The US Agency for International Development and U.S. Foreign Policy

One of the very first acts of the second Trump administration was to pause all United States assistance to foreign nations. This was followed by the dissolution of the federal agency charged with administering $43.8 billion assistance funds, and firing of almost all its approximately 10,000 staff — two-thirds of which worked overseas in developing nations. What impact do these actions have on the impact and effectiveness of U.S. foreign policy? Do alternative U.S. government agencies have the ability to fill this gap?

Michael Schiffer, former Assistant Administrator of the United States Agency for International Development (USAID) Bureau for Asia, provided his adept insight into U.S. foreign policy and national security at the TCFR luncheon on December 12. Schiffer, also a former senior advisor and counselor on the Democratic Staff of the Senate Foreign Relations Committee and former Deputy Assistant Secretary of Defense for East Asia, delivered an insightful discussion on the implications and challenges of U.S. foreign assistance. He addressed what the suspension of aid and restructuring of USAID means for America’s influence and effectiveness abroad, emphasizing that a fundamental misunderstanding of USAID and U.S. foreign assistance carries significant strategic consequences. He stressed that this is not just a bureaucratic or budgetary debate — it affects American power, credibility, and global competition. 

Reform and a Discussion of “Soft Power”

Despite spending several years at the agency, Schiffer introduced the concept of reform at USAID and emphasized that he was “not at all opposed” to the idea, or even the notion of folding USAID into the State Department. Institutions created decades ago were designed for a different geopolitical era, and thoughtful reform can make sense. Schiffer underscored that his concern is not reform itself, but rather the manner in which it was carried out through abrupt dismantling rather than deliberate restructuring. A point of criticism was “soft power,” a term devised with positive intentions but one that ultimately did damage to U.S. foreign policy discourse. The hard versus soft power distinction treated military power as serious and necessary while portraying development and assistance as optional or merely “nice,” leaving USAID politically vulnerable. U.S. competitors, Schiffer noted, do not think this way: China and Russia do not ask whether an action is hard or soft power, instead asking whether it advances national interests. They integrate infrastructure, finance, military, and diplomacy into coherent strategies, and Schiffer argues that the United States should do the same by thinking in terms of strategic power, rather than focusing on power that is hard or soft.

How Does American Aid Strengthen Global Influence?

Schiffer provided three examples to illustrate the meaning of integrated American power. Following Russia’s invasion of Ukraine in 2022, the U.S. response was not only military. While weapons were provided, the Development Finance Corporation offered political risk insurance when private markets collapsed, USAID supported small and medium-sized agricultural businesses to ensure food production continued, the State Department engaged in digital diplomacy and counter-disinformation, and the Treasury worked to stabilize energy flows. Each tool served a different function, but together they reinforced resilience - an example provided by Schiffer of what is not soft power, but rather strategic power. Similar integration occurred in the Philippines between 2023 and 2024, where U.S. development assistance was aligned with military cooperation sites in the midst of rising Chinese pressure, focusing on health systems, infrastructure, and community resilience to reframe the role of the U.S. as a partnership rather than only deterrence. 

Vietnam provides the third and most powerful example provided by Schiffer, in which U.S. development assistance focused for decades on war legacy issues: Agent Orange cleanup, unexploded ordnance, and disability support built trust between former enemies, enabling the 2023 Comprehensive Strategic Partnership and expanded defense and technology cooperation. Schiffer placed emphasis on the fact that in each case, development assistance did not merely support strategy; assistance created the conditions for strategic alignment, highlighting why the dismantling of USAID represents not just the loss of bureaucracy, but the abandonment of a critical instrument of American power.

The Costs of USAID’s Dismantling

Was the loss of USAID just institutional, or was it something more strategic? According to Schiffer, the loss can be characterized as both. Material losses include approximately $43 billion in annual foreign assistance and the elimination of 10,000–13,000 professionals, in which two-thirds were overseas, embedded in communities from the Pacific Islands to sub-Saharan Africa to Latin America. These were not simply bureaucrats in Washington; they had deep local knowledge, long-standing relationships, and technical expertise in disease surveillance, agricultural development, and democratic governance. Schiffer was troubled at this knowledge, illustrating that the dismantling also destroyed the infrastructure of global cooperation: the global development commons. The UN Humanitarian Air Service, which operates in 21 crisis countries, faced fleet reductions, service cuts, and doubled fares, limiting life-saving access. Health supply chains in Africa, where USAID funding exceeded 10 percent of domestic health budgets, lost warehouse management, bulk purchasing, and logistics support. The consequences to humans are already severe: a 71-year-old Burmese refugee was the first documented death when oxygen supplies ended at a USAID-supported hospital, and Boston University estimates approximately 375,000 deaths already, with The Lancet projecting up to 14 million more preventable deaths by 2030. UNHCR lost 40 percent of funding, suspending or eliminating programs for refugee registration, menstrual hygiene, gender-based violence counseling, and education. The removal of USAID and its supporting systems leaves countries more vulnerable to future crises that do not stop at borders.

China, Strategy, and Why USAID Matters

Schiffer made a point to address the argument that China could simply “fill the gap” left by U.S. foreign assistance, and acknowledged why Chinese development finance is attractive, such as faster timelines, single financing packages, and politically visible results. Schiffer, however, pointed out that these projects often fail, suffering from massive cost overruns, poor construction quality, long delays, unsustainable debt, and loss of host-country control over critical infrastructure. In contrast, U.S. standards such as feasibility studies, transparency, environmental safeguards, and competitive bidding are not red tape but what make development work long-term.

Schiffer stressed that USAID was mistakenly framed as charity, which is politically expendable, rather than as a strategy, which is not. Foreign assistance serves U.S. national interests, creates American jobs, and enhances security, as demonstrated by South Korea’s transformation from 1970s poverty into a major U.S. investor and security partner. He placed emphasis on the idea that American values are American interests: dignity, accountability, and openness are inseparable from long-term security and represent a comparative advantage over China. When countries must choose between corrupt, self-interested powers,  they choose whoever offers more money. Having a credible, values-based partner allows for the possibility of long-term alignment. According to Schiffer, being “good” is not sentimental, but rather strategic. 

Other agencies cannot replace USAID: the State Department excels at diplomacy but lacks development implementation capacity, while the Defense Department is not designed for health, agriculture, or governance. The U.S. is unilaterally weakening itself in strategic competition, eroding the rules-based international order as opacity becomes normalized and damaging its own institutional capacity and credibility. At the same time, the executive’s termination of congressionally appropriated programs and a dissolved agency raises serious separation-of-powers concerns. This is not about preserving a bureaucracy, but about whether the U.S. can compete in the 21st century by rejecting false distinctions between hard and soft power, using a full strategic “toolkit,” and recognizing that the choice is clear — and adversaries are watching.

Michael Schiffer, former Assistant Administrator of the USAID Bureau for Asia, speaks to TCFR members in the Arizona Inn at the December 12, 2025 event.

Parvina Sharvanova and Michael Schiffer, former Assistant Administrator of the USAID Bureau for Asia in the Arizona Inn at the December 12, 2025 event.