Freeze on USAID by United States

Syllabus: GS2/ International Relation, Foreign Affairs

Context

• US President Donald Trump has taken steps to close the United States Agency for International Development (USAID).

What is USAID?

• The United States Agency for International Development (USAID) is an independent agency of the U.S. government, established in 1961 by President John F. Kennedy. 
• It was created to consolidate various foreign assistance programs under one agency to administer civilian foreign aid and development assistance.
  • USAID receives funding allocated in the U.S. federal budget.
• The top recipient countries of USAID include: Ukraine, Ethiopia, Jordan, Somalia etc.

Objectives and Areas of Work

• It operates in over 100 countries, providing financial aid and technical assistance in key sectors such as:
  • Economic development, Health and education, Food security and humanitarian assistance, Climate change mitigation and Democracy and governance.
• USAID collaborates with governments, NGOs, businesses, and international organizations, offering grants and assistance for development projects. Some notable initiatives include:
  • President’s Emergency Plan for AIDS Relief (PEPFAR), addressing HIV/AIDS treatment and prevention.
  • Feed the Future, tackling hunger and food security issues.
  • Power Africa, expanding electricity access across Africa.
  • Water for the World Act, improving water, sanitation, and hygiene services.

Implications of freeze on USAID

• Impact on U.S. Global Influence: Foreign aid has been instrumental in Washington’s efforts to build alliances and counter geopolitical rivals like China and Russia in developing nations.
  • The freeze may reduce U.S. influence in strategic regions.
• Rise of Alternative Development Partners: Countries such as China, through initiatives like the Belt and Road Initiative (BRI), could step in to fill the aid vacuum, increasing their strategic leverage.
• Humanitarian Setbacks: Several vulnerable nations will struggle to meet development goals due to funding cuts, affecting education, healthcare, and infrastructure programs.

USAID’s Role in India

• USAID’s engagement with India began in 1951 under the India Emergency Food Aid Act signed by President Harry Truman. 
• The funding freeze is unlikely to have a major impact on India, given its reduced dependence on USAID assistance.
  • However, it may affect select ongoing projects in health and sanitation. In 2024, USAID allocated $79.3 million for India’s healthcare sector.

Concluding remarks

• The freeze on USAID funding by the U.S. government has wide-ranging implications for global development efforts. 
• While India is relatively insulated from its effects, many developing nations reliant on U.S. aid may face significant challenges. 
• The move underscores the need for nations to explore alternative strategies for ensuring sustained development assistance and economic stability.

Source: TH