The recent suspension of USAID funding globally has shocked the world. As a recipient, Bangladesh has experienced shockwaves in the country’s development sector. This move, initiated by an executive order from U.S. President Donald Trump, not only affects ongoing projects but also poses significant challenges for the future of humanitarian and development initiatives in Bangladesh. As a major recipient of U.S. foreign assistance, ranking as the 20th largest globally with $550 million received in 2023, this sudden halt is particularly concerning for the country’s financial and social development. It has already faced a shock as many USAID contractors including NGOs and for-profit consultancy firms have left with no option but to lay off until the review process is completed.
Immediate Consequences on NGOs and Development Sector
The immediate impact on both the NGO sector and broader development assistance efforts is stark. Over 100 projects valued at approximately $550 million were suspended immediately following Trump’s executive order; upon receiving instructions from the local USAID office. This abrupt cessation has led to job losses among employees working on these projects, with many NGOs and consultancy firms forced to terminate contracts with employees who were on probationary periods without pay.
One notable example is the International Centre for Diarrheal Disease Research (ICDDRB), which terminated over 1000 employees involved in infectious disease research funded by USAID. These terminations highlight how critical these jobs are within specialized fields like public health. USAID fund contributes to ICDDRB’s 20% of total funding. Therefore, its operations are affected significantly, especially in fighting against infectious diseases. In the coming days, when a Diarrheal epidemic would occur, it would not be able to provide the critical support it used to provide in the past.
Like ICDDRB, other contractors relying on USAID projects are also facing uncertainty and have to terminate contracts with their employees or put them on suspension without pay for the next three months. Such unforeseen disruption in the development sector would also increase the number of literate unemployed in the country.
Over the past two decades, the development sector emerged as a lucrative job market for fresh graduates who would eagerly join the sector to gain first-hand experience. The pouring aid and flourishing projects gave them job stability and social security. Such suspension would erode trust as well as create a job crisis for the new graduates.
Broader Socio-Financial Implications
The suspension of more than 100 ongoing projects will exacerbate social and financial hurdles that may not be immediately visible but will undoubtedly slow national development progress over time. For instance, halting salinity removal projects along coastal areas could lead to acute shortages of drinking water during natural disasters like cyclones or floods.
Besides, projects on financial inclusion of marginalized communities would backtrack the country in its journey towards an inclusive economy. Furthermore, the suspended climate adaptability projects would hurt the people facing the adverse impacts of climate change.
Rohingya Camps: A Humanitarian Concern
Although Rohingya relief programs are exempt from this suspension, any disruption to related infrastructure support could deteriorate camp management conditions. Besides the relief programs, several USAID projects in the camp aimed to provide essential support for the refugees. For instance, USAID-funded hospitals in the camp used to provide crucial healthcare support for the Rohingya. Among many others, there is also a project to ensure proper sanitation within the camp. Suspension of these vital projects would negatively impact the social and physical well-being of the displaced Rohingya.
Furthermore, the suspension of funds to the WFP could also passively hit the Rohingya hard as it may again result in a ration cut for the Rohingya. Since the end of 2022, the WFP has already axed down twice on the monthly ration for the Rohingya from $12 to $8.
Future Ahead: Review Process
Most critical humanitarian projects worldwide are likely to pass through Trump’s review process due to their strategic importance for U.S. soft power abroad. Considering the projects in Bangladesh, most projects are likely to pass the review process as they are humanitarian and provide critical support.
However, given President Trump’s conservative stance, liberal-oriented initiatives such as LGBTQ community strengthening programs, gender inclusion or development programs, projects regarding liberal value creations or climate change mitigation strategies might face significant funding cuts. Trump administration perceives such projects as ‘wasteful spending’ and aims to reduce the ‘wasteful spending’. Hence, several such projects could face cancellation in Bangladesh also.
Diplomatic Efforts Needed Urgently
It is imperative that diplomatic channels be activated urgently during this review period to emphasize both strategic urgency and mutual interests associated with these vital programs. The Ministry of Foreign Affairs and the Bangladesh Embassy in Washington D.C need to increase their engagement with the State Department and pursue the responsible officials to safeguard the projects in Bangladesh for the next 90 days.
In conclusion, while President Trump’s decision aims at realigning foreign aid with U.S. policy objectives over the next three months, its immediate impact on countries like Bangladesh highlights pressing concerns about global humanitarian stability. Activating diplomatic efforts now could ensure continued support where it matters most—critical sectors impacting millions worldwide.
[Photo by USAID, via Wikimedia Commons]
Anik Dey has completed his BBA and MBA from the Department of Finance, University of Dhaka. The views and opinions expressed in this article are those of the author.
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