Trump Administration Proposes Radical Overhaul of U.S. Foreign Aid Structure

WASHINGTON, March 20 (Reuters) – A sweeping proposal to restructure the way the United States distributes billions of dollars in foreign aid has been crafted by the Trump administration, according to an internal memo obtained by Reuters. The memo advocates for a more focused approach, directing funds towards fewer areas deemed strategically aligned with U.S. geopolitical interests.

This proposal surfaces amidst a broader effort spearheaded by President Donald Trump and tech entrepreneur Elon Musk to reduce the size and scope of the federal government, arguing that taxpayer money is often misallocated to initiatives that do not directly benefit the United States. Trump initiated his administration with a 90-day pause on all U.S. foreign aid, and subsequent actions, including stop-work orders halting many programs of the U.S. Agency for International Development (USAID), have disrupted the delivery of critical food and medical assistance, throwing global humanitarian efforts into disarray.

The situation at USAID appears dire, with the agency reportedly largely dismantled. Significant staff reductions have occurred, with many employees placed on leave or terminated, and a staggering 80% of the agency’s grants have been terminated.

The internal memo provides a rationale for the proposed changes, asserting that the current U.S. foreign aid structure is excessively broad, expensive, and has failed to adequately reduce the dependency of recipient nations on U.S. assistance. The proposal advocates for a more narrowly defined, strategic allocation of funding. The document asserts that the proposed restructuring offers measurable returns to America, projects American soft power, enhances national security, and counters global competitors, most notably China.

The internal memo is slated for review by U.S. Secretary of State Marco Rubio, according to a source familiar with the document. The existence of the memo was initially reported by Politico.

While the extent to which the proposal will be implemented remains uncertain, it represents a detailed roadmap of the Trump administration’s vision for transforming USAID, an agency established in 1961 by President John F. Kennedy.

One of the most significant aspects of the proposal is the elimination of nearly two dozen USAID bureaus and the renaming of the agency to the "U.S. Agency for International Humanitarian Assistance." This restructured body would be embedded within the State Department, with its mandate specifically limited to humanitarian assistance, disaster response, global health, and food security.

Furthermore, the proposal suggests moving any "politically-oriented programs," such as democracy promotion, religious freedom initiatives, and women’s empowerment programs, to the direct oversight of the State Department. A State Department spokesperson, when questioned about the memo, affirmed the department’s commitment to implementing President Trump and Secretary Rubio’s foreign policy objectives by being as innovative, nimble, and focused as possible.

However, the Trump administration’s efforts to overhaul USAID have faced legal challenges. A federal judge recently blocked Musk and the Department of Government Efficiency from proceeding with the closure of USAID, ruling that their actions likely violated the U.S. Constitution.

The immediate impact of the court ruling on USAID operations and the potential reinstatement of staff remains unclear. Despite the legal uncertainty, USAID’s new leadership, some of whom were recently appointed, outlined their priorities for the coming months in a separate internal email sent on Wednesday.

The agency’s immediate priorities include administering approximately 1,000 ongoing life-saving humanitarian aid programs, ensuring the safety, dignity, and productivity of USAID personnel during the transition, and collaborating with Congress and Secretary Rubio to formulate a vision for the agency’s transition to the State Department. The agency emphasized its commitment to ensuring ongoing programs remain functional and can service beneficiaries in need.

The memo was signed by Kenneth Jackson, the recently appointed chief financial officer of USAID, and Jeremy Lewin, the newly named chief operating officer who is also performing the duties of deputy administrator for policy. Lewin’s previous affiliation as a staffer for DOGE, as reported by the COO of the Consumer Financial Protection Bureau, introduces another layer of complexity to the already contentious restructuring efforts. The reference to DOGE may indicate involvement from a political action committee or organization with specific ideological leanings, which could influence the direction of the changes at USAID.

The proposal, if implemented, would represent a fundamental shift in the United States’ approach to foreign aid, moving away from a broader development agenda towards a more narrowly focused, strategically driven model. This shift raises significant questions about the future of U.S. engagement in global development and humanitarian assistance, and the potential impact on vulnerable populations around the world who rely on U.S. aid. The legal challenges and internal resistance underscore the complexities and potential pitfalls of such a radical overhaul.