated funding of $153.3 million. However, all the obligated funding is subject to review.
What does the executive order entail?
The last couple of days were quite volatile for those working on international development. I woke up to a frantic series of emails and WhatsApp messages on January 20: "All media and social media communications related to USAID projects should be stopped immediately," the messages read. The next round of instruction was to stop activities related to DEIA. Finally, the communication was to suspend operations altogether for 85 days, within which there will be a review of the projects.
What is happening now?
As per the order, all USAID projects across the world have been suspended. The projects will now be reviewed based on which recommendations will be made to continue, modify, or cease a foreign assistance programme. This means, unless otherwise written, an ongoing project has not been terminated, rather, the projects have entered a review phase.
What will be the direct effect on Bangladesh?
As per World Bank data, Bangladesh received $5.12 billion in official development assistance (ODA) in 2022. USAID disbursed $469 million in 2022, which decreased to $448 million in 2024. USAID is a major partner, especially for emergency food assistance ($98.8 million), food for progress ($34.2 million), and Rohingya Response ($24.7 million). I do not anticipate much effect on the food assistance and humanitarian programmes that are subject to the review. Moreover, emergency food assistance is already exempt from it. It is evident that the Trump administration will not fund activities that have connections or relevance to DEIA or climate change. The DEIA sanction also extends to gender-based violence and activities related to gender, race, and sex. Health activities are likely to come under severe sanctions in line with the Trump administration's policy related to health in the United States. Bangladesh received around $40 million in aid assistance for health interventions from USAID in 2024. In brief, a review of Trump's internal policy should explain the likely outcomes of the review.
What will be the institutional and individual impact of this order?
Exactly how much of the obligated funding will be terminated is unknown. It is likely that there will be major reshuffles and realignments. In case a project is fully terminated, the shock will be primarily absorbed by the international contractors of USAID. These are all US contractors, barring a few major local contractors. The first hit therefore will be taken at home in the USA. The contractors are unlikely to incur a major loss as all expenses until January 24, 2025, will be paid for. The contractors, of course, have huge opportunity costs as they have to forego projected revenue. Essentially, they will cut down on expenses, trim down their sizes, reduce exposure to USAID, and shift to other donors. All of these will affect a narrow group of executive team members of the contractors in the USA and their regional hubs.
Absurdly, there are local contractors in Bangladesh that are heavily dependent on individual donors. These contractors lack the agility to move. There will be an institutional impact here. In case of termination of projects, there will be an immediate impact on the jobs of the local staff in the projects, a majority of whom are youth. There will be a displacement, but I believe, eventually, the market will absorb them as their skills are interdisciplinary.
The major impact will be on people who are direct recipients of the benefits from the projects. They will be deprived of the transformational services that were being facilitated by the projects. However, USAID is continuing food assistance for the Rohingya refugees, which is an early signal that direct transfers will continue. This means the poorest of the poor will be safeguarded.
Future implications
Change in policy is a constant in any field, but customers are never constant. Any business, whether for-profit or non-profit, should be agile, adaptive, and creative to sustain. By design, aid is temporary. Even though global aid has been on the increasing curve, it is way below the target to support activities to meet Sustainable Development Goals (SDGs).
In 1970, in the United Nations General Assembly, economically advanced countries committed 0.7 percent of their gross national income (GNI) to official development assistance. In 2023, ODA/GNI stood at 0.37 percent despite overall growth in aid by 1.6 percent between 2022-2023. With an ODA/GNI ratio of 0.24 percent, the USA stands at number 25 among the economically advanced countries. For Bangladesh, the USA is the third largest donor. In terms of global diplomacy for aid, the USA is expected to commit more funding.
However, in terms of how the Trump administration sees aid, the USA's influence on aid might be much bigger than its commitment to aid. Whether the changes administered by the Trump administration are sustained or not is a matter that will be resolved over the next five years. But what is certain is that the organisations working on international aid have to embrace the uncertainty and work towards finding new avenues to support the development targets.
Md Rubaiyath Sarwar is managing director at Innovision Consulting.
Views expressed in this article are the author's own.
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