The United States has suspended foreign aid to Pakistan, halting several major projects across governance, energy, education, and health sectors. The move follows President Donald Trump’s directive to reassess U.S. foreign assistance programs to ensure they align with his administration’s foreign policy priorities.
USAID foreign assistance
Tammy Bruce, spokesperson for the U.S. Department of State, confirmed the suspension. “Consistent with President Trump’s Executive Order on Reevaluating and Realigning United States Foreign Aid, Secretary Rubio has paused all US foreign assistance funded by or through the State Department and US Agency for International Development (USAID) for review,” Bruce said. Trump “is initiating a review of all foreign assistance programs to ensure they are efficient and consistent with U.S. foreign policy under the America First agenda.”
The sudden halt to U.S. foreign aid does not apply to weapons support to Israel and Egypt and emergency food assistance, according to a memo issued by the U.S. department.
This move affects ongoing U.S.-funded programs in Pakistan. For over 70 years, the U.S.-Pakistan development partnership has been a crucial support system for key sectors such as energy, economy, agriculture, education, and health. The South Asian nation, struggling with an economic crisis in 2023 that nearly led to a sovereign default, has relied on this partnership for vital support.
The U.S. has invested more than $205 million in Pakistan’s energy sector, according to USAID’s website. Additionally, it has funded programs aimed at economic development, such as the Investment Promotion Activity ($16.8 million) and the Pakistan Private Investment Initiative ($43.5 million), which focus on improving Pakistan’s business climate and supporting small and medium enterprises (SMEs).
Programs and sectors affected in Pakistan
This decision has had an immediate impact, affecting numerous U.S.-funded programs in Pakistan, including the Ambassadors Fund for Cultural Preservation (AFCP), which supports the protection of cultural heritage. The U.S. embassy described the fund as demonstrating “the depth of U.S. respect for the cultural heritage of Pakistan.”
In the energy sector, five projects related to power improvement, climate financing, and clean energy have also been halted. Those employed in USAID-funded projects in Islamabad confirmed the receipt of stop-work orders, some of which have resulted in furloughs and terminations.
Dr Gabriel Filippelli, American biogeochemist and Executive Director of the Indiana University Environmental Resilience Institute, regretted the suspension order.
In the economic development sector, several projects aimed at promoting private investment and recovery have been paused, including the $24.8 million FATA Economic Revitalization Program, which has already been completed. Agriculture programs, including Water Management for Enhanced Productivity and Pakistan Agriculture Programs-II, are also impacted. Four of these 11 projects were projected to be completed in 2025.
In governance and democracy, four out of 11 key programs, including initiatives to strengthen electoral processes and local governance, have been affected. Similarly, educational programs, such as Improving Girls Education and Higher Education System Strengthening, have been paused, while health initiatives addressing tuberculosis and global health security are also on hold.
Ahmed Bilal Mehboob, founder and president of the Islamabad-based think tank Pakistan Institute of Legislative Development and Transparency (PILDAT), warned that the aid suspension could have serious consequences for Pakistan’s civil society and development sectors. He noted that approximately 10,000 to 15,000 people are employed in organizations dedicated to democracy and human rights protection in the country.
Silver lining
While the suspension has raised concerns that some programs may be permanently shelved, the White House has signaled that the freeze is temporary.
“The responsible department and agency heads, in consultation with the Director of OMB, will make determinations within 90 days of this order on whether to continue, modify, or cease each foreign assistance program based upon the review recommendations,” the White House said in a recent statement.
This decision underscores the Trump administration’s “America First” policy, reflecting concerns about foreign aid programs that, according to the White House, “serve to destabilize world peace.” As foreign aid comes under scrutiny, the future of U.S. support for international projects remains uncertain.
Experts say Pakistan should focus on local solutions
Pakistani economists and former diplomats dismissed the new U.S. administration’s decision to suspend foreign assistance to countries including Pakistan.
Despite this, economist Kaiser Bengali argued that the suspension might not be as harmful as expected, given that Pakistan’s economic issues are largely self-inflicted. He pointed out that foreign aid hasn’t significantly benefited the economy over the past 40 years and suggested that the suspension could prompt Pakistan to focus on local solutions and reforms.