US foreign aid suspended. What now?
On 20 January, US President Donald Trump temporarily halted all US foreign assistance programs for 90 days through an executive order. The effects have reached Bangladesh. In the midst of experts ringing warning bells, we take a look at the potential damage
With one executive order, US President Donald Trump has sent millions in Bangladesh into uncertainty. His order to suspend foreign aid to the world has created ripple effects here affecting the health, agriculture, energy and education sectors. Lest we forget, the Rohingya refugee crisis was already suffering from dwindling foreign aid.
Then there are development practitioners in Bangladesh, those employed across the INGO board and beyond in humanitarian projects that are heavily reliant on US foreign aid or fully funded by it, facing job insecurity almost overnight.
On 20 January, US President Donald Trump temporarily halted all US foreign assistance programs for 90 days through an executive order aimed at reassessing their alignment with his administration's policy objectives. Following his order to leave the World Health Organisation (WHO), the Paris Agreement and his threats of a tariff war, this recent decision has sent the world into a state of confusion and disarray.
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Furthermore, the suspension risks eroding trust between donor agencies and implementing partners, impacting long-term development cooperation. Although the Foreign Affairs Adviser Md Touhid Hossain has assured the nation that the effects of aid suspension are a global matter and it was expected following the change of power in Washington, there is little to feel assured about.
Let's start with the United States Agency for International Development (USAID).
On 25 January, it announced an immediate cessation or suspension of any work in Bangladesh under contracts, work orders, grants, cooperative agreements or other assistance or procurement instruments.
This creates operational challenges for NGOs and local partners reliant on US funding. Many organisations are left without clarity on whether their programs will resume after the 90-day review, disrupting planning and service delivery.
USAID operates its largest program in Asia in Bangladesh.
In agriculture and food security, USAID collaborates with the government of Bangladesh to enhance access to diversified nutritious foods and improve sustainable agricultural productivity in 23 districts of southern Bangladesh. These efforts employ climate-smart agriculture, digital tools and private-sector engagement to promote economic growth and strengthen value chains — all of which will remain suspended.
Additionally, USAID supports food policy development through research, training and stakeholder coordination, benefiting smallholder farmers and enterprises.
Addressing environmental challenges, USAID supports Bangladesh in managing its strained natural resources, enhancing biodiversity conservation and adapting to climate change. It collaborates with the government and private sector to improve energy security and build resilience against natural disasters.
However, the United States has already left the Paris Agreement, and Trump has made it clear that he will not allow any climate-related projects to be greenlit. He called it 'Putting America first in international environmental agreements' — making it highly likely for climate funding or related USAID projects to be discontinued.
In the health sector, USAID works to strengthen health systems to combat high maternal and child mortality rates, tuberculosis and malnutrition. It also promotes family planning and reproductive health and played a crucial role in Bangladesh's Covid-19 response, providing support for testing, treatment, vaccination and community education.
USAID also plays a critical role in disaster risk reduction, supporting communities to prepare for and respond to natural calamities like cyclones and floods. Programs improve water, sanitation, and hygiene infrastructure while also providing livelihood skills to help vulnerable populations withstand economic shocks.
"In Bangladesh, USAID has been involved in health, energy, agriculture sectors in Bangladesh for a long time. In agriculture, they are involved in smart agriculture or food policy; in energy, they provide technical assistance; in health sector, they assist in strategy development and structural reforms," Dr Selim Raihan, professor of Economics at the University of Dhaka and executive director at Sanem told TBS on Saturday.
"Many projects are still ongoing, which are important for developing countries like ours. If they get suspended overnight, then it will affect us dearly," he added.
Dr Taufique Joarder, an Associate Professor at the Global Health Evaluation in the SingHealth Duke-NUS Global Health Institute, thinks that such suspension of funds will create issues in the public health sector, and the NGOs working on these projects may suffer.
Moreover, Trump has already left the World Health Organisation (WHO), sending the international agency in jeopardy.
"We receive substantial funding in the health sector, particularly from USAID, which provides significant funds to combat malnutrition. If this funding ceases, many projects in Bangladesh will halt," explained Dr Joarder.
Various NGOs in rural areas operate with this funding, supporting grassroots-level work. Dr Joarder argued that sexual and maternal health assistance is likely to be targeted.
"When Republicans come to power, there are certain constraints in these areas. I know this firsthand from acquaintances working in USAID," he said, adding, "They have mentioned that under the Trump administration, they could no longer provide funding in sectors like maternal health, sexual health and hygiene, which are interconnected. A cessation of funding would create significant problems in these areas."
Another important area is the funding for the Rohingya refugees.
USAID is the leading contributor to the Rohingya crisis response, with nearly $2.4 billion in assistance since 2017. Its initiatives provide life-saving support in refugee camps, addressing food, nutrition, and disaster risks, while also supporting host communities through economic resilience and disaster risk reduction activities.
The US foreign aid plays a pivotal role in helping the World Food Program (WFP) restore food rations in Cox's Bazar. Beginning in early 2024, WFP was able to increase the ration and, by August, restore the full amount to $12.50 per person per month. For the first time, fortified rice was added to the assistance package.
However, to sustain the full ration and continue operations into next year, WFP urgently requires nearly $80 million in additional funding. Chief Adviser's Deputy Press Secretary Apurba Jahangir confirmed that the food assistance program will be exempted during a media briefing at the Foreign Service Academy.
So, the nutrition assistance provided to Rohingya refugees through WFP will continue and be exempted from the suspension, the US officials assured Khalilur Rahman, the High Representative of Chief Adviser Prof Muhammad Yunus.
Yet, the other costs of the Rohingyas loom large on our cash strapped government.
"If funding gets suspended for the Rohingya refugees, then it will be a major crisis," said Mohammed Mizanur Rahman, the Refugee Relief and Repatriation Commissioner (RRRC), "I personally believe that the Trump Administration will not suspend the funding. Also, I got to know that the food assistance will continue. For the other assistance, I hope the US government will consider them, as Bangladesh government does not have the affordability."
He added, "If the fund stops, the organisations would need to lay off their staff and squeeze their remaining funds. Ultimately, the Rohingyas will be the biggest sufferers."
"If the US government decreases funding to the Rohingya refugees in Bangladesh," added Dr Selim Raihan, "It will have a major implication, and I hope that our policymakers are discussing plans to counter it."
The USAID-related NGOs are a major employer of the country. With the uncertain future, development practitioners are anxious about their job prospects. A number of development practitioners have expressed their disappointment.
Two industry veterans in the INGO sector, requesting anonymity, said that they are having meetings about downsizing teams and laying people off.
Sakil Malik, CEO and Co-Founder of Global Center for Innovation and Learning, US, has echoed their concerns. "The interpretation of the order is not clear yet. So far, everyone at USAID-funded programs must stop all work and may need to put staff on paid leave, but it is unsure how long will the paid leave last."
He added, "USAID projects have been suspended immediately. However, local NGOs who have different donors other than the USAID can carry out their other non-US funded projects. However, it may be tough. The other donors may soon follow the US' footsteps"
He also pointed out the potential changes that may come after 90 days. "Even if you get the funding after 90 days, you may need to scrap the projects related to inclusivity, gender issues or climate change. These sectors will be impacted greatly."
He urged the National Bureau for NGOs to play a proactive role for the development practitioners. "They should take supportive measures, try to find alternative sources of funds and increase capacity building."
