USAID's fall, Iraq's call, losses appal
Shafaq News/ Iraq’s civil society is on thebrink of collapse. With the US abruptly freezing foreign aid, organizationsthat have long provided humanitarian and economic services now face anexistential crisis.
Nearly 90% of them could shut down withintwo years, leaving millions without support and threatening progress in keysectors.
The decision, one of President DonaldTrump’s first executive orders in 2025, suspends all foreign assistance for a90-day review, sending shockwaves through Iraq’s non-profit sector and raisingurgent questions about the country’s future stability.
The Trump administration’s decision todismantle USAID at the start of 2025 marks a significant departure fromprevious US foreign aid priorities. Led by the Department of GovernmentEfficiency (DOGE) under Elon Musk, the move aimed to slash federal expenditures,with a federal court upholding the cost-cutting measures. As a result, theState Department announced the closure, shifting oversight of the remaining 17%of USAID programs—approximately 1,000 initiatives—to its purview.
This shift follows the Biden administration’searlier plan to allocate $42.8 billion to foreign aid, with USAID managing$28.3 billion. However, the Trump administration swiftly reversed course,canceling over 5,300 grants and contracts worth more than $27 billion.Secretary of State Marco Rubio defended the decision, asserting that themajority of programs had misallocated funds or failed to serve US interests.
Critics warn that dismantling USAID wouldreduce America’s global aid footprint while competitors like China expandtheirs is a strategic misstep.
USAID in Iraq
Established in 1961 by President John F.Kennedy, USAID serves as the primary channel for US foreign aid. Officiallypromoted as a tool for international economic growth, food security, and humanrights, many experts view USAID as a soft power instrument advancing USinterests.
Operating in over 100 countries, USAIDallocated nearly $ 28.3 billion in 2025, funding reconstruction in Afghanistan,health and food security programs in Ethiopia, and disaster relief in Haiti.
As detailed in the agency's official yearlyreports, Iraq has received more than $9.3 billion in assistance from USAIDsince 2003. This support spans multiple sectors and drives long-termdevelopment.
Of this amount, over $1.3 billion has beenallocated to humanitarian aid, benefiting vulnerable populations.
USAID has also contributed to rebuildingcritical infrastructure, providing more than $405 million to the United NationsDevelopment Programme’s Funding Facility for Stabilization (FFS). Thisinitiative has supported reconstructions in Mosul, al-Ramadi, and Tikrit,restoring essential public services and facilities.
Economic development has been another keyfocus, with $140 million invested in fostering entrepreneurship, job creation,and women’s empowerment. These efforts have benefited more than 15,000 smalland medium-sized enterprises (SMEs) and provided vocational training to over75,000 Iraqis.
Governance programs have also received over$250 million to strengthen institutions, enhance transparency, and improvelocal administration. Additionally, infrastructure projects have played a rolein recovery efforts, with the restoration of 1,500 schools, 100 health clinics,and 500 water and sanitation facilities in Mosul.
In Sinjar, over 30,000 Yazidis have gainedaccess to essential services, contributing to stability in the area.
Meanwhile, in al-Anbar, USAID has workedwith the Iraqi government to provide clean water to 1.4 million residents inal-Ramadi and Fallujah. Further investments include a $20 million initiativelaunched in 2024 to improve water and sanitation services across fiveprovinces—Maysan, al-Diwaniya, Nineveh, Baghdad, and Erbil—benefiting 2.5million people.
It Can Be Painful
The reduction in USAID funding came withimmediate repercussions. With financial resources diminishing, millions ofdisplaced Iraqis, particularly in Nineveh, al-Anbar, and Saladin, could faceincreased food insecurity, limited medical access, and deteriorating sanitationconditions.
The agricultural sector, previouslysupported by USAID initiatives, may experience setbacks, impacting livelihoodsand food production. Economic momentum could also slow as job training andentrepreneurship programs come to an end.
Beyond economic and humanitarian concerns,the funding cut raises security considerations. Some analysts caution thatinstability in former ISIS strongholds could create vulnerabilities, whilecommunity reintegration efforts and programs promoting social cohesion may beaffected.
