USAID Suspends Funding to Bangladesh Amid Trump's Foreign Aid Review

In a significant shift in U.S. foreign policy, the United States Agency for International Development (USAID) has suspended all funding to the interim government of Bangladesh led by Muhammad Yunus. This action comes in compliance with an executive order signed by President Donald Trump on January 20, which temporarily halts all U.S. foreign aid for a period of 90 days to reassess its alignment with American interests and values.

The "stop-work" order, issued by the U.S. State Department on Friday, mandates the immediate cessation of all ongoing foreign assistance programs, including those in Bangladesh. Notably, this directive does not apply to military financing for Israel and Egypt, which remain exceptions to the aid suspension.

A memo from Secretary of State Marco Rubio, as reported by NPR, outlines that a comprehensive review of all U.S. foreign assistance must be concluded within 85 days, after which a report will be prepared for the Secretary's review and subsequent recommendations to the President.

Here is what you need to know

USAID's direct communication to its implementing partners in Bangladesh was clear: "This letter serves as a directive to all USAID/Bangladesh implementing partners to immediately stop, cease, and/or suspend any work performed under your respective USAID/Bangladesh contract, task order, grant, cooperative agreement, or other acquisition or assistance instrument." The agency emphasized that partners should minimize costs and await further written notice to resume operations.

President Trump's executive order criticizes the existing framework of U.S. foreign aid, stating, "The United States foreign aid industry and bureaucracy are not aligned with American interests and in many cases antithetical to American values." It further explains that this aid has sometimes destabilized world peace by promoting ideas contrary to stable international relations.

Bad news for Yunus?

For Bangladesh, this sudden halt in aid could pose severe challenges. USAID's program in the country is the largest in Asia, supporting sectors like food security, health, governance, education, and environmental projects, as well as managing the humanitarian response to the Rohingya refugee crisis. The cessation of this aid could disrupt these initiatives at a time when Bangladesh is also grappling with economic instability, with the Yunus administration seeking international financial support, including a $4.7 billion bailout from the IMF and $5 billion to bolster its foreign reserves.

The U.S. had previously committed substantial financial support to Bangladesh, with $202 million in aid pledged in September 2024, part of a broader $954 million package agreed upon in 2021 for disbursement through 2026.