Trump's foreign assistance freeze generates uncertainty and confusion

Within hours of taking office, United States President Donald Trump announced a 90-day pause on foreign assistance spending during which the new administration will review aid programs to decide what should stay and what should go. The executive order on “Reevaluating and Realigning United States Foreign Aid” offers one of the clearest signals to date that Trump’s White House views U.S. foreign assistance as a political and cultural battleground where it must stamp out progressive policies and programs. “The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values. They serve to destabilize world peace by promoting ideas in foreign countries that are directly inverse to harmonious and stable relations internal to and among countries,” the order alleges. It requires that agency heads must “immediately pause new obligations and disbursements of development assistance funds to foreign countries and implementing non-governmental organizations, international organizations, and contractors pending reviews of such programs for programmatic efficiency and consistency with United States foreign policy.” While Trump was widely expected to issue a barrage of executive orders on his first day in office, the aid spending pause and review caught many U.S. development professionals by surprise. As a result, the U.S. aid community is now scrambling — and consulting with lawyers — to determine what exactly the executive order means and which funding is likely to be affected. USAID’s annual budget is currently about $40 billion. The Professional Services Council, a trade association that represents U.S. government contractors, has asked USAID for clarification and is still waiting for a response, said Paul Foldi, PSC’s vice president for international development affairs. A current senior USAID official told Devex the agency’s lawyers are still reviewing the order to pause funding. But in the meantime, they also shared concerns that it could apply to significant amounts of funding from the 2024 fiscal year that have not yet been committed to a specific project. The same official speculated that Trump’s team could be using the pause to set up a future effort to reclaim unspent funds through impoundment or rescission — budget processes that could allow the White House to circumvent congressional appropriations. The order gives the U.S. secretary of state — now Marco Rubio, who was confirmed this week — significant authority over the pause and review process, alongside the director of the Office of Management and Budget. Russell Vought, the person who held that role during the first Trump administration, has been nominated again, but not yet confirmed. “Rubio is key to how this will be implemented and how he sees this as part of his foreign policy priorities,” said George Ingram, senior fellow at the Brookings Institution. An internal memo from Acting USAID Administrator Jason Gray — sent Tuesday and seen by Devex — noted that he has been working with leaders throughout the agency “to develop directives on these Executive Orders to be implemented at all levels.” “The next four years offer a great opportunity for our Agency,” the memo reads. Ingram told Devex that the impacts of the pause will depend on whether the Trump administration uses it to filter out a relatively small number of programs it disagrees with or to undertake a comprehensive review of its full foreign assistance portfolio. “If it’s a quick review focused on their priorities, like family planning and climate change, then it’s going to have an impact on a particular subset of what USAID does,” Ingram said. But a full-blown review of the “complicated, multilayered beast” that is USAID, would take “a lot of people more than three months to do.” He also noted that it is currently unclear whether U.S. humanitarian assistance funding will be included in the pause, though “there’s nothing in the executive order that explicitly exempts it.” Tom Hart, president and CEO of the NGO coalition InterAction, told Devex that “any reevaluation of assistance grants will prove that foreign assistance programming delivers an extraordinary return on investment for the American people.” Devex understands that another big question circulating within the aid community is what the executive order means for organizations that have performed work on foreign assistance programs but have not yet been paid for it. According to the executive order, the pause applies to both “obligations” and “disbursements.” The latter often refers to payments for completed work. Those kinds of details could depend on how strictly Trump’s senior leaders seek to interpret and enforce the order. One person who could be involved in the process is Peter Marocco, a former USAID official who multiple sources tell Devex has been chosen to be director of the Office of Foreign Assistance at the State Department. Marocco made headlines during the first Trump administration for trying to restructure and eliminate programs — and sparring with career staff in the process. It is also unclear from the executive order whether the pause and review apply to other U.S. development agencies, such as the Millennium Challenge Corporation and the U.S. International Development Finance Corporation, which have sometimes enjoyed greater autonomy. “This is a really big moment of uncertainty for U.S. foreign aid,” said Walter Kerr, co-executive director of the aid reform coalition Unlock Aid. Kerr said that a 90-day review creates a “narrow window of opportunity” to change the U.S. foreign aid system for the better, but also creates significant risk. “By issuing a blanket pause on funding you’re putting into jeopardy a lot of really important investments in areas like health, food security, and migration,” he said.