On January 20, 2025, his first day in office, U.S. President Donald Trump signaled a pivotal turnaround in U.S. foreign policy, paving the way for arguably the most consequential shift since the September 11, 2001, attacks.
In a single stroke, Trump imposed a 90-day freeze on all aid programs. The executive order that imposed the freeze stated that these programs would be reviewed to ensure “programmatic efficiencies” and “consistency with United States foreign policy.”
Trump’s initial order was followed four days later (January 24) by a memo from the State Department ordering officials at the United States Agency for International Development (USAID) to stop all projects and “new obligations of funding.”
Since then, 83 percent of all programs have been eliminated, while the remaining 17 percent have been taken under the direct purview of the U.S. State Department.
Meanwhile, officials from the so-called Department of Government Efficiency (DOGE) have conducted several spot inspections and raids, which have been criticized as unconstitutional but have continued uninterrupted at USAID and other institutions, including the U.S. Institute for Peace. Many of these institutions and programs have also since been shut down.
While the State Department has clarified that it will approve waivers on humanitarian grounds, only a few programs, including assistance to Israel, have been allowed to continue.
Anatomy of a Shutdown
Washington’s suspension of foreign aid and assistance has been met with mixed reactions, abroad and at home. The Democratic Party, in disarray since Kamala Harris lost the presidential election last November, has opposed the gutting of any foreign assistance.
Critics contend that the president has no power to bypass congressional approval in enforcing such measures and that the agency tasked with those measures, headed by Elon Musk, a man who enjoys federal tax subsidies, is violating the Constitution.
Since Trump’s assumption, DOGE, which is not an officially mandated body, has accessed personnel data, ostensibly to ensure compliance with Trump’s “America First” policy and “curb wasteful spending.”
In a press release after it halted USAID operations, the State Department declared that ensuring conformity with the president’s mandate, and auditing how taxpayer money is being spent abroad, is no longer an option but a moral imperative.
Secretary of State Marco Rubio said that in the future, aid programs should be able to address three questions: “Does it make America safer? Does it make America stronger? Does it make America more prosperous?”
On February 3, Rubio was appointed as acting administrator at USAID. Around that time, officials confirmed the agency would be merged with the State Department – a move critics say will undermine its independence.
Samantha Power, the head of USAID under Joe Biden, has been openly critical of these developments. In a spate of interviews, she argued that USAID operations have saved countless lives in the developing world. In a recent op-ed in The New York Times, she wrote that its closure would be “a win for autocrats everywhere.”
The USAID Withdrawal in South Asia
Despite the State Department’s clarification, the suspension has impacted aid operations in the most vulnerable regions, including South Asia. In Nepal, projects to do with disease surveillance, malnutrition, and other critical health issues have stopped. According to one report, the suspension in Nepal could affect the operation of U.N. agencies that were financing these projects.
Pakistan and Bangladesh are reeling from multiple crises; USAID held a significant presence in both countries. Though not as badly affected, India’s social sector has also unraveled. Sri Lanka and Maldives, reliant on USAID assistance, are bracing for similar impacts.
It’s not just civil society and the development sector that have been left in the dark. In Sri Lanka, parliamentary committees have relied on technical expertise from USAID.
In a recent interview, opposition parliamentarian Harsha de Silva, who chairs the country’s Committee on Public Finance, admitted that while it was the government’s responsibility to ensure “we have high quality analysts,” they have depended on foreign assistance.
Whether the government can resolve this is left to be seen. While Cabinet Spokesperson Nalinda Jayatissa said the Sri Lankan government would continue USAID projects, if necessary with alternative funding, how such funds will be secured has not been mapped out.
In certain cases, humanitarian waivers have come into play. U.S. funding for certain projects, including a $121 million initiative for Rohingya refugees in Bangladesh, has been allowed. On the other hand, it is unclear how these programs will run without proper personnel to oversee them.
For the Trump administration, the USAID shutdown is part of a broader effort to align foreign aid with U.S. foreign policy and national interests. Supporters of the move claim that the organization has been funneling taxpayer money to “woke” causes, including Diversity, Equity, and Inclusion (DEI), gender, and climate resilience.
