The effects of USAID cuts for Ukraine

The United States Agency for International Development (USAID) has historically been a cornerstone of international development efforts, particularly in nations undergoing significant geopolitical transitions or facing humanitarian crises. In Ukraine USAID's role has been magnified since Russia's full-scale invasion in February 2022, providing crucial support across a spectrum of sectors from direct budget assistance to humanitarian aid, economic development and critical infrastructure repair. However, recent and substantial cuts to USAID funding have sent shockwaves through Ukraine's fragile landscape, posing significant threats to its ongoing development, reconstruction, and overall resilience.

The scale of USAID's commitment to Ukraine in the immediate aftermath of the 2022 invasion was immense. Following modest allocations before the war, aid soared to an estimated $9 billion in 2022 and peaked at an astounding $16 billion in 2023. This funding was vital for sustaining essential public services, supporting internally displaced persons, and beginning the arduous process of rebuilding. By 2024, the allocated amount had decreased to $5.4 billion, still a substantial sum but indicative of a shift. The critical turning point, however, came in early 2025, with the U.S. government's announcement of a global cancellation of over 80% of all USAID programs. While a waiver for "lifesaving humanitarian assistance" was introduced, its implementation has been largely ineffective, leading to widespread disruptions.

The immediate and devastating impact of these cuts has been felt across Ukraine's civic infrastructure and democratic reform agenda. Many non-governmental organizations (NGOs) and governmental bodies operating USAID-funded projects received abrupt "stop-work orders" in early 2025. A rapid assessment in February 2025 revealed that a quarter of surveyed Ukrainian civil society organizations (CSOs) were forced to reduce staff, 19% placed employees on unpaid leave, and 12% completely closed certain programs. This abrupt withdrawal contrasts sharply with typical donor transitions, which involve multi-year drawdowns and consultations, exacerbating the challenges for organizations that had relied on this consistent support for their operations and programming.

The effects on development and reconstruction are multifaceted and severe. USAID had been deeply involved in areas critical for Ukraine's long-term recovery. Projects supporting local governance, such as the DOBRE and HOVERLA programs, which assisted over 100 territorial communities with strategic planning, service delivery, and citizen engagement, have been terminated or suspended. These initiatives were crucial for strengthening local self-governance and fostering democratic resilience at the grassroots level, particularly vital in a country battling external aggression.

Economic development projects, a significant focus of USAID funding, are also facing severe setbacks. These programs aimed to support small and medium-sized businesses, promote exports, and stimulate job creation. The curtailment of such initiatives threatens to stifle Ukraine's economic recovery, making it harder for businesses to restart, attract investment, and provide employment in a war-torn environment. For instance, the agricultural sector, a pillar of Ukraine's economy and vital for global food security, received substantial USAID support through initiatives like the Ukraine Agriculture Resilience Initiative (AGRI). Cuts here jeopardize critical inputs like seeds, fertilizers, and equipment, potentially impacting future harvests and export capabilities.

Furthermore, critical infrastructure projects, particularly in the energy sector, have been heavily affected. USAID has provided significant assistance to Ukrenergo and other energy projects, crucial for repairing damaged power grids and ensuring energy security amidst persistent Russian attacks. The suspension of this funding leaves significant gaps in the ongoing efforts to restore and strengthen Ukraine's energy infrastructure, increasing the vulnerability of communities to blackouts and undermining long-term energy resilience. The health sector, already strained by the war, has also suffered, with a reported $1.4 billion curtailed from health programs, leading to reduced services and uncertainty for organizations providing essential medical care.

The implications extend beyond the immediate practicalities of development. The sudden withdrawal of a major donor like USAID creates an enormous funding gap and a potential power vacuum. This leaves the field open for other actors, including potentially autocratic donors, to step in and exert influence, raising concerns about the future direction of Ukraine's development trajectory. Moreover, the signal sent by these cuts can be disheartening for democratic movements and civil society actors, both within Ukraine and globally, who rely on external support for their work.

While Ukrainian President Volodymyr Zelenskyy has acknowledged the need to prioritize military aid, his government is now tasked with identifying critical funding gaps and seeking alternative sources from European partners and other international donors. However, the sheer scale of the needs, coupled with the existing funding shortfalls from other humanitarian aid requests, makes this an incredibly daunting task. The abrupt nature of the USAID cuts also makes it difficult for Ukrainian organizations to pivot and secure new funding, leading to widespread layoffs and program closures.

In conclusion, the recent USAID cuts represent a profound challenge to Ukraine's development and reconstruction efforts. While the initial waves of aid were instrumental in stabilizing the country, the sudden and dramatic reduction in funding threatens to undo much of the progress made. Critical sectors like governance, economic development, infrastructure, and health are facing severe disruptions, leading to a rollback of vital programs and a loss of institutional capacity. Beyond the financial impact, these cuts also carry significant geopolitical and symbolic weight, potentially undermining democratic resilience and leaving Ukraine more vulnerable as it continues its fight for survival and a democratic future. The true cost of these cuts will be measured not only in economic terms but also in the long-term impacts on Ukraine's ability to rebuild, reform, and integrate into the broader international community.