USAID funding is on hold. Why has Ukraine's billions been frozen, and what will the consequences be?

U.S. President Donald Trump has paused funding for foreign aid to other countries, amounting to tens of billions of dollars. How this will affect Ukraine and which projects are on hold – read in the material from RBC-Ukraine.

On his first day in office, U.S. President Donald Trump suspended foreign aid to other countries, including Ukraine. This concerns funding through the U.S. Agency for International Development – USAID. For most Ukrainians, this is a little-known abbreviation, but billions of dollars have been funneled through it. All agency projects have been put on hold for 90 days. During this time, an audit will take place, after which the projects will either be reinstated or revised.

What is happening with USAID in Ukraine

The decision to suspend aid came as a surprise to both Ukraine and many in the U.S. It is no wonder that there has been much speculation surrounding this topic. The New York Times reported that military aid to Ukraine has also been frozen. The publication did not provide details or data about the source of this information.

The head of the Center for Countering Disinformation at the National Security and Defense Council of Ukraine, Andriy Kovalенко, stated that this information is inaccurate – military aid to Ukraine continues through packages that were approved earlier.

At the same time, USAID funding in Ukraine has already ceased. Project staff confirm the suspension of the projects, halting grant funding, and pausing support for local government bodies.

"We are working. We have, let's say, a legitimate two months before we are definitely laid off. If they can conduct the audit and reinstate the funding within these two months, we will continue working. If not, then that’s it," – an employee of one of the USAID projects told RBC-Ukraine.

Which projects in Ukraine were funded by USAID

Before Russia's full-scale invasion, USAID allocated relatively small amounts to Ukraine – several hundred million dollars. These were primarily projects related to democracy and human rights. However, everything changed in 2022. Now, Ukraine is the largest recipient of the agency's funds.

According to aggregated data from the portal "Slovo i Dilo", USAID funded projects in Ukraine worth billions of dollars. In 2022 – $9 billion, in 2023 – $16 billion, and in 2024, there was a significant reduction in aid – down to $5.4 billion.

USAID project worker combating tuberculosis (all photos: facebook.com/USAIDUkraine)

Currently, the agency is implementing 40 projects in Ukraine. These cover areas such as humanitarian aid, "democracy, human rights, and governance," healthcare, "peace and security," and education.

Of course, there have long been questions regarding specific projects – on what exactly American taxpayers' money is being spent. Member of Parliament Maryan Zablotsky provided several such examples:

• support for the creation of a YouTube talk show titled "Ebaут",

• support for the music group TVORCHI in creating a song and performing at concerts in selected cities of Ukraine (one musical composition "Razom" was created and distributed),

• support for the NGO "CUKR" in organizing a series of cultural events during the summer season in "Dvorik na Kuznechnoy". Creation of a mural in "Dvorik na Kuznechnoy",

• support for the company "Film UA" in producing a documentary film titled "Testo".

However, about 90% of USAID funds were allocated to the state and communities in the regions, rather than to public organizations, notes a source from RBC-Ukraine involved in grant distribution. For example, the "Hoverla" project focuses on supporting local self-government: from training local deputies and activists to providing generators, repairing schools, and hospitals.

"We don’t talk much about the fact that Americans funded the repair of, say, 50 hospitals or the establishment of all the generating capacity that President Zelensky boasts about. In fact, all the extensive generation and the relatively smooth passage of this heating season is due, firstly, to the work of the air defense, and secondly, to the energy workers who have the money and equipment to repair everything. And all this happens with donor funds," – said Sviatoslav Pavliuk, executive director of the Association "Energy Efficient Cities of Ukraine," to RBC-Ukraine.

Humanitarian aid from USAID

This is especially true for municipal enterprises, which themselves lack the funds to purchase energy equipment, design it, or connect it. Therefore, assistance was provided for both the equipment itself and its maintenance. Currently, there is a situation where even with installed cogeneration machines, there are difficulties connecting them to the networks. According to Pavliuk, many local administrations conducted tenders, signed agreements, received services, and now lack the funds to pay for the corresponding work because USAID funding has already been blocked.

Assistance to authorities and media

Projects in the area of "democracy, human rights, and governance" are, among other things, aimed at supporting government bodies in developing legislation and improving the qualifications of officials. This usually involves engaging Ukrainian or foreign experts, whom the state cannot always afford to pay independently.

Additionally, USAID grants partially funded competitive commissions in the Constitutional Court and the High Qualification Commission of Judges.

Furthermore, several Ukrainian media outlets operated with grant funds. This was particularly true in regions where the advertising market is small. The philosophy of these projects is to ensure that media do not depend on local elites and remain at least partially unbiased.

Special equipment purchased by USAID

Several grants from USAID were allocated to NOTU (Public Broadcasting) and "Hromadske," but they have other sources of income. USAID also funded small local media in front-line territories, whose target audience is in occupied areas.

For example, in the Luhansk region, these include relocated "Severodonetsk Online," "Tribune" from Rubizhne, "Real Newspaper" from Luhansk, "Donbas News," and "Farvater.Vostok." For such media, the loss of American funding is felt more acutely, and sometimes – critically.

Will there be money for pensions?

On January 28, Ukrainian President Volodymyr Zelensky instructed the government to report on the programs that have been suspended. The head of state mentioned Oleksii Kuleba, the Vice Prime Minister for the Reconstruction of Ukraine - Minister for Community and Territorial Development.

"Many projects. We will determine which of them are critical and require immediate decisions," – said the president in an evening address.

Zelensky added that part of this funding might be provided from the state budget, while for other projects, "we will discuss with Europeans and Americans."

The suspension of USAID projects for three months will not affect the funding of budget programs, particularly social payments and pensions, says a source from the economic block of the government to RBC-Ukraine. Protected budget items do not depend on grant aid that comes through USAID.

"For this year, we have secured funds, which should come from the income from frozen Russian assets amounting to $50 billion. The American portion of this amount, as well as from all other partners, goes through the World Bank program, so there are no risks for the Ukrainian budget," – explained the source.

Deputy Head of the President's Office Iryna Vereshchuk, who is responsible for humanitarian response, noted that negotiations are planned to restore certain projects involving the state.

"A 90-day pause from a key donor cannot be overlooked. But I am confident that we will stabilize everything in the humanitarian direction. Soon we will begin substantive consultations with our American partners to expedite the continuation of funding for humanitarian response projects in Ukraine," – stated Vereshchuk.

Fertilizers for farmers purchased by USAID

At the level of the Verkhovna Rada, consultations have also begun with European donors. This concerns replacing American aid, at least for the time being, until final decisions are made in the U.S. However, practice shows that the European Union allocates such funds extremely slowly – within 4-6 months.

As for communities in the regions, difficult months are ahead for them. Local budgets lack the funds to complete ongoing projects.</