Trump to Cut Foreign Aid Budgets, Opening South and Central Asia's Door to Chinese Influence
from Asia Unbound

Trump to Cut Foreign Aid Budgets, Opening South and Central Asia's Door to Chinese Influence

It looks like U.S. President Donald J. Trump's plan to reduce the foreign aid budget will come at a cost to his administration's other aims in South and Central Asia.

Some of the cuts come as no surprise as they target programs, like climate change, that the president came into office determined to roll back. But others will undermine stated administration priorities, such as regional counterterrorism and cooperation with India.

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Central Asia

South Asia

The proposed budget will end funding completely for four strategically located countries in this region, and shrink health funding by half region-wide. The proposed budget will also eliminate two categories of aid, one known as Development Assistance and one called Assistance for Europe, Eurasia, and Central Asia (AEECA), instead using the Economic Support Fund (ESF) category as a preferred vehicle for the countries in which U.S. aid will continue.

As Foreign Policy noted in its initial assessment of the changes, the shift toward ESF has caused concern that Trump will be “more interested in using foreign assistance to achieve short-term political objectives than his predecessors” since this category of foreign aid has often been less-linked to actual development outcomes. Still, a closer examination of the proposed fiscal year 2018 (FY18) assistance levels for the countries of South and Central Asia, based on the FY18 Control Levels document obtained by Foreign Policy, shows that these proposed changes could paradoxically undermine the United States’ ability to shape objectives in the region.

Moreover, at a time of massive Chinese assistance flooding the region, savings achieved through scrounging comparatively small levels of assistance will leave Washington with a shrunken profile and a shallower footprint.

Impact on Central Asia

In Central Asia, the proposed budget will change the category through which assistance flows by ending the AEECA budgets entirely for all five countries. In and of itself, the end of the AEECA account is not necessarily a problem. This legacy assistance account covers post-Cold War assistance to Eastern Europe and Eurasia (and appears slated to end for all the European countries as well.) As the Center for Global Development noted back in 2012, in many ways these programs have “outlived their purpose.” It is also challenging to manage the overall picture of U.S. foreign assistance with such a kaleidoscope of different funding sources, so consolidation could make U.S. foreign aid easier to administer. The Barack Obama administration, incidentally, proposed to end this category during FY13.

But what will happen instead?

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Aid to Kazakhstan and Turkmenistan will end, full stop. Kazakhstan, an upper middle-income country according to World Bank data, was receiving limited U.S. aid, on the order of $6 million. Turkmenistan, also an upper middle-income country with an authoritarian leader—a place the Guardian recently called the world’s second-most isolated state after North Korea—will see the closure of its miniscule $3.9 million aid package. Assistance to the Kyrgyz Republic, Tajikistan, and Uzbekistan will continue—but under the ESF account, and with smaller budgets shrunk by about half. Assistance to Uzbekistan will increase slightly.

Consider the Tradeoffs

It’s worth thinking about the tradeoffs here in ceasing and shrinking these relatively small programs in Central Asia. As Nisha Desai Biswal—who served as assistant administrator for Asia at the U.S. Agency for International Development before becoming assistant secretary of state for South and Central Asia during the Obama administration—puts it, “limited foreign assistance is playing a crucial role.”

She notes that across Central Asia, U.S. aid is focused on “priorities like combatting terrorism, promoting economic connectivity and advancing human rights and democratic governance.” Promoting democracy and human rights are longstanding U.S. priorities. Economic connectivity across Central Asia with linkages to Afghanistan, of course, will offer long-term stability for the Afghan economy, something that has been and should continue to be a strategic priority for the United States.

Putting the U.S. on the Back Foot

At a strategic level, the reduction in funds across all of Central Asia will put the United States on the back foot at a time when China is rapidly increasing its assistance across the region—by orders of magnitude greater than the United States, and for visible infrastructure projects. China’s One Belt, One Road initiative has delivered new train lines that run through Kazakhstan, Turkmenistan, and Uzbekistan, and roads to China via the Kyrgyz Republic and Tajikistan.

