(NewsNation) — After President Trump’s executive order freezing almost all foreign aid from the U.S., American businesses that help provide global assistance are furloughing employees.
There’s grave concern that stated policy goals of the Trump administration, like American prosperity, strong national security and combating the rise of China, are at risk through these actions.
Impact on U.S. businesses
The foreign aid budget accounts for less than 1% of the federal budget or around $40 billion, according to the State Department, yet thousands of Americans are employed by businesses that work in the aid arena. For many, their jobs are on the line.
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For example, U.S.-based aid company Chemonics International directly employs 1,100 Americans and partners with more than 145 American companies. It’s enacted furloughs that could become permanent if funding is cut.
“As a result of the stop-work order that is affecting all of the USAID-funded programs we implement, we are taking several cost reduction measures, including furloughing many of our staff,” a Chemonics spokesperson said.
According to the State Department’s cable issuing the stop-work order consistent with the President’s executive order, the initial timeline for this pause in funding is a minimum of 90 days. Many are concerned that the first 30 days are being used to create a review process instead of conducting reviews, delaying funding longer.
A person familiar with USAID’s programs warned that if the State Department or Congress wants any foreign assistance programs to resume after this pause, it’s possible that partners who help implement the programs will no longer exist. USAID partners pay upfront for all costs of doing work on behalf of the U.S. government (like salaries, office leases, etc.) either with cash on hand or through a line of credit.
If the government does not reimburse them within 30 days, lenders may not be willing to extend credit to partners again. And with no cash on hand, a business cannot survive.
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While Secretary of State Marco Rubio has signed some waivers that provide exemptions, like foreign military financing for Israel and Egypt and emergency food assistance, the work of aid organizations is vast, encompassing agriculture, education, health care, and more.
The source said that many partners that implement USAID’s programs face financial insolvency within 30 to 60 days.
Some U.S. small businesses that work overseas have already folded.
The head of an American-owned small business explained that the order didn’t just pause current and new funds. The government has also stopped paying for work that’s already completed, including invoices submitted before the order was issued. That small business may have to file for bankruptcy.
They, and others, don’t understand why the administration would not pay bills and freeze funds before a review process is in place, wondering if this is actually an excuse to gut the foreign aid budget and fold USAID into the State Department in a diminished capacity.
National security and keeping China at bay
The actions of the Trump administration are not just detrimental to these American businesses and their employees; they’re counterintuitive to the goals of the Trump administration, according to several sources.
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The U.S. Global Leadership Coalition, a bipartisan group that includes almost 270 retired admirals and generals, provided several examples of where the freeze could harm U.S. interests.
For example, security guards who were guarding thousands of ISIS militants at the Al Hol camp in Syria stopped showing up for work, leaving the camps largely unattended until the freeze on the specific camp program was lifted.
Current U.S. foreign assistance programs to prevent, detect and respond to biothreats and global disease outbreaks are frozen, hurting America’s ability to halt health threats, like other pandemics, from reaching the U.S.
In the tiny nation of Papua New Guinea, in a strategically important region to the U.S., China owns over 40 companies, and there are more than 1,800 foreign companies controlled by Chinese nationals or entities. With this funding freeze, Chinese influence can grow, and successful partnership opportunities with allies that advance U.S. interests in the Indo-Pacific will shrink.
Co-chair of the council, former CENTCOM Commander and Marine Corps General Anthony Zinni, believes the freeze “takes the U.S. off the playing field and diminishes America’s strength around the world.”
At his confirmation hearing to be secretary of state, Rubio said he’ll focus on three questions: Does every dollar we spend make us safer, does it make us stronger, and does it make us more prosperous?
USGLC Communications Director Josh Cohen not only believes that when it comes to international assistance, the answer to all three is “yes,” “but if we pull back from the world, China is itching to fill the vacuum.”
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Right now, funds are frozen, but no permanent cuts have been made, which is limiting criticism. Many of the people NewsNation spoke with were only willing to do so anonymously for fear of retribution in the form of permanent cuts.
A State Department spokesperson justified the pause by saying it is impossible to evaluate programs on autopilot because participants don’t have an incentive to share details if they’re continuing to get funds.
“A temporary pause, with common-sense waivers for truly life-threatening situations, is the only way to scrutinize and prevent waste,” they said.
Notably, all of the sources NewsNation spoke with agreed there’s value in a review process to get rid of waste and understand that the new administration wants alignment with what they perceive are America’s interests.
But to pause funding without a review process in place is leaving thousands of Americans jobless and allowing China to step into the void. This could leave the country weaker, less secure and less prosperous.
That’s the opposite of what voters said they wanted.