In one of many such “disclosures,” House Foreign Affairs Committee Chairman Brian Must accused USAID of having disbursed funds for, among other things, “the expansion of atheism in Nepal” through the State Department.
The Heritage Foundation-authored Project 2025, which some see as the basis for Trump’s agenda, devoted a chapter to USAID, pointing out that it was overhauled during the first Trump presidency but that under Biden it reverted to the old model of making “scores of poor countries underdeveloped and dependent on aid.”
Many of these allegations have been echoed by nationalist-populist politicians in the Global South, including in Sri Lanka, as well as left-wing critics of U.S. and Western aid.
Opponents of Trump’s move, on the other hand, contend that by gutting USAID, the United States stands to lose more than goodwill and influence in the developing world; they argue that it will empower China and Russia, as well as authoritarian leaders around the world.
In the days after the USAID shutdown, statements from Russia and Belarus, and the likes of Hungarian Prime Minister Viktor Orban, to say nothing of politicians in countries like Sri Lanka, appeared relieved and exultant at the gutting.
On X, both Elon Musk and Trump tweeted details about projects that USAID supported, including one in Sri Lanka to educate journalists on “gender pronouns.”
Many of these disclosures have since been shown to be false or misleading, including by local media. Still, that has not stopped politicians from recycling claims critical of such organizations. This has been true in Sri Lanka, where politicians have frequently linked foreign assistance with “regime change,” and in Bangladesh, where, according to one State Department official, USAID was involved with political changes last year – though Trump himself has since denied such claims.
The situation has become particularly complex in Myanmar, where in the aftermath of the recent earthquake employees from USAID were dispatched for humanitarian work, only to be informed of their dismissal and termination while going about their work.
Fueling Nationalist Narratives in Sri Lanka
In the days following the initial USAID stop order, Wimal Weerawansa, a Sri Lankan (Sinhala) nationalist ex-MP, tweeted his support for Trump’s decision. In his book “Nine: The Hidden Story,” published in 2023, Weerawansa accused a host of actors, including an ambassador, of having helped with then-President Gotabaya Rajapaksa’s removal from power in 2022. Weerawansa went as far as to accuse USAID of conspiring to reduce the country’s population. He has since regularly been retweeting right-wing figureheads on Twitter, including Elon Musk himself.
Namal Rajapaksa, Gotabaya’s nephew and former President Mahinda Rajapaksa’s son, soon joined these harangues, penning a long tweet against USAID and calling for a probe into local NGOs. According to a Sri Lankan journalist, however, these parliamentarians made use of USAID funding for government projects when they were in power.
To be fair, of course, USAID has not entirely been free from controversy. When then-President John F. Kennedy initiated it through an executive order in 1961, Washington was engaged in a battle of propaganda with the Soviet Union.
USAID was one of several outfits, including the Peace Corps and the Alliance for Progress, that aimed on the one hand at projecting to other countries, mainly postcolonial societies in Latin and Central America, Africa, and Asia, a positive, benevolent image of the United States, and on the other ensuring economic and political stability in states that seemed vulnerable to communism.
No doubt USAID, like all foreign government funding, has been hard to extract from the quagmire of geopolitics. During the Cold War, such institutions helped achieve U.S. foreign policy objectives, particularly in regions like Latin America.
However, the Trump administration’s argument is that while billions of dollars have been spent on spreading “American values,” this has not helped project American power. “It was always about promoting an agenda,” Rathindra Kuruwita, a Sri Lankan international relations analyst, said. “Trump has made the geopolitical underside of U.S. aid more transparent.”
While the politics and geopolitics of USAID remain debated, the humanitarian fallout from its shutdown continues. In regions like South Asia, development sector organizations that were working with marginalized communities, including sexual minorities, relied on USAID funding.
Because of the shutdown, they have all been forced to lay off staff, or worse, wrap up operations altogether. In a newspaper interview, a Sri Lankan transgender activist stated that, given Trump’s policies, they did not expect a waiver after the 90-day period.
