The Ripples of Ending USAID

A little over a week ago, the U.S. government decided to shutter USAID. In his statement to the public published through multiple platforms, Secretary of State Marco Rubio noted that the agency, despite its large budget and decades on the ground, has little to show for its work.

He claimed that it was inefficient, that it viewed its constituency as the UN and international NGOs, and the broader global community rather than the U.S. taxpayers, making its compass misaligned with American goals and priorities.

He outlined the failure to reciprocate by recipient countries as a key indicator of the failure of the program, citing the low voting support of sub-Saharan countries for the U.S. in the UN as an example of this failure. He adds that despite extensive aid to the region, U.S. favorability ratings in Middle Eastern countries remained lower than that of China as another marker of the failure of USAID.

He criticized the charity versus trade model embodied by the agency, claiming that it fostered dependence and funded failed governments. He added that these governments and the people in those countries preferred a trade based engagement model, one rooted in investment, to the one based on charity.

For these reasons, and under the doctrine of America First foreign policy, the administration decided to cease USAID operations, bringing assistance programs under the State Department to enable more efficiency and strategic oversight.

With that statement in mind, lets explore the implications of this decision on American foreign policy.

Eyes on the Ground

A lot of Rubio’s criticisms of the agency are rooted in truth. It does not foster immediate good will for the American government; it does not result in specific voting support in multilateral forums and does not engender reciprocal government behavior in recipient countries.

But that was not the point.

The American government is not altruistic (neither is any other government). USAID delivered extensive assistance to communities and people around the world, but the agency, as an arm of the government, had multitiered roles that were more important and valuable from a strategic perspective than that of simply delivering assistance or providing aid.

One of the most important aspects of this agency is intelligence. It has unfettered access to human intelligence on a wide and more importantly deep scale. It, through the programs it offers, developed a key understanding of the pain points in countries across the world, broad sentiments about governments, where potential flashpoints could erupt, key trends and directions and an assortment of other information that would otherwise be more difficult to obtain.

It could gain direct unfiltered primary source data through its presence and through its connection with the people on the ground, collecting a significant amount of up-to-date information through which it could supplement its officially and unofficially gathered data. Officially generated data, whether through signals intelligence, or through direct official engagement through diplomatic channels is often incomplete, requiring support and cross verification through other means. USAID was one of those means.

It also allowed the American government to identify discrepancies between officially stated positions and realities on the ground. When a government issues a development report claiming accomplishments in a certain field that are not reflected in reality, this becomes a valuable pressure point that can be leveraged in negotiations. It helps identify aspirations, and even guide them through subtle program management.

On the economic side, USAID, by virtue of its focus on providing assistance to sectors that are inherently weak in recipient states, is a very important tool in identifying potential sectors for investment. Think infrastructure, communications, agriculture, for example. Being present provides a picture not only of the unmet needs, the potential investment channels, but also opens doors to local authorities that would be responsible for facilitating any investment projects or ventures.

It also provides a picture of the local cooperation ecosystem. Its presence on the ground allows it to identify who else is there, who else the recipient state is engaging with, what they are focusing on, what avenues are being explored that may not be gaining media attention. It can pinpoint global actors trying to break into local activities, and what their focus is. If a global rival, for example China, begins operating on projects and development assistance in an area where USAID is already extant, it can swiftly identify what its areas of focus are and assess trends before they develop.

This capacity to legitimately access primary source data, to be involved and understand local political and socioeconomic ecosystems, cannot be overstated.

Early Warnings

By being present and involved, by having access to unfettered and unfiltered information and data, USAID was therefore a canary in a coalmine.

Through its extensive footprint, hundreds of offices and locations serving thousands of projects around the world, the collective database of real time information becomes a treasure trove of information, that collated, can identify local and regional flashpoints before they occur.

When multiple missions across a particular region begin reporting an uptick in problems across a sector, say agriculture, predictive modeling can identify coming problems and needs in that region. It can become a tool through which American presence precedes any of its global rivals, giving it more time to formulate responses if needed, assess repercussions, and develop preemptive solutions. Think a country from which illegal immigration flows to the U.S. in times of economic hardship, where USAID can identify an oncoming economic issue through early indicators. It can feed this to decision makers up the chain, who can develop policy to stem the flow before it begins through approving relevant programs.

It can also gauge political sentiment in the regions in which it operates. It can identify rising political trends, including extremism, on a much more holistic basis than pure intelligence or diplomatic agencies could. It can identify shifting sentiments toward U.S. in key -volatile- areas through its daily interactions with partners on the ground. Think of it as the top of the intelligence funnel, where a large amount of information comes in about a variety of different subjects and topics, that can then be filtered by more specialized agencies to assess potential growing risks from different regions.

