US President Donald Trump’s administration has introduced new conditions on billions of dollars in foreign aid spent through the UN and other multinational agencies, according to official documents examined by IRIN.
The rule change, previously unreported, takes aim at USAID’s funding for Public International Organizations (PIOs), a category that includes UN agencies like UNICEF as well as the World Bank and the African Union.
According to the new rules, any PIO grant over $5 million must now be vetted at the very top, in the office of USAID Administrator Mark Green. The threshold for Green to have to vet any other types of grant is $40 million. Former USAID officials say the low limit for PIOs will slow approval of UN financing, could create backlogs, and may leave funding more vulnerable to political interference.
The move comes as Trump’s administration is cutting UN funding in Iraq to redirect it to Christians and other minorities, and as it announces a new religious freedom initiative. Green has been directed by US Vice-President Mike Pence to prioritise earmarking for such causes.
An internal USAID manual (section 300 of the automated directives system, or ADS) was updated, effective from 27 June, to require all PIO funding decisions to meet the range of new policy criteria. USAID contends that it is just bringing PIOs in line with other recipients, but development sector analysts say the move means UN funding could be diverted elsewhere or dry up considerably.
In a statement to IRIN, a USAID official, who asked not to be named due to agency policy, said the change is to “ensure senior leaders examine high-dollar-value acquisitions and assistance and PIO proposals prior to solicitation to encourage more rigorous competition, creativity, and innovation.”
How much is at stake?
USAID did not provide exact figures on what percentage of funding, nor which projects, would be affected. IRIN attempted to calculate the implications of the change using historical records.
PIOs get about a quarter of USAID’s billions of aid dollars annually. The new rulebook could add a significant administrative burden: for example, in financial year 2017 about 24 percent of USAID’s spending went, in 815 grants, to “multilateral” organisations, (a category broadly equivalent to PIOs). Of those $3.2 billion in allocations, 125 agreements were over $5 million and so now could require extra oversight.
“I don’t see a way that this does not result in the UN getting less money,” said Jeremy Konyndyk, a senior policy fellow at the Center For Global Development think tank and the former director of USAID’s Office of US Foreign Disaster Assistance.
Konyndyk argues that the involvement of Green’s office shifts the decision further from technical experts and those in the field. “What’s so weird about this,” he added, “is it takes what is basically a programmatic and technical decision and elevates it to the highest level of political leadership.”
Other former officials were more blunt. “They want to review grants over $5 million? That’s insane,” said one ex-employee of the agency who is familiar with contracting regulations and expected reduced grants for the UN as a result of the change.
According to the 2017 data, UNICEF, the International Organization for Migration, and the UN Development Programme have the most to lose among UN agencies. (The UN’s World Food Programme gets the most funding allocations but would likely fall under an exemption for emergency humanitarian funding).
A UNDP official told IRIN that the agency continues to have “a very robust partnership with USAID,” but did not offer clarity on how the oversight change could affect their funding.
Taking back the reins
Though the White House has moved to cut the foreign aid budget, the USAID official said that was not the intent of the PIO move.
In a statement, the official said: “The close attention of senior leaders will be critical to ensure we integrate the principles of self-reliance, leverage new resources, co-collaboration/co-design, and broadening our partner base into all of our mechanisms including grants, contracts and awards with PIOs.”
Outside experts and former USAID staff who spoke with IRIN questioned the agency’s explanation and criticised the new $5 million threshold as being too low.
“This is an administration that has made explicitly clear that they look very sceptically at foreign aid spending,” said a senior NGO official familiar with the foreign aid budget and who speaks regularly with US and UN officials. The new review process, this person said, “by definition will slow the process.”
While the changes to the rulebook alarm supporters of the UN, they also appear to reinforce centralised control over funding from Washington and limit what staff closer to the projects themselves are charged with.
“I am concerned that the thresholds have been lowered and that this would appear to conflict with the alleged move to greater programming in the field,” said George Ingram, a former deputy assistant administrator at USAID and now a senior fellow at the Brookings Institution. “The whole requirement goes counter to what they are trying to do at [US]AID, which is push programming out to the missions.”
The largest proportion of UN grants from USAID will be untouched: for example, most emergency funding should be exempt from the extra scrutiny. According to the detailed changes to USAID’s policy, the extra review step is not required for “...Food for Peace emergency food aid, urgently needed humanitarian assistance, or urgent activities of the Office of Transition Initiatives.”
Nevertheless, that leaves many other sectors, such as education and agriculture, potentially facing unwelcome changes. The non-emergency grants allowed USAID to contribute to longer-term development projects. Funding through PIOs conventionally allowed the United States to be one of many donors for a programme, rather than providing the entire outlay. “Ironically, that’s something this administration talks about a lot – that they want to see more burden-sharing,” said Konyndyk.
Other international bodies, such as development banks, research bodies, and international institutions like the IMF are also classified as PIOs.
One area where the United States may prefer to go it alone is in Iraq. The Trump administration has brushed aside the UN in pursuing programmes for minority religious groups victimised by so-called Islamic State.
“We will no longer rely on the United Nations alone to assist persecuted Christians and minorities in the wake of genocide and the atrocities of terrorist groups,” Pence said last October at a dinner with religious groups. “Our fellow Christians and all who are persecuted in the Middle East should not have to rely on multinational institutions when America can help them directly.”
Pence’s influence has already led to the withholding of UN funding. In January, USAID held back most of a $75 million tranche previously agreed with UNDP for stabilisation projects in Iraq, preferring to funnel millions to groups that specifically support Christian and Yazidi communities.
The administration's support for targeting foreign aid at minority groups was on full display during the first ever US Ministerial to Advance Religious Freedom, held in Washington during late July. Headlined by Pence, the event also featured speeches by Secretary of State Mike Pompeo and US ambassador to the UN Nikki Haley.
This focus may backfire. Last year, Kori Schake, a former White House and State Department official during the second Bush administration, travelled to Iraq with the UN and reviewed recovery efforts. Schalke noted that Christian communities were already disproportionately benefiting from additional assistance. Their homes and churches were reconstructed faster and with more resources than those of Muslims.
“It is breeding resentment,” Schake, now deputy director-general at the International Institute for Strategic Studies, wrote in December. “Targeting assistance and attention to Christian communities to the exclusion of their Muslim fellow citizens is ultimately bad for Christian communities and bad for American interests in the Middle East.”
Help make quality journalism about crises possible
The New Humanitarian is an independent, non-profit newsroom founded in 1995. We deliver quality, reliable journalism about crises and big issues impacting the world today. Our reporting on humanitarian aid has uncovered sex scandals, scams, data breaches, corruption, and much more.
Our readers trust us to hold power in the multi-billion-dollar aid sector accountable and to amplify the voices of those impacted by crises. We’re on the ground, reporting from the front lines, to bring you the inside story.
We keep our journalism free – no paywalls – thanks to the support of donors and readers like you who believe we need more independent journalism in the world. Your contribution means we can continue delivering award-winning journalism about crises. Become a member of The New Humanitarian today.