Iraq’s civil society organizations are alsofacing challenges. Zainab Ali Shbar, a researcher at the Information Center forResearch and Development, noted the potential impact, “The US funding hassupported vital programs. Without this financial support, many organizationshave been forced to downsize, leading to rising unemployment, while others arepreparing to close. It’s estimated that 90% of these organizations will shutdown within two years.”
Although some European funding remainsavailable, it does not fully compensate for the US withdrawal. Insam Salman,head of the human rights and sustainable development organization Aysan,stated, “American funding accounts for about 60% of Iraq’s incoming support.Without it, many critical development programs will cease, stalling Iraq’sprogress and undermining years of work in various sectors.”
The funding cuts also pose challenges forkey UN development programs, particularly those supporting the Iraqi Ministryof Migration and Displacement. Initiatives aimed at repatriating Iraqi familiesfrom northern Syria and sustaining operations in camps such as al-Jadaa andal-Hol may face financial strain.
Ali Al-Jahakir, spokesperson for theministry, commented, “Most of the projects that have been halted arerehabilitation programs funded by the US government. While some NGOs continuewith EU grants, the suspended projects are not essential and can be replacedwith alternative funding.”
Independence is Strength
As Iraq navigates the suspension of US aidto international organizations, officials are actively exploring alternativefunding sources while reinforcing the role of the Ministry of Migration inmanaging humanitarian initiatives.
Following a meeting on March 13, theNational Security Advisory and key ministries urged the United States toreconsider its decision, emphasizing the importance of continued support forhumanitarian efforts.
However, Alaa Al-Moussawi, vice presidentof the Iraq Youth Center for Studies and Training, underscored the potentialbenefits of self-reliance. She advocated for a stronger emphasis onstate-supported organizations, arguing that domestic funding would help ensurecivil society initiatives remain aligned with national priorities.
“When funding comes from the state,organizations work for the country, ensuring loyalty to Iraq,” Al-Moussawistated. “Every funding source, whether domestic or foreign, has its ownobjectives. While external funding may seem beneficial, it often does notprioritize Iraq’s interests above those of its backers.”
In response to the funding gap, Iraq isalso intensifying its efforts to secure alternative funds.
One key strategy has been bolsteringpartnerships with international donors, particularly the European Union, whichhas been a major financial backer since 2003.
The EU has provided over €1.2 billion indevelopment aid to Iraq and remains a crucial player in stabilizing thecountry. Currently, the bloc is funding projects worth €510 million across governance,education, and infrastructure.
In 2024, a €47.5 million initiativetargeted recovery efforts in Basra, Nineveh, and Erbil, supporting employmentprograms and improving public services.
Japan has also played a pivotal role inIraq’s reconstruction. Through the Japan International Cooperation Agency(JICA), Tokyo has injected nearly $11 billion in official development loans,primarily supporting electricity, healthcare, and water management. These fundshave significantly contributed to rehabilitating power grids, expandinghospitals, and revitalizing irrigation projects.
In late 2024, JICA renewed its cooperationwith the United Nations Development Programme (UNDP) to accelerate economicrecovery efforts, with a focus on job creation and sustainable growth.
Meanwhile, the United Kingdom has deepenedits engagement in Iraq’s infrastructure and energy sectors. In early 2025,London finalized a $15 billion agreement with Baghdad, which includes alarge-scale water infrastructure project aimed at improving access to cleandrinking water in southern and western Iraq.
The deal also encompasses significantinvestments in modernizing Iraq’s power transmission systems, a crucial steptoward addressing chronic electricity shortages.
Apart from the government-backedinitiatives, Iraq has turned to international organizations and NGOs to bridgethe funding shortfall. The United Nations Development Programme remains a keypartner, working across multiple sectors to sustain economic diversification,support governance reforms, and promote climate resilience.
Additionally, global humanitarian groupssuch as ‘’Unlock Aid’’, ‘’Founders Pledge’’, and ‘’The Life You Can Save’’ havelaunched emergency fundraising campaigns to offset some of the losses caused bythe USAID suspension.
While these efforts have helped mitigatethe immediate impact, they still fall short of replacing the scale of Americanfunding.
