The real cost of gutting USAID

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0:31George Ingram: There was a point not too long ago when the United States was the largest state sponsor of international aid in the world. For decades, Washington spent billions of dollars for medicine, research and agriculture in the poorest countries. Experts say it saved millions of lives. Then earlier this year, the Trump administration pulled almost all funding for the U.S. Agency for International Development. And now we're getting a sense of the consequences.

1:04George Ingram: This is Swamp Notes, the weekly podcast from the Financial Times, where we talk about all the things happening in US politics, finance, and the economy. I'm your host, Mark Filippino. And this week, we're asking, what is the closure of USAID really costing the world? Here with me to discuss is George Ingram. He's worked on international development and economic policy for two branches of government and the nonprofit space. He's now a senior fellow at the Brookings Institute's Center for Sustainable Development, George, welcome.

1:31David Pilling: Thanks for inviting me.

1:32George Ingram: And we've also got David Pilling, the FT's Africa editor. Hi, David. Hi, Mark. George, you've been involved in this space, foreign assistance, international development policy for decades, including for a couple of years as a principal deputy assistant administrator of USAID. Give me a sense of the foreign aid landscape before this year. You know, what did it look like?

1:54David Pilling: Well, before the last six months, for the last 70 years, the U.S. has been one or the principal bilateral donor. It's the largest donor, but it's only a third of 1 % of U.S. GDP. So it's actually, the U.S. is one of the smaller donors from the point of view of percentage of the U.S. economy. and assistance has been provided across the landscape. The dominant programs are humanitarian assistance in response to natural disasters and man-made disasters such as war and internal conflict. Secondly, in health, the U.S. is also the largest provider of health and that's probably best known for the program that George Bush started, PEPFAR, which supposedly from the accounting has saved 25 million lives.

2:49George Ingram: That's the president's emergency plan for AIDS relief.

2:51David Pilling: That's correct. And it's involved in economic development and democracy, civil society, and other areas.

2:59George Ingram: And just to drill down a little bit more, how would you describe where USAID fit into this broader picture? What role specifically did it play, or is it one and the same, basically?

3:10David Pilling: USAID was established in 1961 by John Kennedy in an effort to consolidate all of our foreign assistance program in one entity. Today, well, until six months ago, USAID represented about 60 % of U.S. assistance, with the other largest implementer being the State Department. AID really had the brainpower, the strategies, and drove the nature of U.S. assistance.

3:39George Ingram: David, when you as President Donald Trump took office the second time earlier this year, Elon Musk, you know, the world's richest man, CEO of Tesla and various other companies, took on a special role leading the so-called Department of Government Deficiency, or DOGE. One of the first things Musk did was gut USAID, which is, you know, why George was saying up until this year. When that happened, what changed for the countries and the nonprofits receiving that aid?

4:05David Pilling: Well, I think we need to look at that in two parts. First of all, kind of when the announcement was made, and what we saw was panic. There were a number of what were called stop work orders where people were called up and told, you must cease to work now until we find out what's happening. So these were people, for example, who were in the middle of conducting clinical trials where they were testing experimental drugs. If they obeyed the stop work order, they were forbidden from even contacting the patients who were taking these or in these trials. This really spread panic. But more recently, I wanted to go and find out what had happened kind of in a sense when the dust had settled.

4:50David Pilling: Marco Rubio, Secretary of State, had said that life-saving interventions would not cease. And people didn't quite know what that meant, what would come back on stream, what wouldn't. And I have to say that even six months down the road, there's still a fair amount of confusion around this. But in so much as things are settling, I think what we can see is the following, that core interventions, for example, I was in Eswatini looking at HIV and the HIV programs, core interventions, medicines were continuing, at least for now, to be supplied. but that everything around that, what might look like sort of peripheral interventions, outreach programs, mobile clinics, checking that people were taking their medicines properly, that now there was serious concern that this would stop.

5:45George Ingram: David, is there one story about people being impacted by these cuts that really come to mind?

