USAID in Crisis: Inside Trump’s Aid Freeze and Its Impact on U.S. Soft Power

BIANNA GOLODRYGA, ANCHOR: Well, now, as we heard earlier in the show, USAID funds groups around the world, providing critical support. It also acts as a key soft power tool to promote American interests overseas. President Trump and Elon Musk are now moving to dismantle the agency in a controversial cost cutting move that sparked protests outside USAID headquarters on Monday. So, where does all of this leave USAID’s thousands of employees and beneficiaries? New York Times reporter Karoun Demirjian joins Hari Sreenivasan to discuss.

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HARI SREENIVASAN, CORRESPONDENT: Bianna, thanks. Karoun Demirjian, thanks so much for joining us. This has been a tumultuous day or two for the USAID, right? And we had, on Monday, Marco Rubio, the secretary of state, essentially said that he is now taking over as the head of the agency, this comes after Elon Musk launches sort of operations. And we’re going to get into all of that. I guess, first, for people, especially our overseas viewers, just a quick background on what the USAID is, what its function is?

KAROUN DEMIRJIAN, REPORTER, THE NEW YORK TIMES: Right, well, USAID, which stands for the U.S. Agency for International Development, has been the lead government operation that has been doing humanitarian assistance and development work around the globe. It takes its foreign policy guidance — or it took its foreign policy guidance from the State Department for decades. It was established in 1961. But otherwise, mostly functioned independently in handing out these grants and running these programs with partner organizations around the world. This move by Rubio on Monday effectively is taking away that independence that they had, subsuming USAID under the auspices of state and saying the secretary of state is going to function as the administrator of the developmental aid program. Now, the United States would not be the only country in the world where, you know, the foreign office basically controls development and humanitarian assistance, but it’s a very big change to the system. And Congress is saying it’s an illegal move because they created this agency for development and they are still funding it as a unique entity.

SREENIVASAN: And what kind of aid are we talking about?

DEMIRJIAN: We’re talking about everything from health programs, to economic development programs, to, you know, infectious diseases and food insecurity. And all these things are happening in corners of the world that include many conflict areas where, you know, the funneling of U.S. money, which is oftentimes the most significant pot of money to come in as development assistance in these areas, is really important for maintaining stability and for creating — you know, maintaining alliances, even in part of the worlds where we have a lot of adversaries and do not have a great footprint or diplomatic relationship. So, that ability to be able to extend the reach of the United States and its helpful hand to corners of the world has been seen as a really important diplomatic tool, even if it’s kind of functioned as a parallel organization to what the State Department does.

SREENIVASAN: You know, often Americans are woefully misguided when they are asked how much do we give in foreign aid, right? I mean, the estimates were like, oh, I think we give about a quarter of our budget to the rest of the world. I mean, how much in money terms are we talking about that USAID actually distributes?

DEMIRJIAN: I believe that we said that in fiscal 2023 it was about $38 billion dollars, but that amounts to far less than 1 percent of the annual budget of the federal government. I mean, it pales in comparison to the size of, let’s say, the defense budget, which is approaching a trillion dollars, is over $850 billion dollars. And we’re talking about a couple tens of billions here that goes into this foreign aid and development assistance, humanitarian aid pool. So, it’s not, comparatively speaking, very much money at all.

SREENIVASAN: OK. So, now we have an understanding of what USAID does and why it’s important. What happened in really rapid succession to USAID? What were the kinds of orders, e-mails that they were getting? What happened to basically the offices on Monday?

DEMIRJIAN: So, the dissolution of USAID is really a story of a rapid decline over about the span of a week. About a week ago is when deputies and representatives of Elon Musk and his Department of Government Efficiency, which is this task force that the president created to find cuts, to cut back on the federal budget, basically, in the hopes of balancing it. They entered USAID. It was, all of a sudden, senior staff started to be put on administrative leave. And fear started to take hold among the workforce there. You saw then as the week progressed that contractors found that they could no longer log into their e-mail accounts or access any of the systems. Then we also saw that, you know, in the last couple days that, you know, the direct civil servants started to lose access to the systems as well. And all of this together started to just basically feel like an inevitable end, an endgame that was not going to be good for USAID. So, you ended up with, you know, staffers finding out by e-mail, if they even had access to their e-mail anymore, that the offices were closed and they shouldn’t show up to work. You had near altercations as some people tried to get into the office and a small subset did. You had the security chiefs over the weekend being let go and put on suspended leave as well because they tried to deny Elon Musk’s representatives access to classified spaces where they were saying, you don’t have the security clearance to get in here. So, it’s been a clash of — and test of wills between, you know, whether the people tasked by Trump and Musk to make cuts are going to succeed, or whether the agency would be able to hold on. And it seems that, right now, at least, the agency has — those workers have lost that battle, and USAID has been moved into state, and it’s not clear, you know, what of any programs that it ran may actually survive this organizational transition. I mean, look, there’s been a waiver across the government for what are supposed to be lifesaving programs. There was a freeze that went out over all these programs. There is now that waiver. There is a court order that says that you have to, you know, keep the money flowing because it’s a subject of a lawsuit right now. But overall, it — you know, we’re in a position of massive transition right now, and it’s not clear, at the end of the day, what programs are going to survive under this new regime.

