Trump aid freeze is opportunity to revamp US programs in Bangladesh
2025.02.03

When the Donald Trump administration on Jan. 20 announced a suspension of all U.S. foreign aid, the global disinformation network working on behalf of ousted Bangladesh Prime Minister Sheikh Hasina rejoiced.
The network, which includes a multitude of Indian right-wing media commentators working at New Delhi’s behest, began to spin Washington’s 90-day pause as a sign of the new Trump government’s displeasure with Bangladesh’s interim government.
But they were soon left red-faced upon realizing that Bangladesh was not the only South Asian recipient of what President Trump called the “the United States foreign aid industry.”
India, too, received U.S. development assistance and its NGOs had been similarly cut off by the president’s executive order – a fact that the jingoistic commentators hotly derided for days as “fake news” when I pointed it out to them on X.
This is not to minimize the impact of the aid freeze on beneficiaries and providers of development programs in Bangladesh at a critical moment in their people’s history.
While humanitarian assistance to Rohingya refugees was allowed to continue, other programs, such as in health, sanitation and education, which were funded by the United States Agency for International Development (USAID), had to take drastic and painful steps.
In one case, local media reported that more than 1,000 employees of a health research NGO lost their jobs because they had been hired to work specifically on USAID-funded projects.

The second Trump administration’s desire to review worldwide assistance programs to ensure that they aligned with new U.S. priorities did not come as a surprise, given comments made during the electoral campaign.
While at the micro level, the disruptions are real, more broadly it is an anachronism to think of the U.S. relationship with Bangladesh as primarily an aid-centric one.
The foreign exchange earned by Bangladesh from its export of readymade garments to the United States, remittances it receives from its citizens in America, and loans provided by U.S.-dominated international financial institutions such as the World Bank matter much more to the South Asian nation’s overall economic well-being.
In this scenario, the Trump administration’s upcoming policy decisions related to trade and immigration will potentially have a greater impact on Washington-Dhaka bilateral relations than the aid pause.
For example, U.S. trade policy would determine whether Bangladesh’s readymade garment exports become more, or less, competitive depending on how tariffs are applied.
Reducing levels of immigration and the repatriation of undocumented migrants could lead to a decline in remittance flows to Bangladesh. And a proposed tax on the funds sent abroad by foreign workers in the U.S. could reduce it even more.

What happens after the 90-day pause on aid is anyone’s guess, with even USAID’s future as an independent agency now in question.
While the foreign assistance policy is being decided, the Trump administration should also discuss burden sharing with U.S. allies, especially partners in the Quad grouping, which are India, Japan, and Australia.
With Bangladesh situated square in the Indo-Pacific, it behooves Washington’s Quad partners to step up economic and military assistance to Dhaka to compete with China’s outreach. Japan appears most likely to do so.
This could also help make up for reduced U.S. bilateral assistance.
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Also missing in many doomsday analyses about Dhaka and Washington’s aid pause were mentions of recently expanding U.S.-Bangladesh commercial ties.
For one, a U.S. company on Jan. 24 signed a new liquified natural gas (LNG) purchase deal with Bangladesh.
Secondly, a businessman-investor, who’s said to be close to Trump, reportedly told the South Asian nation’s interim government chief, Muhammad Yunus, that Bangladesh was ripe for investment.

Foreign investors had remained cautious about Bangladesh after the political uncertainty that set in when ex-PM Hasina fled the country in August.
These expressions of business interest signal an improvement in Bangladesh’s business and political climate.
New and targeted efforts by Bangladesh’s interim government to expand trade and attract U.S. investment have also played a significant part in raising Dhaka’s profile abroad.
As has Chief Adviser and Nobel laureate Yunus’ personal outreach with international private business, such as at the World Economic Forum in Davos last month.
As many development economists have long argued that it is trade and not aid that increases economic welfare, placing too much of an emphasis on foreign assistance appears misguided and does Bangladesh a disservice as well.
For Bangladesh, where the U.S. invests will be as important as the overall dollar amount, when the dust settles after the 90-day period.
Many existing U.S. assistance programs in the democracy and governance arena were designed for a different time. It is probably beneficial for Bangladesh that the Trump administration will be reviewing them.
Of course, not all existing programs need to be reworked, but an insistence on retaining the status quo can be a mistake.
Prioritize democracy funding
This is a chance to prioritize funding in, for instance, projects to support free and fair elections.
That would better serve Bangladesh’s needs at this critical time.
Likewise, given the events of July-August 2024, a greater focus on engaging with Bangladesh’s Gen Z would likely provide a larger return on investment.
The university students who began the protest against Hasina and led the movement when it spread nationwide showed a maturity far beyond their years.
Those events demonstrated the importance of harnessing the potential of Bangladesh’s youth.
Designing programs to meet their needs so they can serve as a catalyst for positive change in Bangladesh – and Asia and the world at large – would be pathbreaking.
Jon Danilowicz is a retired U.S. Department of State senior Foreign Service officer with extensive experience in South Asia. During his diplomatic career he undertook three stints in Dhaka, including service as Deputy Chief of Mission at the U.S. embassy. The views expressed here are his own and do not reflect the position of the U.S. Department of State or BenarNews.