In that respect, USAID, was effectively a soft intelligence system that feeds into the broader American intelligence network, providing useful contextual cues, and more holistic overviews of operational ecosystems.

Separation on Purpose

The administration’s decision to shutter USAID did not say that the U.S. would no longer provide aid, but that the State Department would be the agency handling all aid moving forward, in the interest of efficiency.

But there is a very important reason, apart from the practical operational ones, that USAID was separate from other American agencies, including the State Department. Distance.

Political arms of the government are inherently interconnected with any policies , and therefore unpopular American policies can be directly attributable to its operations. When tensions flare or disagreements arise, host governments tend to be less cooperative and less inclined to engage with representatives of the agency driving unpopular policies.

USAID however, by being one step separated is somewhat sheltered from that. As an independent agency focused only on assistance and aid, it benefitted from a buffer zone from the purely political aspect of American foreign presence. It became a way to retain presence on the ground when other agencies faced difficulties due to political disagreements and even offered informal backchannels that helped thaw relations quicker.

This separation made access easier, the presence more welcome, and ultimately more sustainable.

Dependence: A Feature, not a Bug.

Rubio, rightly, asserted that the style of program fostered by USAID and many other aid agencies around the world engendered dependency. A significant percentage of countries that receive aid continue to do so for extended period of time. It becomes a self-perpetuating cycle, one where both the donor and the recipient become locked in a mutually reinforcing dynamic.

However, that is not necessarily a bug. Fostering dependency is an exceptional way to gain leverage with other countries. The U.S. did well in fostering dependency across the world, through NATO in Europe, through military aid in the Middle East, and through aid programs peppered around the world. When it comes to the negotiating table, this dependency is leverage that can be wielded.

To be fair this is an expensive endeavor and requires consistent maintenance and follow up. It cannot be cultivated through ad hoc programs or singular engagements, requiring years and sometimes decades of engagement. It also requires broad application in a single country; one or two programs will not achieve this effect, whereas a spectrum of programs across multiple fields implemented over an extended period will.

While expensive, it bears reminding that it offers advantages over the more direct approaches at gaining leverage; gentling hinting that a key program’s funding may dry up at key moments is a tool through which a partner government can be pressured. Over time, and as long as programs persist, recipient governments tend to be more cognizant of this threat and take it on board during political negotiations, sometimes without even having to be reminded of it.

All the while, USAID programs fuel the American economy. Significant parts of the budget are salaries of American experts, and the bulk of the products and services provided are delivered by American providers. The money spent on these programs feeds back to the U.S. economy in the form of procurements.

Return on Investment

Rubio pointed out that many of the recipient countries do not reciprocate. That they do not support American positions in the UN and other multilateral forums. But if we pan out and consider the broader geopolitical ecosystem beyond UN meeting rooms, a different picture emerges.

On key political issues, particularly hot button issues, recipients of USAID tend to avoid direct opposition to American policy. Consider places like Latin America or the Middle East where key governments have been on the program for years or decades. They may vocally oppose U.S. positions in certain contexts, but when it comes to implementation they tend to be either supportive of American policy goals, or at least reluctant to become a hurdle to them.

The difficulty with identifying the specific returns on investment in this context lies in the cumulative nature of these programs, and the apparent indirect correlation of their presence with policy shifts. It is somewhat difficult to pinpoint the exact moment that a government becomes more aligned with American policy as a result of any specific program.

Because of that, it is also difficult to pinpoint the optimal level of investment in USAID programs to achieve this goal, and consequently, the immediate return on investment, in terms of policy alignment, becomes difficult to ascertain.

But that is only one aspect of the equation, and the returns on investment in terms of access and intelligence are both tangible and cumulative. With the added policy variable, difficult though it may be to pinpoint, it becomes a trifecta of returns on the long term.

Then Why the Decision?

It is a matter of perspective. To understand the decision, we must look at the policy roots driving the Trump administration. The foundational aspects of it diverge significantly from its predecessors. Prior administrations operated under the notion of abundance, and accordingly believed that they could afford to extend programs ad infinitum without concern as to whether these resources could be better used elsewhere. It was also an operational mindset of relative complacency and habit. This agency exists, therefore it must work. There was less deliberation than there would otherwise have been had the operational assumption been scarcity.

Trump’s administration however operates from a starting point of scarcity, as Vice President Vance mentioned on several occasions. This means that any investments that do not result in immediate returns -and here returns are defined more as tangible rather than intelligence or long term policy- are considered inefficient and ultimately disposable.

