Connect with us

Economics

America’s foreign aid pause puts lives at risk

Published

on

THE SPRAWLING al-Hol camp in north-eastern Syria is part of a network of prisons holding tens of thousands of detainees and family members from Islamic State’s jihadist “caliphate”, which was smashed by America and its allies in 2019. Western securocrats have long worried that prisoners might break out and wreak bloody havoc, in Syria and abroad. Such fears have intensified given the turmoil after the fall of Syrian dictator, Bashar al-Assad, in December.

There could scarcely be a worse time for the Trump administration to order, as it did on January 24th, an immediate halt to almost all aid work—at al-Hol and around the world—pending a 90-day review to ensure foreign assistance aligns with America First principles. The only exceptions were aid for Israel and Egypt (mostly military) and “emergency food aid”.  Waivers could subsequently be issued on a case by case basis.

Chart: The Economist

America is by far the world’s largest aid donor, spending $68bn in fiscal 2023, the most recent year. The US accounts for about 40% of all humanitarian assistance provided by governments. The announcement of an abrupt cutoff of much of this money hit humanitarian agencies like an earthquake. American-funded projects wobbled and some risked collapse.

The affected work included the distribution of antiretroviral drugs for people infected with HIV under a scheme known as PEPFAR, credited with saving some 26m lives since 2003; medical services for Rohingya refugees in Bangladesh; mine-clearing in South-East Asia; reconstruction of bombed-out energy infrastructure in Ukraine; pro-democracy work in Russia’s near-abroad; and much more.

“Every dollar we spend, every program we fund, and every policy we pursue must be justified with the answer to three simple questions: Does it make America safer? Does it make America stronger? Does it make America more prosperous?” the state department said.

Among the casualties were groups working at al-Hol, home to about 40,000 Islamic State (IS) fighters and their relatives, among them European women who married combatants and bore their children. The Kurdish-dominated Syrian Democratic Forces (SDF), which controls north-eastern Syria, is in charge of security at the camps. But aid workers speak of a free-for-all within. Women loyal to IS hold sway with guns and train a new generation of ideologues. The perimeter is pierced by tunnels, allowing weapons in and inmates out. Killings are commonplace. Children are sold as fighters. “It’s more an IS base than a prison,” says a Western researcher.

Blumont, the American firm that manages al-Hol (and a smaller camp called Roj) under a state department contract, says its teams left the camps when they received the stop-work order, and arranged for other groups to provide “very much reduced basic services”. Some humanitarian groups said they were issuing termination letters for their staff. On January 27th Blumont received a 14-day waiver and said its staff returned the next day.

Amid chaos and an outcry that countless lives were at risk, Marco Rubio, the secretary of state, later widened exemptions to include “life-saving humanitarian assistance”. This includes “medical services, food, shelter, and subsistence assistance, as well as supplies and reasonable administrative costs.” Programs would not be funded if they involved abortion, family-planning, transgender surgeries or other aid deemed not to be life-saving.

Even with this concession, aid groups say confusion abounds. “Does work on clean water count as life-saving aid?” asked an official in one large ngo. Some projects were being closed because of the uncertainty. The status of PEPFAR is unclear.

Waivers apparently still need to be issued case-by-case. Whether the government has the staff to process them quickly is another question. Few of the state department’s political appointees have yet arrived. USAID, the main American development agency, has furloughed hundreds of senior staff and contractors. One spoke of a “sad and apocalyptic” atmosphere.

The state department says the full halt was necessary because “it is impossible to evaluate programs on autopilot”, arguing that those running them have little incentive to give details if the money keeps flowing. It claims to have already saved about $1bn, halting things such as the delivery of condoms to Gaza, sex education globally and clean-energy programmes for women in Fiji. The department offered no details to support its $1bn estimate.

Al-Hol offers just one example of how stopping work suddenly for such dubious reasons is an avoidable act of self-harm. “Without aid, it’s difficult to maintain the security of the camps,” says Ali Rahmoun, a spokesman for the Syrian Democratic Council, the political wing of the SDF. “The jihadists won’t just be a problem for Syria but for the region and even Europe.”

Americans would be in danger, too. Shamsud-Din Jabbar, a 42-year-old US army veteran, rammed his Ford pickup into a crowd in New Orleans on New Year’s Day, killing 14. He was killed by police. In his vehicle they found IS’s black flag. 

Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important political news, and Checks and Balance, a weekly note from our Lexington columnist that examines the state of American democracy and the issues that matter to voters.

Economics

Bessent sees tariff agreement as progress in ‘strategic’ decoupling with China

Published

on

Treasury Sec. Bessent: Likely to meet with China again 'in next few weeks' on a bigger agreement

Treasury Secretary Scott Bessent said Monday that the trade agreement reached over the weekend represents another stage in the U.S. shaking its reliance on Chinese products.

