COMMENTARY: The global impact of the US' foreign aid re-evaluation
Gettyimages.com/ Kevin Dietsch / Staff
President Trump's shift in U.S. foreign assistance policy has serious implications for USAID employees and contractors alike. Here is what it could mean, according to Karen Dobson.
On Jan. 20, President Trump issued Executive Order 14169, titled “Reevaluating and Realigning United States Foreign Aid.” This directive mandates that “reviews of each foreign assistance program shall be ordered by the responsible department and agency heads under guidelines provided by the Secretary of State, in consultation with the Director of OMB.”
This order marks a significant shift in U.S. foreign assistance policy and has sparked widespread discussions among policymakers, international development organizations, and private sector contractors.
USAID: Employees and Contractors
The United States Agency for International Development, one of the primary organizations affected by this executive order, employs approximately 10,000 staff. In addition to its direct employees, USAID relies heavily on private contractors which compete for business in accordance with the Federal Acquisition Regulations. Winning a federal contract through this rigorous process requires substantial investment in time, financial resources, and human capital.
Federal News Network reports that “USAID is responsible for distributing more than $50 billion across the world consistent with the United States’ geopolitical interests.”
A significant portion of this funding is managed through contracts with private companies that implement aid programs, build infrastructure, and provide humanitarian assistance.
Outstanding Money Due Contractors
The Professional Services Council, an organization representing government contractors, voiced concerns about the financial burden that sudden policy changes impose on these contractors.
According to PSC, the U.S. government currently owes its member companies about $500 million in unpaid invoices for services already rendered under USAID contracts. This figure does not include amounts owed to non-member contractors, who are also experiencing delays in receiving payments for completed work.
These delays have real-world implications beyond just financial loss. Many of these contractors have already made significant investments under their contract vehicles. Such investments include hiring domestic and international staff, establishing local partnerships, and developing infrastructure projects.
Moreover, these companies have commitments to subcontractors, suppliers, and employees who depend on the continuity of funding to sustain their operations. If funding is paused indefinitely or contracts are canceled without due consideration, these businesses will struggle to remain viable.
Damage to Contractors’ Reputations – Domestically and Abroad
Beyond the financial ramifications, contractors also face reputational risks. Many of these organizations rely on their proven track record of reliability to secure future government contracts.
If USAID halts or suspends funding, there could be long-term damage to their credibility as stable and trustworthy development partners. The uncertainty surrounding these contracts raises serious concerns about the sustainability of the contractor base that the U.S. government depends on to execute its foreign programs efficiently.
PSC President and CEO David J. Berteau emphasized the importance of reviewing government programs to align them with an administration’s priorities. However, he cautioned that such reviews must be conducted thoughtfully to ensure that they do not disrupt ongoing contractual obligations or weaken the U.S. government’s ability to leverage private-sector expertise when needed most.
The pause on USAID funding has generated mixed reactions. Supporters argue that reviewing foreign aid is a necessary step to ensure that taxpayer dollars are spent effectively and in ways that directly benefit U.S. national interests.
Critics, however, warn that such an abrupt halt to funding could have dire humanitarian consequences, particularly in conflict zones and impoverished regions that rely on U.S. assistance for stability, food security, and healthcare initiatives.
Broader Geopolitical Implications
There are concerns about the broader geopolitical implications of reducing U.S. foreign assistance. Foreign aid has long been a strategic tool for maintaining diplomatic influence, fostering economic partnerships, and countering the presence of rival nations such as China and Russia in key regions.
A sudden reduction in U.S. aid programs could create a vacuum that adversarial powers might seek to fill, potentially shifting global influence away from the United States.
An example of how China works to dominate Africa is through its own direct investment. China is now sub-Saharan Africa’s largest trading partner. Africa exports metals, minerals and fuel while it imports Chinese-manufactured goods, electronics and machinery. Children in Kenya are learning Chinese and studying Chinese culture. This represents China’s commitment to using international investment in communities to further its own long-term initiatives.
Authority to Manage Appropriations
USAID has a long-standing history as a key instrument of U.S. foreign policy. Founded by Executive Order in 1961 by President John F. Kennedy, USAID was established to promote global development and humanitarian assistance as part of America's broader diplomatic and national security objectives.
Since then, Congress has played a crucial role in overseeing its operations. The Foreign Affairs Reform and Restructuring Act of 1998 reinforced congressional authority over USAID’s management and appropriations, setting a precedent that suggests any significant restructuring of the agency should involve consultation with relevant congressional committees.
Secretary of State Marco Rubio has been assigned responsibility for USAID and has initiated a pause on all foreign assistance programs managed through the agency. This move aligns with the administration’s “America First” agenda, which emphasizes prioritizing American interests in policy decisions: “American citizens need policies that put them first instead of policies that stand in their way.”
The administration's next steps will determine not only the future of USAID but also the broader trajectory of U.S. global engagement and leadership in international development. Whether this policy shift results in a more efficient and strategic foreign aid program or leads to unintended disruptions remains to be seen.
The administration faces a critical balancing act: ensuring responsible stewardship of taxpayer funds while maintaining America's role as a leader in international aid and development.
NEXT STORY: COMMENTARY: The times they are a changin’