SREENIVASAN: While there is this confusion on what is legal and what is not legal, whether or not it can be subsumed under the State Department, whether the agency can be completely cut off altogether, the work is stopping. Is that accurate?

DEMIRJIAN: So, it’s a mixed bag, really. The work has stopped for the most part. Look, we were in an era where initially there was an executive order put out of like, don’t put out any more of the grants and the disbursements that are on the schedule. A bunch of states sued because of the freezes that were happening across the government grants. Now, there is a temporary restraining order and the administration has said, OK, for anything that is like an ongoing or an in the pipeline award, you know, we still have to send that out because we’re in this freeze right now because there’s this court case going on. So, that’s one. And you know, it’s not clear what that’s going to mean for the whole USAID budget, which is now under the State Department, right? It’s also a question of — there was this waiver that was put out to say — because there was a backlash of like, look, if we stop funding you know, HIV programs or certain very, very acute food programs, we are going to cause potentially death and definitely a lot of human suffering. And so, there was this waiver that was put out before all of the last steps of the dissolution of USAID happened over the weekend to say, OK, if it’s a lifesaving program where there’s like a direct tangible impact on keeping people alive, then we can keep those programs going. But it’s been kind of — you know, there’s been confusion.

SREENIVASAN: One of the areas that we have been seeing USAID active in the recent months is the conflict in Gaza and what has happened, say, for example, to projects on the ground there?

DEMIRJIAN: We have — that’s right, there’s a — there — that has been visible. It’s also been, and is, a critical component to keeping the ceasefire going. The flow of humanitarian aid into Gaza, and the United States being one of the major backers of that, and a guarantor of the ceasefire as well, that’s critical to keeping that humming along and not descending back into a war. Look, at this point, the Gaza mission, which is based in Jerusalem, has faced the same hits as many of the other missions across the globe in conflict areas. They’ve lost their contractors. Some direct staff are having difficulty. I mean, look, there’s been a push over the last several hours even to be able to try to get access back for some of these people, to bring people back online. So, this is all a very much living in real- time sort of transitional situation. But the staffing of that office, like every other office has taken a hit, and that can affect the capacity because there’s now more work to be done by fewer people that have to make it happen. And so, everybody is very nervous about what that might look like and will that actually affect how much aid is able to get to the Palestinians in Gaza?

SREENIVASAN: One of the concerns that President Trump has expressed repeatedly is that we need other countries to step up to the plate and fill the gap. We can’t be everything to everyone all the time. Now, is there any indication that turning off the spigot as quickly as turning off USAID will automatically generate that response? Is there anything historically to say, well, this is what happens when we back away?

DEMIRJIAN: Well, Hari, you’re testing my historical knowledge on that one, but I would just say that, look, this is — the sort of shock to the international system is probably not going to see an immediate opening of everybody else’s Treasury Departments to just spill money into completely make up that shortfall. That’s just kind of unrealistic. Government budgets don’t work that way. Our government budgeting process doesn’t work that way. We see the way that Congress bickers over every penny that they spend in many ways. So, it’s a — look, a lot of people have expressed this concern that even if you can recover, either because the United States decides that, you know what, we think all these programs are great, we’re just going to run them out of state now. It’s just organizationally different, but the money will start flying again. Everybody can get up and running, or because other countries stepped into the breach and they fill it with whatever they’re doing. That it will take too much time to be able to actually make that happen smoothly. That the contractors, the NGOs that will have to shut down, the staff that they will have to lay off, the lapse in actually providing some assistance to people will mean that you will lose the — you know, the know-how of people who had to do this. You will lose the organizational experience. And you have to build it from the ground up, and you’ll lose the trust of the populations that are served. You know, because, again, if you have a gap of several weeks or several months until you can get things going again, that’s enough time for things to fall apart, and bringing things back up online from that sort of a back foot position takes more time, more effort, and more rebuilding of that, you know, handshake relationship with the people that are being served, and sometimes the governments that are very potentially hostile to the idea of, you know, Americans or others coming in and have to kind of get that diplomatic ability to come back in, up and running. Again, in conflict areas, I’ve had people tell me that, look, when the communities trust the aid workers, then the people who are warring are more likely to let those aid workers function. And if there’s a lapse in that, or if some — for some reason, you know, the aid agencies are seen as unreliable, it becomes much more difficult for them to start up operations and get going again.

