Trump effect is already visible in Nepal

The Donald Trump administration’s decision to freeze all foreign aid has begun to show its effects in Nepal. US Secretary of State Marco Rubio issued an internal memo to all relevant agencies and diplomatic missions, announcing the suspension of foreign aid with exceptions only for emergency food assistance and military funding for Israel and Egypt.

 

In Nepal, USAID and its implementing partners have temporarily halted numerous ongoing projects. Pre-scheduled visits from US officials to Nepal have also been canceled. Organizations working with USAID now face an uncertain future, with no clarity on the fate of previously signed projects. Officials indicate that all activities will remain suspended for the next three months, adding to the ambiguity surrounding existing programs.

 

USAID has been Nepal’s largest donor in sectors such as health, education, agriculture and food security, water and sanitation, energy, environment and humanitarian assistance. Organizations collaborating with USAID were reluctant to comment on the impact of the freeze but acknowledged they were rushing to communicate with stakeholders about the decision.

 

The memo seen by Agence France-Presse (AFP) explicitly states, “No new funds shall be obligated for new awards or the extension of existing awards until each proposed new award or extension has been reviewed and approved.” This directive effectively pauses US funding for critical initiatives like PEPFAR, an anti-HIV/AIDS program launched under President George W Bush in 2003. PEPFAR, which has saved an estimated 26m lives, primarily in developing countries, is now facing uncertainty. The memo permits exceptions on a case-by-case basis and allows temporary funding for salaries and administrative expenses during this period.

 

The freeze comes with an 85-day timeline for an internal review of all foreign assistance. Rubio justified the decision by stating that it was necessary for the new administration to ensure foreign aid commitments were not duplicated, were effective and aligned with President Trump’s foreign policy priorities. Rubio, once a proponent of development assistance, noted the need for greater oversight.

 

The US has long been the largest donor in dollar terms, providing more than $64bn in overseas development assistance in 2023, according to the Organization for Economic Cooperation and Development. However, the Trump administration’s approach marks a significant departure from bipartisan support for foreign aid in Washington.

 

On his first day in office, Trump signed an executive order suspending foreign assistance for 90 days. Anti-poverty organization Oxfam criticized this move, calling it a drastic shift from a longstanding US consensus on foreign aid. “Humanitarian and development assistance accounts for only around one percent of the federal budget; it saves lives, fights diseases, educates millions of children and reduces poverty,” said Oxfam America President Abby Maxman. She warned that cutting these programs could have severe “life or death consequences.”

 

Trump’s decision to withdraw from the Paris Climate Accord and the World Health Organization further compounds potential challenges for countries like Nepal, where foreign aid plays a vital role in addressing critical issues.

 

In May 2022, the Nepal government and USAID signed a five-year assistance agreement worth $658m. The grant aimed to strengthen democratic governance, promote enterprise-driven economic growth, and build resilience in communities most vulnerable to natural disasters and climate change. This partnership highlighted the long-standing collaboration between the US and Nepal in addressing developmental and environmental challenges.

 

However, the recent freeze has cast doubt on the continuation of such initiatives. USAID operations in neighboring countries like Bangladesh have also come to a halt, citing the executive order. The suspension of foreign assistance underscores the Trump administration’s shifting priorities and its potential repercussions for vulnerable nations like Nepal.

 

As the freeze unfolds, the implications for Nepal’s development, public health and disaster resilience remain uncertain. The situation demands close monitoring, as delays in funding and project implementation could disrupt critical progress across multiple sectors.