5:49David Pilling: Yes, I could give you one story. It's become a bit notorious, but Elon Musk said that they were cutting aid that was going to distribute condoms to Hamas in Gaza. The aid that he was referring to, he later admitted that he'd made a mistake, and everybody makes mistakes, was actually for Gaza province in Mozambique, where the main aim was to prevent the transmission of HIV from mothers to babies, which is easily done if you can detect that the mother has HIV and if you treat early enough with the right drugs. I know for a fact that people who work not only in Gaza province in Mozambique, but around Africa more generally, are very concerned that incidence of mother to baby transmission of HIV will now go up, maybe is already now going up.

6:48David Pilling: This is babies who are born with HIV who didn't have to be, that is a very real consequence.

6:56George Ingram: And while there's a little bit of ambiguity about what's going to happen, I think it's become clearer over the past couple of months, right? Like we've written about how many more deaths there will be by 2030 because of USAID cuts. There have been more strains of monkeypox that will come out of the fact that USAID has basically been shut down. I'm curious to know, George, what do you make of all of this? Not just David's experience on the ground, but just the broader picture of what this means globally for the U.S.

7:30David Pilling: Well, you don't have to wait until 2030 to see an account for the impact on human lives from the withdrawal of U.S. assistance. The latest count is that 410 ,000 people have died because of the withdrawal of U.S. humanitarian and health assistance. There are health, there are medicines and food sitting in warehouses that are spoiling, that are wasting, that won't be delivered to the intended beneficiaries. So the impact today is dramatic on human lives. And beyond the human element, it's the impact on the trust of the United States. The Trump administration has broken 80 years of trust that America has built up through its diplomacy and development programs by breaking thousands of contracts around the world on what we said we were going to do.

8:34George Ingram: Guys, I want to pick apart a little bit something that George said, which is the lack of trust in the Trump administration. So a lot of the conversation around USAID at the time when the Trump administration and Doge were talking about dismantling it was this idea of soft power and that the demise of USAID and other aid programs means America is basically forfeiting this power. George, you started to talk about that a little bit, but what do you make of that argument?

9:07David Pilling: U.S. soft power is based on our diplomacy, our development, our research in this country, our scientific research, our culture, our arts in movies and medicine. And Trump has withdrawn funding from those three elements. just to look at foreign assistance. U.S. diplomats count on the U.S. aid program to get them into the door of ministries in developing countries. For the U.S. no longer to have that soft power of foreign assistance, which gives us the tool which to collaborate with governments and civil society and private sectors around the world is basically leaving the pitch. Look, I would agree with some of that.

10:00David Pilling: And I think explicitly, you know, JFK thought of USAID as an arm of U.S. soft power. I think he said, you know, instead of sending soldiers, we're going to send you. and I think schemes like PEPFAR, George W. Bush's scheme, have indeed won the US a lot of praise. But I think there is a wrinkle in the argument, which is that when the USAID closed down, there was surprisingly little pushback from some African governments. And they had been talking for quite a long while about trade, not aid. And aid comes with it an element of intervention from a foreign country, a picking of priorities. To be frank, it's kind of humiliating when you outsource very important functions of your government.

10:55David Pilling: So the pushback against the closure of USAID has not been as big as I had expected. I think what we now need to see, and I think this is a real question, is which governments will actually pick up the baton and step into the gap that has been left by USAID. You mean local governments, not Russia or China? No, I'm not talking about Russia. And I think Russia will be nowhere. And I don't think China is interested in this. No, I'm talking about the recipient countries. You know, some Nigeria, South Africa has said, look, we will raise money, you know, from our own budgets and we will fill the gap.

11:35David Pilling: But others, I think, have been more casual about this and may now find themselves shocked at actually the big role that foreign donors were playing as those donors begin to withdraw funds. George, you look like you may want to jump in. Yeah, no, I think those are really good points. In the last three months, I've been in several virtual conversations, roundtables with representatives from the global South. And while a lot of the conversation was bemoaning the loss of U.S. assistance, some of the voices were saying, you know, this just demonstrates what we've been saying all along, that aid is a new form of economic colonialism, and we are too dependent on aid, And we need to be more independent and develop our own sources, indigenous resources and capabilities to advance our own development.

12:34My perspective on that is we live in a global world. So that type of mutual learning and support really is what we would like to see.

12:47David Pilling: And I think that's what a lot of the civil society organizations in developing countries are looking for. I absolutely agree with that, George. And I'd just like to jump in. I mean, if you look at kind of what people call global health, which I think has done enormous good in preventing child mortality, these have been incredibly important interventions. But in building up some of the capacity, the world is helping itself as well. For example, in the realm of pandemic preparedness, setting up the laboratories in developing countries around the world is really vital. Because as we know, infectious diseases have no boundaries.

