Summary:

• Policy Shift: USAID has suspended all funding to Bangladesh's interim government in compliance with President Donald Trump's executive order, halting all U.S. foreign aid for 90 days to reassess alignment with American interests and values.

• Stop-Work Order: The U.S. State Department has issued a stop-work order for ongoing foreign assistance programs, excluding military financing for Israel and Egypt.

• Review Timeline: Secretary of State Marco Rubio has outlined a comprehensive review of U.S. foreign assistance to be completed within 85 days, with recommendations to be provided to the President.

• Impact on Bangladesh: USAID's directive to its partners in Bangladesh mandates the immediate cessation of work, with instructions to minimize costs and await further notice.

• Challenges for Bangladesh: The halt in aid threatens ongoing initiatives in Bangladesh, including sectors like food security, health, and education, as well as the humanitarian response to the Rohingya crisis. Bangladesh is also seeking financial support from the IMF and other sources to stabilize its economy.

• Financial Commitment: The U.S. had previously pledged substantial aid to Bangladesh, including $202 million in September 2024, as part of a larger $954 million package through 2026.

In a notable change to U.S. foreign policy, the United States Agency for International Development (USAID) has suspended all funding to the interim government of Bangladesh, led by Muhammad Yunus. This decision is in compliance with an executive order signed by President Donald Trump on January 20, which temporarily halts all U.S. foreign aid for 90 days to reassess its alignment with American interests and values.

The "stop-work" order, issued by the U.S. State Department on Friday, mandates the immediate cessation of all ongoing foreign assistance programs, including those in Bangladesh. However, this directive does not apply to military financing for Israel and Egypt, which remain exceptions to the aid suspension.

A memo from Secretary of State Marco Rubio, as reported by NPR, states that a comprehensive review of all U.S. foreign assistance must be concluded within 85 days. Following this review, a report will be prepared for the Secretary's evaluation and subsequent recommendations to the President.

In a direct communication to its implementing partners in Bangladesh, USAID stated: "This letter serves as a directive to all USAID/Bangladesh implementing partners to immediately stop, cease, and/or suspend any work performed under your respective USAID/Bangladesh contract, task order, grant, cooperative agreement, or other acquisition or assistance instrument." The agency emphasized that partners should minimize costs and await further written notice to resume operations.

President Trump's executive order criticizes the current framework of U.S. foreign aid, asserting, "The United States foreign aid industry and bureaucracy are not aligned with American interests and, in many cases, are antithetical to American values." It further explains that this aid has sometimes destabilized global peace by promoting ideas that contradict stable international relations.

This sudden halt in aid could pose serious challenges for Bangladesh. USAID's program in the country is the largest in Asia, supporting sectors such as food security, health, governance, education, and environmental projects, as well as managing the humanitarian response to the Rohingya refugee crisis. The cessation of this aid occurs at a time when Bangladesh is already dealing with economic instability, with the Yunus administration seeking international financial support, including a $4.7 billion bailout from the IMF and $5 billion to bolster its foreign reserves.

Previously, the U.S. had committed substantial financial support to Bangladesh, pledging $202 million in aid in September 2024. This amount is part of a broader $954 million package agreed upon in 2021 for disbursement through 2026.