Though the U.S. “decoupling” itself from its need for cheap imports from the China has been discussed for years, the process has been a slow one and unlikely to ever mean a complete break.

However, Bessent said there are now specific elements of decoupling in place that are vital to U.S. interests. The U.S. imported nearly $440 billion in goods from China in 2024, running a $295.4 billion trade deficit.

“We do not want a generalized decoupling from China,” he said during an interview on CNBC’s “Squawk Box.” “But what we do want is a decoupling for strategic necessities, which we were unable to obtain during Covid and we realized that efficient supply chains were not resilient supply chains.”

When the pandemic struck in 2020, demand in the U.S. shifted from one reliant more on services to a greater focus on goods. That meant greater difficulty in obtaining material for multiple products including big-ticket appliances and automobiles. The technology industry, with its reliance on semiconductors, was also hit. What followed was an inflation surge in the U.S. not seen in more than 40 years.

The details of the U.S.-China pact are still sketchy, but U.S. officials have said so-called reciprocal tariffs will be suspended though broad-based 10% duties will remain in effect.

“We are going to create our own steel. [Tariffs] protect our steel industry. They work on critical medicines, on semiconductors,” Bessent said. “We are doing that, and the reciprocal tariffs have nothing to do with the specific industry tariffs.”

The agreement between the two sides is essentially a 90-day pause that will see reciprocal duties halted though the 10% tariff as well as a 20% charge related to fentanyl remain in place.

Bessent expressed encouragement on the fentanyl issue in which Chinese officials “are now serious about assisting the U.S. in stopping the flow of precursor drugs.” Bessent did not indicate a specific date when the next round of talks will be held but indicated it should be in the next several weeks.

Don’t miss these insights from CNBC PRO

Continue Reading

Economics

Checks and Balance newsletter: The election of Pope Leo XIV goes beyond American politics

Published

on

Checks and Balance newsletter: The election of Pope Leo XIV goes beyond American politics

Continue Reading

Economics

Germany’s economy chief Reiche sets out roadmap to end turmoil

Published

on

09 May 2025, Bavaria, Gmund Am Tegernsee: Katherina Reiche (CDU), Federal Minister for Economic Affairs and Energy, takes part in the Ludwig Erhard Summit. Representatives from business, politics, science and the media are taking part in the three-day summit. Photo: Sven Hoppe/dpa (Photo by Sven Hoppe/picture alliance via Getty Images)

Picture Alliance | Picture Alliance | Getty Images

Germany needs to take more risks and boost its stagnant economy with a decade of investment in infrastructure, German Minister for Economic Affairs and Energy Katherina Reiche said Friday.

“The next decade will be the decade of infrastructure investments in bridges, in energy infrastructure, in storage, in maritime infrastructure… telecommunication. And for this, we need speed. We need speed and investments, and we need private capital,” Reiche told CNBC’s Annette Weisbach on the sidelines of the Tegernsee summit.

While 10% of investments could be taken care of with public money, the remaining 90% relied on the private sector, she said.

The newly minted economy minister also addressed regulation coming from Brussels, warning that it could hinder companies from investments and start-ups from growing if it is too restrictive. Germany has had to learn that investments comes with risks “and we have to kind of be open for taking more risks,” she said.

Watch CNBC's full interview with German Economy Minister Katherina Reiche

“This country needs an economic turnaround. After two years of recessions the previous government had to announce again [a] zero growth year for 2025 and we really have to work on this. So on the top of the agenda is an investor booster,” the minister added.

Lowering energy prices, stabilizing the security of energy supply and reducing bureaucracy were among the key points on the agenda, Reiche said.

Germany’s economy contracted slightly on an annual basis in both 2023 and 2024 and the quarterly gross domestic product has been flipping between growth and contraction for over two years now, just about managing to avoid a technical recession. Preliminary data for the first quarter of 2025 showed a 0.2% expansion.

Forecasts do not suggest much of a reprieve from the sluggishness, with the now former German government last month saying it still expects the economy to stagnate this year.

This is despite a major fiscal U-turn announced earlier this year, which included changes to the country’s long-standing debt rules to allow for additional defense spending and a 500-billion-euro ($562.4 billion) infrastructure package.

Several of Germany’s key industries are under pressure. The auto industry for example is dealing with stark competition from China and now faces tariffs, while issues in housebuilding and infrastructure have been linked to higher costs and bureaucratic hurdles.

Trade is also a key pillar for the German economy and therefore uncertainty from U.S. President Donald Trump’s changing tariff policies are weighing heavily on the outlook.

Continue Reading

Trending