It goes without saying that alternative funding for such organizations will be hard to come by. As a Sri Lankan analyst observed, “this shows how dangerous it was to become complacent about U.S. government funding and to not look into other sources.”
In fact, such funding is increasingly being seen as a two-edged sword. On the one hand, in countries like Sri Lanka, U.S. government involvement in advocacy for gender rights, climate resilience, and democratic governance has been criticized as an intrusion on sovereignty or an attempt at undermining “national culture.”
On the other, in the United States, such funding has been viewed as inimical to U.S. interests. On both counts, activism on gender, minority, and climate issues will suffer; as one activist noted, “smaller agencies that were not able to diversify their funding will take the bigger hit.”
An Inside Perspective
Since Trump’s executive order and subsequent cancellation, USAID employees have faced a dilemma over whether to obey instructions and halt projects or not.
While some in the agency have opposed the shutdown, they have so far been powerless to stop it. USAID employees in the United States and outside have, despite the pressure on them, voiced concerns about what they view as a capitulation by the U.S. to interest groups and lobbies.
Speaking on condition of anonymity, a USAID employee who was based in Sri Lanka questioned the rationale for Trump’s orders. While Musk has supported the gutting as a means of promoting transparency on government spending, the employee said that “in fact, the data on USAID funding was available online, including on the Congressional Research Services website.”
However, the employee said that the Trump administration has “developed and perfected a robust and successful communications ecosystem which has enabled disinformation on USAID to be amplified, especially on Elon Musk’s platforms.” Democrats, who are currently in opposition, lack an effective communications strategy to counter this.
The USAID employee also questioned the motives behind these decisions, speculating whether they were part of a bigger effort by Musk to preempt investigations into his companies, “including SpaceX and Starlink,” which have long benefited from government subsidies.
Moreover, by terminating contracts without thinking of replacements, “the government is making the work of the U.S. State Department even harder,” the employee said, contradicting its own objective of making government leaner and more efficient.
“On the one hand, Trump is claiming credit for revealing information on USAID grants, which was already online before,” the employee argued. “On the other, he and Musk are demonizing employees for wasting funds in a context where federal workers pay taxes and billionaires find so many ways of avoiding it.”
All these arguments are being watched closely in developing countries, including Sri Lanka. “Today, the view is that the United States has damaged its international credibility. Even if USAID resumes tomorrow, how can we assure our partners in the Global South we will not break their trust again?” the USAID employee said. This can impact the governments of poor countries.
“In Sri Lanka, nationalist politicians can use Trump’s policies to discredit the current government.” This is becoming more likely. Already, social media posts and articles linking USAID funding to important officials, including the prime minister herself, are making the rounds.
Finally, the official criticized the view that USAID does not serve American interests, pointing out that USAID agriculture projects have benefited American farmers, and that the suspensions will adversely affect these stakeholders.
Perhaps the most important takeaway from these developments is the extent to which the domestic consensus on U.S. foreign aid has ruptured. Both the Democratic and Republican parties have their international aid organizations. The International Republican Institution (IRI), affiliated with the Republican Party, has expanded its presence across countries like Bangladesh.
Yet while the Democratic Party-affiliated National Democratic Institute is still online, the IRI website has been disabled – supposedly to “mitigate expenses.” In the meantime, the National Endowment for Democracy, created during Ronald Reagan’s presidency, has come under attack by Musk for being a “scam.”
Filling the Gap
The question remains as to who will step forward to fill the gap left behind by these policy turnarounds. Western liberal commentators argue that China and Russia will take up the mantle, weakening the United States’ soft power in the Global South. Some even suggest that this will make the U.S. weaker. However, such a scenario remains unlikely for at least two reasons.
First, as an economic and business analyst in Sri Lanka noted, “China may not want to devote much of their budget to aid when confronted with domestic economic challenges.”
While China’s overseas aid has increased since 2009 – reaching, according to one source, more than $3 billion last year – this has been a fraction of what the U.S. has been able to muster, which according to PEW, came to more than $70 billion in 2023. Meanwhile, the EU allocated $1.9 billion for its humanitarian budget this year, against the backdrop of “decreased cooperation funding.”