The current administration also prefers direct, ad hoc engagement over long term cumulative ones, which puts it at odds with the foundational aspects of USAID. Trump would rather send an envoy to quickly address a single issue rather than cultivate dependency over extended timeframes.

It also relates to the President’s management style. Since he assumed office for his second term, he has been focused on centralizing decision making. Whether on foreign policy or defense, the decisions are more centralized than prior administrations, and the reshaping of American institutions over that past six months has been a reflection of this approach, a consolidation of power centers around Trump, and decisions are made through him and his direct circle. USAID does not fit this bill.

Through that lens, absorbing USAID operations under the State Department aligns with the administration’s management approach. It can be more precisely directed and compelled to align with specific policy goals and direction, rather than allowed to operate under relatively autonomous terms.

And of course there is the issue of organizational self-preservation. USAID has been operational for decades, and like most organizations that exist for extended periods of time, self-preservation becomes a considerable priority. Left to their own devices, without specific oversight into their operations, organizations being to seek out or create activities that justify their existence. It is a common paradox in the world of humanitarian organizations: if an organizations achieves its goals, it loses its reason to exist.

With that in mind, and without a way to differentiate whether the activities USAID is engaged in were relevant to the administration’s policy goals in the short term, the cost benefit ratio of keeping it versus shuttering it tilted toward the latter. The risk of keeping an agency focused on self preservation rather than achieving foreign policy goals was greater than the benefit of keeping it.

There is also the issue of timelines and timespans. The Trump administration’s main operative assumption, in addition to the issue of scarcity of resources, is scarcity of time. Since taking office, the pace of change has been very fast, whether on the international or domestic fronts, spurred by an urgency dictated by a cacophony of political considerations. Pointing to successes in cutting waste and overspending provides a tangible win, particularly when it comes to an agency that has the alleged purpose of supporting international rather than domestic development.

Was This the Right Step?

No. It was not. For all its faults, USAID was an incredibly useful tool in the American kit. Others have spoken on the impact on recipients and how their lives will suffer due to this decision, but my focus will remain on the strategic and policy side of things.

This step unnecessarily takes away a weapon from the American diplomatic arsenal, one that cannot be replaced by the Department of State or any other politically focused agency. It reduces U.S. presence on the ground, reduces access to human intelligence, reduces part of the American early warning systems on evolving trends, and removes a backchannel communication funnel.

Taking the overall picture into account, this decision from a foreign policy perspective, weakens rather than strengthens American presence on the global arena. The vacuum left by USAID will be filled by rival governments, who will reap the associated benefits whether in terms of intelligence, long term economic access, or political influence.

The U.S. will still be involved in aid, under the guidance of the State Department rather than USAID, which means that some of existing programs will continue. They will, however, stumble, and they will also be viewed with increasing suspicion by recipients, who will now be working overtime to figure out how to hedge against any further unpredictability; if an entire agency can be shuttered with the stroke of a pen, then what of a single program?

And that brings us to one of the recurrent issues that will face American diplomatic endeavors moving forward: reliability and trust.

The Manner Matters

Outside the U.S., American foreign policy is increasingly being viewed oscillating. Arising from the increasing divergence in positions between the Democrats and the Republicans on foreign affairs, American policy has swung pendulously from one position to another three times over the past eight years. When Trump first assumed office in 2017, he implemented multiple policies that were diametrically opposite to those of his predecessor. When Biden took office in 2021, he reversed those positions and implemented the previous administration’s approach, and then when Trump took office for the second time in January, he swung the pendulum once again.

Therefore, allies and adversaries alike are formulating their approaches to American foreign policy in four-year stints, rather than any long-term approaches. There is no guarantee of continuity from one admiration to the next.

In the case we are looking at right now, the speed with which USAID was dismantled raised alarm bells across the board in the humanitarian community. This rapid shuttering of a long-standing agency signals that there is no permanency for any particular program, and that excessive integration and engagement with the U.S. on humanitarian issues may be prone to shut down at any moment. This drives an imperative to hedge against reliance on or engagement with the U.S. where avoidable, further reducing American influence and footprint in a field that generates extensive political influence and intelligence simultaneously.

American programs will be viewed as suspicious, unreliable and potentially unsustainable, and alternatives, where available will be more palatable. Even if the agency were to be reconstituted by a successive administration later down the line, it would not have the same access or reach. Over the coming few years, governments and humanitarian agencies will scramble to ensure that they can pivot away from American project or programs at the drop of a hat, not because they want to but because it is now an imperative.

Even if the costs (in terms of political influence and intelligence access) of shutting down USAID were bearable per the administration’s calculations, the manner in which it was done, as a further domino in its foreign policy approach, will reverberate elsewhere in American foreign relations.