Scoop: FCDO says USAID merger would have 'seismic impact'

The United Kingdom’s Foreign, Commonwealth & Development Office, or FCDO, has warned its senior staff that the U.S. foreign aid freeze is likely to have lasting effects beyond the initial 90 days — both on humanitarian aid and on U.S. relations with the communities it serves. A memo sent to senior staff outlined the wide-ranging implications of the 90-day aid freeze and the potential integration of the U.S. Agency for International Development into the U.S. State Department, which it said would likely have a “seismic impact” on U.S. development’s focus on the Sustainable Development Goals. It added that a merger could “rapidly diminish overall U.S. personnel capabilities and capacity to deliver aid.” It did not specify how the U.K. plans to respond to these developments, however, it separately told staff members that the U.K. will establish a mechanism to monitor the ramifications of the U.S. aid cuts on programs in conflict-affected countries, as well as the impact on international and multilateral organizations. U.K. development teams across the world will track health and humanitarian repercussions, as well as changes that drive migration, it said. FCDO noted that given the U.S.’s dominant role in global humanitarian and development assistance, the freeze will impact nearly all sectors. And while there is a waiver for the temporary resumption of “life-saving humanitarian assistance,” there are still no confirmed reports of these services continuing, largely due to the lack of staff, lack of clarity on the policy, and lack of guidance, the memo said. It cited particular concern about the impact on global health, including the U.S. withdrawal from the World Health Organization, significant staff reductions at the President’s Malaria Initiative, and disruptions to international HIV programs such as PEPFAR. The memo said that these changes could hinder essential HIV treatment and prevention, especially in vulnerable communities. Long term, FCDO said the lack of U.S. support could significantly weaken WHO’s ability to respond to pandemics, especially if the U.S. stops sharing data. The U.S. will stop participating in negotiations on the pandemic accord and amendments to the International Health Regulations, according to the memo. It added that the reinstatement of the Mexico City Policy, or “global gag rule,” which blocks U.S. federal funding from going to NGOs that provide abortions or information about them, will not only impact health services worldwide but could also directly affect U.K. programs if implementing partners agree to U.S. conditions in order to get their funding. The outlook is less severe for international financial institutions, or IFIs, and multilateral development banks, as FCDO expects them to mitigate the freeze’s effects by borrowing from other institutions — at least if the freeze is limited to 180 days. However, if it extends beyond that or leads to cuts in previous U.S. commitments, IFIs could face balance sheet pressures, reduced equity, and potential creditworthiness issues, according to the memo. However, smaller organizations and NGOs with limited reserves will be disproportionately impacted, it added, and some say they may be forced to shut down completely. Another major concern is the International Development Association, or IDA, which provides financing for the world’s least-developed countries. The U.S., which is IDA’s largest donor, pledged $4 billion during its most recent replenishment in December. IDA leverages donor contributions to scale its total financing output, which was projected to reach $100 billion during the current cycle. If the U.S. withdraws, that figure would drop to $83 billion, according to the memo. FCDO noted that the U.S. has an outstanding $2 billion commitment to IDB Invest, the first part of which is due in April 2026, but suggested it is likely to pay in order to avoid losing influence. It is less sure that the country will honor a guarantee made under former President Joe Biden to the International Bank for Reconstruction and Development that was meant to expand lending capacity by $50 billion over the next decade. On gender, education, and equality, the memo highlighted the stark contrast between the Biden administration’s historic investments in gender equality programs and the Trump administration’s past efforts to restrict reproductive health access and LGBTQ+ rights. The memo said that there is significant concern that the U.S. Global Equality Fund will no longer be able to function, especially as LGBTQ+ rights organizations are reporting that their funding has been cut, not just frozen. It also noted that the State Department has paused $1.1 million in funding for organizations supporting people with disabilities in Ghana, Nigeria, Senegal, and Togo — an initiative that FCDO also funds. The U.K. is expecting U.S. negotiators to push for the removal of any language that involves a commitment to inclusion, diversity, and equality in the context of multilateral fora.