What’s up with USAID?

USAID staffers awoke yesterday (Monday) to an email that there’d be no need to come into the office, because their HQ in DC is now closed.

Opposition lawmakers then gathered outside to demand answers, and Secretary of State Marco Rubio has now duly penned letters to the US foreign affairs and relations committees advising there’s a review underway, after which USAID might get absorbed into the State Department.

In defending the move, Rubio argued that USAID had been acting as “a global charity separate from the national interest”. So, what’s going on?

First, what’s USAID?

The US Agency for International Development (with the 10/10 acronym of USAID) emerged at the height of the Cold War under JFK. Since its founding in 1961, it’s been Washington’s primary tool for delivering humanitarian aid and supporting economic development worldwide. The agency now…

• Has a workforce of 10,000 (two-thirds overseas)
• Manages a $43B aid budget
• Focuses particularly on governance, and
• Sends the most assistance to (in order) Ukraine, Ethiopia, Jordan, DR Congo, Somalia, Yemen, Afghanistan, Nigeria, South Sudan, and Syria.

Second, why is USAID now in trouble?

It’s faced its fair share of foreign criticism over the years, with governments variously accusing it of meddling in local politics, and even providing cover for the CIA.

But now USAID is also facing tough criticism at home (again), with Marco Rubio calling it “completely uncooperative”, and telling his trailing press pack in El Salvador that while the agency does some good stuff, its projects can often be duplicative.

But did you notice that sneaky parenthetical ‘again’? That’s because this isn’t new…

In the 1990s,Senator Jesse Helms pushed to eliminate USAID as a way to cut costs and downsize the government. Ultimately, the Clinton administration brokered a deal that merged other minor agencies into State while leaving USAID semi-autonomous.

Then in the 2000s, folks questioned some of the new US aid bodies springing up again, and various DC think tanks revived the idea of dismantling or merging USAID into State.

It’s not a new idea abroad, either — Australia folded its own aid agency into its foreign ministry back in 2013, inspiring the UK to follow suit in 2020. Both mergers were similarly about cutting costs and better aligning aid with the national interest, though they were also controversial, with impacts still being felt today (eg, a loss of institutional expertise).

So third, is the US now about to make a mistake?

DC has spent generations building foreign aid as a soft power tool, delivering food, vaccines, and school books in bags labelled From the American People. It’s made the US the world’s largest donor, generating goodwill (and therefore influence) along the way.

But 77 million Americans also just voted for Donald Trump’s vision, including less waste, and a clearer America First focus. And as with any large organisation, you can bet this new review will uncover examples of USAID breaching some of these principles.

But there’s also a risk that, in pursuing one legitimate set of objectives, these aid reforms might disrupt others (like the US effectiveness, goodwill, and influence built up over decades). It ultimately depends a lot on the execution, which the UK and Australian experiences suggest ain’t easy.

And that’s also leading some to wonder…

Fourth, will this cede space to Beijing?

In an immediate branding sense, sure: it’s an easy talking point to contrast (say) China’s latest new bridge in the strategic island nation of Kiribati, against the questions now emerging around whether the US will still co-fund more internet connectivity there.

But in a practical sense, it’s also not as simple as just swapping USAID for China. While its approach is evolving, China has long relied on bigger infrastructure projects via its flagship Belt & Road Initiative, which often carry strict loans and occasional quality concerns. Plus, China is not really in a fiscal position to fill US funding gaps in any case.

But as with so much else under Trump 2.0 right now, a lot will depend on the details.

INTRIGUE’S TAKE

There’s a classic quote from a Kenyan official who once quipped that “every time China visits, we get a hospital; every time Britain visits, we get a lecture”.

It’s a reminder that, first, aid is never purely altruistic. Second, the West’s traditional passion for governance (“a lecture”) doesn’t always match local priorities. And third, as competition heats up in our emerging multipolar world, there’s more pressure on donors to focus on what partners want. If you don’t, your rival will.

Also worth noting:

• Some other nations are also re-thinking their aid programs — Switzerland, for example, just announced it’s phasing out aid to Albania, Bangladesh, and Zambia by 2028, while the Netherlands is axing $1B from its own program.