SREENIVASAN: What are the employees that you’ve spoken to saying about, especially what’s happened in the last couple of days, whether their access has been denied and now, there’s a new group of people who really haven’t been vetted by Congress, who aren’t necessarily political appointees, but have access to all of their information?

DEMIRJIAN: Yes. I mean, look, the USAID employees are not supposed to be talking right now, but those who have been informing us of what’s going on, it’s a mixed bag. Some of them are very afraid of what this means for themselves and for the world. Some of them are very irate right now because they’re saying, look, we’re just civil servants, you know, and here’s Elon Musk and people calling us evil and saying we’re a criminal organization that’s doing terrible things. So, it’s a mixed bag. Obviously, people who do that work really believe in it. They are, you know — there’s a workforce in D.C. — there’s a workforce around the globe where a lot of people are kind of stranded right now because they can’t even — they don’t even know if they’re going to be able to get their travel back to the United States funded, or what their status is right now, because they can’t access any of their systems. And they were contractors — are now more than contractors, direct hires too. So, it’s a lot of confusion, a lot of anger, and a lot of, you know, preliminary grief, I guess, because I think that everybody right now, given the experience that they’ve had over the last week, does not have a lot of confidence that the changeover to the State Department and the leadership of Marco Rubio is going to save the programs that they are afraid now are going to be permanently on the chopping block. And, you know, they are concerned about what radiating effects that has for the United States and for the people that they have been working for years and years to support as well. You know, people in the field have close relationships with the communities they serve. People in D.C. are doing support work for those programs and there’s a lot of fear, just generally speaking, for themselves and for the work and the lack of — what the lack of work will actually mean globally.

SREENIVASAN: Has there been any response from the corners of Congress, even — you know, there are Republicans who support humanitarian aid and the work the USAID has done?

DEMIRJIAN: Yes. Look, I mean, Secretary of State Rubio was just a couple weeks ago, one of those Republicans in Congress that had a fairly good track record of understanding the importance of foreign aid. The most backlash you’ve heard from lawmakers has been from Democrats. They are furious. They are upset. They are saying, this is illegal, this is a power grab. We created the USAID, we continue to fund it as a unique entity. You can’t just say it doesn’t exist anymore or subsume it within state. And frankly, that they’ve gotten some support from that, from outsiders as well. The Republicans are in a really awkward spot. Not all of them are back in Washington, D.C. yet, or were back in Washington, D.C. at the point in time it started to happen. And they have been more or less quiet about what they think, because it’s a really awkward spot for them to be in between the president that they supported and this position that they’ve taken of, you know, thinking that Rubio will be able to do a good job and believing that, you know, OK, we have to clean up any sort of problems that there are across the government, including in USAID, and then kind of staring what might be a full chop of the entire program and then all of its budgets. And so, I think they are trying to wait and see what happens because they are in a politically very, very strange position.

SREENIVASAN: There’s, of course, the humanitarian assistance that we can all kind of understand in the wake of a disaster or something like that. But I think there’s also a kind of a consequence in that this is a part of American soft power, that we are in places that other countries are not. When we leave what happens?

DEMIRJIAN: You know, that is the big question right now, right? There are international organizations that also do work in various parts of the world, but also remember that let’s take health assistance for one example, right? The United States has disassociated itself from the WHO. So, that means that the international organization now has less money to go into those parts of the world where maybe the United States is going to be pulling back. Other countries have other sorts of, you know, benevolent aid sorts of programs. But again, the United States has a huge budget. And the other thing that is important to realize that a lot of people are raising as a concern right now is that think about the other countries in the world that have the financial ability to be able to reach out into various corners of the globe to wield influence or to just give assistance and try to make alliances, those are countries that the United States considers adversaries for the most part. China has a big reach into these areas. Russia as well has reached parts of, you know, the underdeveloped world to try to have influence in those areas. And the complaint and the criticism of this move from mostly Democrats, but lots of aid workers and others as well, has been if the United States pulls back, other people are going to fill that void. And it’s going to be people that — you know, countries that we already have an issue with. And so, if we pull back on this soft power, on these ways of, you know, doing positive influence by helping people and lifting communities up, that the idea is going to be, you know, China moves in and all of a sudden we start to be in retreat and we start to lose our footprint in the world, lose our alliances, lose our ability to influence people in countries where maybe we don’t have the most perfect diplomatic relationship, but we’re hoping for a turnaround, and that sort of ground up sort of influence is gone and potentially lost to others who would wish the United States various degrees of harm, potentially.

SREENIVASAN: Karoun Demirjian, reporter of the New York Times, thanks so much for joining us.

DEMIRJIAN: Thank you.