The US foreign aid shock of 2025 gives way to a rapidly evolving 2026

The stunning breadth and torrid pace of the U.S. Agency for International Development’s downfall in 2025 still stings for many in 2026. But it’s been dulled by a determination to move forward — both on the part of the Trump administration that dismantled USAID and those still feeling its effects. Whether that momentum represents progress or regression will be the subject of fierce debate for years to come. That debate was the subject of a Jan. 29 Pro Briefing where Devex reporters Michael Igoe, Elissa Miolene, and Adva Saldinger reflected on last year while looking ahead to this year. “Strange dream” is how Igoe described the initial days of the stop-work order that President Donald Trump issued on Jan. 24 to pause all U.S. foreign assistance spending. “The thing that just continues to strike me is how front and center this particular set of issues was to the early actions of this administration, the way they zeroed in on global development, foreign assistance, and the sort of outsized role that these issues played in the minds of some of the most powerful, wealthy, and influential people in the world,” Igoe said. “It was bizarre and surreal" to witness Elon Musk trawling through award databases in a way that was "purely designed to pull out and distort some of the really sensationalist claims about them," he added, noting that when the stop-work order came down, “it wasn't just about putting a pause on future spending. It was just shutting down the whole system immediately. That was the sort of wakeup call — the sort of pivot point from which that system really never recovered.” But it’s evolving — as most recently seen with the U.S. Congress, which largely sat back last year as the administration toppled USAID and clawed back previously appropriated foreign assistance funds through rescissions. It was a striking about-face from the decade Saldinger has spent covering Congress, where appropriators jealously guard their ability to shape budgets. “That power of the purse means a lot to them,’ Saldinger said. “And I think one of the things that was really interesting to see this year is, by and large, often a lack of pushback, of trying to hold on to that power.” Congress recently reasserted that power by passing a $50 billion foreign assistance spending bill that defies Trump’s wish for deeper cuts, though the package is still a drop from previous years. The fact that it was a bipartisan compromise, too, is significant, Igoe noted. But concerns remain as to whether the administration will actually spend the appropriated money. Even if it doesn’t stand in the way, will the State Department have the capacity to get that money out the door — including funds left over from previous fiscal years? “We're still trying to figure out the lay of the land in terms of how much money will be spent and how many people will be hired, but it seems like, certainly right now, the State Department is having kind of a rethink of, OK, we don't have enough capacity, and how are we going to rebuild that capacity by the end of the year?” Miolene said. “What I understand is that where the rubber is really hitting the road right now, in capacity issues, is with contracting and agreement officers and just the State Department not having enough of them to move foreign assistance funding at a sort of pace that we would normally expect,” Igoe said. “My impression is that folks … are still willing to give the administration some benefit of the doubt,” he added. “Administration officials are saying that they want to do this in the right way, and giving some indications to various stakeholders throughout the system that they're taking it seriously, but … we're about to find out if that's genuine and something that they have really wrapped their heads around.” State Department officials have also indicated they want to streamline U.S. foreign assistance by directing operations through regional bureaus, but that shift has prompted a host of questions, including whether these bureaus will hold the same expertise that USAID once had. Another question is who will do the monitoring and evaluation functions once spearheaded by implementing partners who have since been largely cut out of the transition — at least for now — by an administration that has decried the “aid industrial complex.” With international NGOs and for-profit contractors sidelined, the administration is turning toward more direct government-to-government bilateral relations. “And I think that will be a really interesting thing to watch, because it is definitely not the way that the U.S. government has delivered aid in recent decades,” Saldinger said. “Part of the reason that the U.S. moved away from that was concerns about, in fact, waste, fraud, and abuse. … There's a lot of open questions about how this evolves.” Another open question, she noted, is transparency, “including to citizens in those countries about what their governments are promising.” On the flip side, will foreign governments benefit from the more explicitly transactional nature of the administration’s approach to development, one that prioritizes national self-interests? Will arrangements — such as the recent slew of bilateral health agreements that the U.S. has signed with African governments — be a win-win scenario, win-lose, or somewhere in between? “It will be an interesting dynamic,” Saldinger said. “Maybe the answer is a bit of both. I do think — as aid has dropped in the last year — you're seeing African leaders, organizations, etc., have a lot more voice and be a lot more forceful about what they want. At the same time, I think U.S. foreign assistance will, perhaps more than ever, be tied to a direct benefit to the U.S. and to carrying out the policies and ideology of this Trump administration. So, how do those two things square? … We're living in a time where there's a lot of things that may be in tension with one another.” On the U.S. side of the equation, the State Department recently released a five-year strategy that clearly states the U.S. will reward “allies, countries, and groups “that actively advance” American interests. “It does say foreign assistance will depend on, for example, voting in international organizations like the U.N., so it's very clear — this transactional approach,” Miolene said. “What is still playing out, too, on the other side is the way in which … recipient countries now respond.” To that end, Miolene, who was recently at the World Economic Forum in Davos, Switzerland, said she witnessed a determination by global south leaders to reclaim agency over their own development. “People were very clear, and the presidents, especially the former leaders, were very clear,” she said: “What's happened has cost lives, and it's been devastating. However, now is our moment to go forward.”