Three European allies provided millions of dollars that the United States was supposed to spend for low-income countries. Then the Trump administrationand Elon Musk’s government-cutters arrived.
Government officials from Sweden, Norway and the Netherlands told The Associated Press that a combined $15 million they contributed for joint development work overseas has been parked at the U.S. Agency for International Development for months.
After the Republican administration and Musk’s Department of Government Efficiency cut USAID’s funding and the bulk of its programs, the Europeans asked whether their money would be funneled to projects as expected or refunded.
They have gotten no response.
“It’s a concern for us, especially as we want our partner organizations to be compensated for the work they have put into the programs,” said Julia Lindholm, a spokeswoman for the Swedish government’s international development agency.
The true total may be larger. Other foreign governments also had money entrusted with USAID for distribution in a range of joint development projects at the time President Donald Trump ordered the funding freeze on Jan. 20, according to an official directly familiar with the matter who was not authorized to comment publicly and spoke on condition of anonymity.
The worries point to the extent to which the new administration’s abrupt cutoff of foreign assistance and canceling of contracts for humanitarian and development work are raising questions about Washington’s financial reliability. They also show further strain between allies as Trump revamps American foreign policy.
The State Department and USAID did not immediately respond to questions asking how many foreign governments had money for joint development programs going unspent and unrefunded in the USAID funding freeze, how much money that was in total, and whether the administration was doing anything about it.
Concerns from American allies
Sweden, Norway and the Netherlands had been partnering with USAID on a project called Water and Energy for Food, or WE4F. It helps farmers and others in poorer countries develop innovative ways to grow more food without straining water supplies or depending on climate-damaging forms of energy.
“Most importantly,” Lindholm said by email, the U.S. failure so far to disburse or refund allies’ donations is harming ”6 million of the poorest and most vulnerable farmers in the world who are dependent on the technologies for their food production and food security.”
Other administration actions already have alarmed traditional partners. Trump has said he would not necessarily follow the mutual-defense pact underlying the NATO security agreement, he has advanced some of Russia’s talking points and demands in its invasion of Ukraine and has imposed tariffs on Canada, the European Union and others.
America as a reliable financial partner
Now, doubts about the U.S. as a reliable business partner have emerged in lawsuits over the administration’s abrupt cancellation of what Secretary of State Marco Rubio said were 83% of USAID contracts, forcing partner organizations to lay off workers and driving some out of business.
In a brief supporting a lawsuit from federal workers, former Defense Secretaries Chuck Hagel and William Perry, former CIA Director Michael Hayden and more than a dozen other former senior U.S. officials said the administration’s mass canceling of thousands of USAID contracts was flouting U.S. financial regulations and “destroying the United States’ credibility as a reliable partner.”
Canceling the contracts “sends a message that this administration does not feel bound by those regulations — regulations on which every business that works with the United States relies,” the former officials said.
In another case, lawyers for nonprofits and businesses seeking payment from USAID told a judge that because of the financial chaos surrounding the agency’s dismantling, banks have stopped what used to be routine financing for USAID partners based on their contracts with the U.S. agency.
Since the Cold War, the national security argument for development programs has been that making poorer countries more prosperous and stable lessens refugee flows and conflicts.
Trump and Musk call foreign assistance through USAID in particular a fraud and scam. Administration officials are looking at focusing U.S. development efforts much more narrowly on combating China’s influence abroad and boosting U.S. trade and business opportunities.
Seeking money back from the Trump administration
Growing steadily more alarmed by the administration’s foreign aid moves, Sweden, Norway and the Netherlands initially sent USAID emails inquiring about the money they had parked in USAID accounts.
Frustrated at getting no response, two of them warned in the government-to-government emails that they were looking at talking to local media about their missing money, according to the official directly familiar with the matter.
Under court order, the administration has started making good on some $2 billion USAID already owed when Trump ordered the freeze in USAID and State Department foreign assistance on Inauguration Day.
But forced leaves and firings have yanked most officials and workers at USAID’s headquarters off the job. That includes many who oversaw development programs and would be involved in tracking down numbers and calculating any refunds for the foreign governments.
Sweden’s development agency told the AP that it estimates it has $12 million total, including $5.1 million for WE4F, sitting in USAID accounts — money going unspent for people in Africa, Asia and the Middle East and unrefunded by the administration.
Lindholm, the spokesperson for Sweden’s development agency, called the WE4F program “extraordinarily impactful,” with measurable benefits for farmers and others many times greater than the program’s initial targets.
The Norwegian Agency for Development Cooperation told the AP that it has received no information about the fate of a $1.4 million funding tranche for WE4F since Trump began dissolving USAID.
The Dutch Foreign Ministry said it reached out to the U.S. aid agency on how much of the $1.6 million it had given most recently for WE4F had yet to be disbursed by USAID and should be refunded, but that it had not yet gotten any response.
“Donor partners are now exploring other opportunities to continue to run the WE4F programme to ensure a responsible completion,” Lindholm said by email.
This story was originally featured on Fortune.com
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