Bangladesh has started feeling the pinch of the US foreign aid suspension though it is stated as a temporary arrangement for 90 days. While Rohingya response programme is exempted from the sanction, allowing continued support for displaced communities, the aid cut has already resulted in the closure of a large number of US-funded projects across the country.
U.S. Agency for International Development (USAID) which is the main US agency to extend worldwide assistance to countries has been the fourth-largest development partner of Bangladesh after World Bank, Asian Development Bank and JICA. It has been implementing over 100 projects in various sectors such as health, education, democracy, good governance and others.
These projects are now facing closures, indicating serious disruptions in our sustainable development. It is because in the 2023 financial year alone, the agency provided nearly $500 million to Bangladesh. Additionally, in last September, USAID committed over $202 million for the current year.
However, the US is the world's largest provider of official development assistance, according to the Organization for Economic Cooperation and Development (OECD) and most of its support is channeled through USAID. It is an independent government agency established by Congress in 1961.
USAID is by far the largest humanitarian and development arm of the US government, with a workforce of approximately 10,000 people around the world. In 2023 the agency managed more than $40 billion in combined spending in around 130 countries.
So, suspension of USAID assistance will have huge impacts on Bangladesh. Many people already face losing their jobs from an estimated 20,000 professionals work in US-funded projects across the country. For instance, International Centre for Diarrhoeal Disease Research, Bangladesh (icddr,b) has already sacked over 1,000 employees, mostly from a USAID-funded tuberculosis project.
What's more, the US sanction has come on the back of declining aid for our NGOs for the past several years. The foreign aid disbursed through NGOs accounted for $945 million in 2019 and that came down to $741 million in 2023. This is also a factor that would cause significant layoffs in Bangladesh.
On the other hand, this aid cut will also hampered our political transition as it takes effects when the interim government has been struggling with manifold challenges like political instability, high inflation, dollar crisis and social unrest after the fall of the previous government on last August 5.
Understandably, there is another factor that US aid cut may prompt strategically located Bangladesh to turn to other funders. Naturally, if the US essentially withdraws its funding at the expense of its influence, others are there to fill the void.
And China is there to get in on the process by enhancing its partnerships with Bangladesh with more aid and loans than it offers earlier as Beijing has already been implementing a number of mega-projects in Bangladesh under the Belt and Road Initiative.