In plain terms, China is eating our lunch when it comes to assistance outreach across Central Asia. Those small projects carried out with each have kept Washington in the game, and kept doors open in these countries with which U.S. ties have not always been smooth.

Cuts to Health Funding

South Asia is less prosperous than Central Asia, much more populous, and facing an array of development challenges from agriculture to health to economic reform to democracy and governance. U.S. assistance has played an important role in this region over the decades, including in the health field, where American aid has helped deliver innovations like oral rehydration salts to combat cholera.

The Trump budget axes global health funding across the board.

Because health aid programs are more extensive to begin with in South Asia, major cuts bring a disproportionate loss. (In Central Asia, by contrast, health programs were only in three countries and at levels no higher than $7.7 million in any of them.)

In South Asia the global health funding in previous years has been in the tens of millions—in FY16, $79 million for Bangladesh, $53 million for India, $41 million for Nepal, and $22 million for Pakistan. The Trump budget slashes each of these by around half. Global health cuts in this region, unfortunately, will affect the ability to support work combating pandemics, improving maternal and child health, improving nutrition, fighting tuberculosis, fighting HIV/AIDS, and supporting reproductive health and family planning—all challenges at scale in South Asia.

Sadly, the cuts to the global health account do not come as a surprise. The Global Health Initiative was a signature foreign assistance priority of the Obama administration—in fact, it was called a “presidential initiative”—and the cuts are in keeping with President Trump’s desire to undo many of the Obama administration’s undertakings.

No Assistance for the Maldives or Sri Lanka

The Trump budget will end assistance completely to Maldives and Sri Lanka.

The Maldives is an upper middle-income country facing challenges to democracy as well as rising extremism among its 100 percent Sunni Muslim population—a blogger was just killed in cold blood. As a nation comprised of islands in the Indian Ocean, it also faces a threat to its existence from rising sea levels. Its tiny $2 million U.S. assistance budget is slated to close. Aid to Maldives for the past several years had addressed peace and security along with climate.

The Trump administration’s opposition to climate change funding is well-known, however misguided, but eliminating such a small amount of assistance in the peace and security category for a nation facing the threat of extremism does not align with the administration’s own counterterrorism priority. Indeed, Biswal observes that ending the limited funding to Maldives will “undermine our own security” since it will cut the counterterrorism programs our assistance supported.

Sri Lanka, a lower middle-income country that emerged from a thirty-year-long brutal internal conflict only in 2009, with a relatively new government that displaced its earlier strongman in a surprise election result in 2015, will see the end of its $38 million aid package, which had focused in previous years on democracy, human rights, and governance; peace and security; and economic development.

Like the countries of Central Asia, Sri Lanka and the Maldives both lie in a geostrategically important location: the Indian Ocean. As China seeks to expand its reach and influence across the Indian Ocean, it has increased its assistance relationships with each, and has become a major diplomatic and economic partner to both.

Losing Out on a Collaboration with India

U.S. Secretary of State Rex Tillerson meets with Indian Foreign Secretary Subrahmanyam Jaishankar at the State Department in Washington, D.C., March 3, 2017.
U.S. Secretary of State Rex Tillerson meets with Indian Foreign Secretary Subrahmanyam Jaishankar at the State Department in Washington, D.C., March 3, 2017. (Joshua Roberts/Reuters)

India, with more than a billion people, already had relatively small assistance levels given its scale. The preponderance of aid to India supports health programs, 65 percent of the FY17 $76 million budget, for example. It’s worth noting here that between FY12 and FY13, assistance to India dropped from levels of over $100 million down to around $80 million. The proposed Trump aid budget will entirely end the categories of Development Assistance as well as ESF for India, leaving only support for health programs at half of their prior levels.