Second, despite being a key development partner in the Global South, China holds different positions on issues like human rights, media freedom, and good governance, which have long been seen as the mainstay of Western government funding.
The flurry of responses by Sri Lankan journalists to reports of a media agreement between Sri Lanka and China, along with one media organization’s critique of Beijing’s attitude to journalists, indicates that media advocacy groups in such countries tend to prefer U.S. aid to agreements with other countries. Given the blowback against USAID’s activities in the Sri Lankan media landscape, however, it remains debatable whether this will continue.
Some commentators argue that China has more potential in meeting the shortfall in U.N. organizations like the World Health Organization, which have a significant presence in South Asia and Africa. Doing so would certainly be in China’s interest, though it could reinforce accusations that such organizations have become a part of Beijing’s agenda.
On the other hand, both India’s and China’s quick response to the Myanmar earthquake, coupled with Rubio’s recent declaration that the U.S. can no longer “bear the burden of providing the majority of global humanitarian aid,” means that other countries will have to reassess their funding commitments. It is significant that Rubio specifically mentioned China and India as countries that should pitch in to do humanitarian work.
Europe can be pointed out as another possible alternative, even if, given the political compulsions there, it is doubtful whether they will be able to match the United States’ aid spending capacity. If anything, it is likely that Europe will offset increased defense expenditures by cuts to foreign aid: the United Kingdom, for instance, will slash foreign aid to 0.3 percent of Gross National Income from 2027, a move academics and policymakers have criticized.
Yet even as Europe appears to be bracing for foreign aid cuts, there are signs that some countries are moving in to fill the gaps left behind by the USAID suspensions. Recently, for instance, the Sri Lanka Police launched a new training program on LGBTQ+ rights and inclusion. The program, the first-ever in the history of the Sri Lanka Police, commenced in the presence and under the patronage of the Dutch ambassador in Colombo.
Others point out that countries within the Global South themselves can, as one journalist put it, “build an organic civil society more responsive to the needs of our societies.”
The Future: A Question Mark?
All this underlines a fundamental though uncomfortable truth for civil society organizations, which is that competition for funding will now be more intense than before. This is especially true of South Asia, where funding shortfalls were a problem even before the USAID freeze, and it will impact even those CSOs that had a diverse donor portfolio.
More than anything, these developments call into question the United States’ claim of being a reliable partner in the region, seen as an indispensable plank in Washington’s Indo-Pacific policy. How the Trump administration can balance its aggressive foreign policy posturing with the need to project a positive image of itself across the Global South remains to be seen.
The recent arrival of the commander of the U.S. Indo-Pacific Command in Sri Lanka, with the aim of strengthening security partnerships between the two countries, shows that the U.S. military-security establishment is still very much focused on the region. The question can be asked as to whether the withdrawal of foreign aid and assistance initiatives will have an impact on U.S] activities across the Indo-Pacific, particularly in small states like Sri Lanka.
At the same time, the funding freeze has made civil society in countries like Sri Lanka aware of the need to break away from the dependency that U.S. funding institutionalized in the first place. One activist, interviewed by a local newspaper, said that foreign funding tends to be “counterproductive” in “thinking creatively” and “responding to ground realities.”
There is no doubt that the withdrawal of aid has made vulnerable communities who relied on such programs insecure, in a context where nationalist and conservative forces frame such groups as handmaidens of Western agenda. Yet there is also no doubt that, for a long time, even local activists have felt foreign funding benefits a host of intermediaries, resource personnel, and consultants, rather than those for whom such funding is intended.
Things were far from perfect before the freeze. The Trump administration’s claim that USAID entrenched contractors, rather than actual people, is not wholly false. At the same time, as Jake Johnston tweeted, the result of the USAID shutdown will be to direct aid toward political objectives: in effect, to “make political interventionism an even more explicit aim of U.S. foreign assistance.” In regions like South Asia, hardly a stranger to electoral shifts, this is likely to have broad ramifications in the future.
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