13:29David Pilling: They jump around the world extraordinarily quickly. So this is not just charity. This is building the capacity of the world to deal with some of these issues. And if millions of children are saved into the bargain, I don't think that's a bad deal. So I would not want to underplay that at all. But to go beyond health, to go to the economic development, helping U.S. business invest in developing countries helps the developing countries and helps that U.S. business, helps the U.S. economy.

14:03George Ingram: All right, guys, I want to wrap up with one last question, basically summarizing the point of this conversation. I want to know what each of you think the end of serious foreign aid will mean for the world order, and is it changing irrevocably? We are at the beginning of a conversation on moving from old aid to new aid.

14:26David Pilling: And this conversation is going to go on for a decade or so. And there's no consensus now. But people are talking about things we need to move away from siloed projects into scale. Choose a few global challenges like climate, like health, like digital development. and focus your assistance on those few global public goods that will make a difference around the world. David, what are your thoughts? I agree that we are moving into a new era and that it will take many years for the dust to settle. I think we did have a shift in aid, perhaps when the Berlin Wall came down, when we shifted from this idea that aid was a tool of development to one where It shifted more to public health, to helping to save lives.

15:21David Pilling: And then we're going to have another shift. And I think, you know, some countries will take advantage of that. Here I'm talking about the recipient, the host countries, to build, you know, a better social contract between governments and the governed because they'll be offering services. But some countries will really be left behind. Some people will be left behind because their countries are too poor, because their governments are too neglectful. And I also think there are big risks to this. There are risks of blowback and pandemic being one of the more obvious ones. You know, in 10 or 20 years' time, we might be ruining the day when we dismantled some of these systems and that not only served people in developing countries that appear to be far, far away, but that in fact we're helping ourselves as well.

16:13George Ingram: I want to thank both of our guests. George Ingram is a senior fellow at the Brookings Institute's Center for Sustainable Development. Thank you so much, George.

16:20David Pilling: Thank you.

16:21George Ingram: And David Pilling, he's the FT's Africa editor. Thanks, David. Thanks, Mark. All right, we're going to take a quick break and then when we come back, we are going to do exit poll.

17:01George Ingram: Thank you.

17:09George Ingram: learn more.

17:13George Ingram: We are back with Exit Poll, where we ask an FT journalist a question from you, our listeners. This week, I have with me Amy Williams, the FT's U.S. trade and climate correspondent. Hi, Amy. Hi, Mark. So for you, I have a question from Masato, who wrote in asking, could you elaborate on the specific pros and cons of reciprocal tariffs as analyzed by the Financial Times. Masato would be very interested in a detailed breakdown of their potential effects. I think it depends who you are. So if you're the U.S. government, the main pro arguably is increased revenue. You potentially are raking in billions of dollars of extra money.

17:56The potential

17:57George Ingram: downside is inflation, which Trump voters will not like if that starts to tick up more rapidly than we're currently seeing. If you're a US trading partner, though, it's hard to see that there are any pros to these tariffs. Maybe there would be a pro if your tariff was slightly lower than your rival's tariff and that weirdly made you more competitive in the US. But generally, this tariff is bad news for you and is going to make your products more expensive in the US market. Masato, I hope that answers your question. Amy, thanks so much for your time. Thanks. That's the FT's U.S. trade and climate correspondent, Amy Williams.

18:38George Ingram: And remember, if you have a question about U.S. politics and the economy, you should really send it our way. Send your question with your name and where you're writing from, and we'll get you some answers. Send it to my email address on the show notes. By the way, we love voice memos. If you send one, we'll play your voice on the show.

19:00George Ingram: This was Swamp Notes, the U.S. politics show from the FT. If you want to sign up for the Swamp Notes newsletter, we've got a link to that in the show notes. Our show is mixed by Sam Giovinco and produced by Henry Larson. Special thanks to Pierre Nicholson, Sarah Malaba, and Mary Louise Eagleton. I'm your host, Mark Filipino. Our acting co-head of audio is Topher Forges, original music by Hannes Brown. Check back next week for more US political analysis from the Financial Times.

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