This means that the Trump administration plans for U.S. assistance to India to continue solely in the health field. The tradeoff here will be significant: in recent years, in light of India’s rapid economic growth and its emergence as a major donor itself, U.S. foreign aid budgets had been designed to provide a basis for which Washington and New Delhi could partner, such as with shared innovation initiatives, or shared development projects with third countries.

Biswal comments that India has become a “development lab” with innovative approaches to corporate social responsibility and impact investing, and the loss of the funding lines that had enabled U.S.-India development cooperation will “close ourselves to the collaboration and the learning that is going on there.”

Support Preserved for Bangladesh

In Bangladesh, $91 million aid from the Development Assistance account will end, but the ESF account will go from zero to $95 million. This fortunately preserves a substantial line of support in a country that is economically oriented (now the second-largest ready-made garment exporter in the world, after China), and struggling to counter terrorism. The shift here to an ESF emphasis will be positive for many U.S. priorities with Bangladesh. But it will likely also, as Biswal explained to me, reduce the type of programming that has produced such positive outcomes in Bangladesh through traditional development programs addressing education, health, and food security—a “crucial vector for stability” at a time when Bangladesh, too, confronts threats from extremism and terrorism.

Source: The World Bank. (2017). “GDP per capita (current US$).” Data from World Bank national accounts data and OECD national accounts data files. Retrieved from
Source: The World Bank. (2017). “GDP per capita (current US$).” Data from World Bank national accounts data and OECD national accounts data files. Retrieved from

And Nepal, with thirty million people and a per capita income nearly the lowest in the region (only Afghanistan is poorer), will see a reduction of more than half of its ESF and its health budgets.

This is hard to explain, especially in light of the country’s slow and long-delayed reconstruction following the devastation of the 2015 earthquake, as well as its ongoing governance problems for which U.S. assistance can provide helpful training. The country’s fledgling democracy, the result of a long process that developed a new constitution following a bloody Maoist insurgency, needs help with the basics of democratic governance. To what extent the Trump administration will continue such programs under greatly reduced budgets remains unknown.

The special cases of Afghanistan and Pakistan

Afghanistan and Pakistan represent special cases in the region given the ongoing war in Afghanistan and Pakistan’s close involvement. Both have large ESF budgets, especially compared to the rest of the region, and the proposed budget does not subject either to account shifts.

Afghanistan will see a 20 percent reduction to its ESF, slated for $650 million, and Pakistan’s will stay stable at $200 million. (Security assistance figures are not part of the FY18 Control Levels document.)

At the moment it is hard to assess how the specific reduction in ESF to Afghanistan will affect U.S. efforts there, beyond noting that as the poorest country in the region and one in the midst of a war, every dollar going toward a stronger and more resilient economy helps build a source of stability for the country. Making cuts there before the completion of the administration’s military strategy review seems strange, as any overall strategy requires military, diplomatic, and development components to work in tandem.

Misalignment of Priorities

The larger message the Trump assistance budget signals appears to be that Washington plans to reduce the kinds of foreign aid that have underwritten a focus on U.S. values like democracy, governance, and human rights. We will back ourselves out of influence in Central Asia just as China is investing in roads and trains at a furious pace; we will curtail support to strategically located Maldives and Sri Lanka at a time we should be focused on specific counterterrorism and governance objectives there; we will close the funding support for collaboration with rising power India on development innovation; we will shift emphasis in Bangladesh with unclear impact on the highly successful programs on education, food security, and others; we will cut by half our assistance to troubled Nepal, the second-poorest country across South and Central Asia; and we will shrink our ability to promote sustainable economic activity in Afghanistan even before the larger strategy review for U.S. involvement there has been concluded.

When administrations change, policies do as well—but these changes don’t even appear to align with Trump administration priorities.

Follow me on Twitter: @AyresAlyssa. Or like me on Facebook or Instagram. My book on India's rise, Our Time Has Come: How India is Making Its Place in the World, is forthcoming from Oxford University Press.

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