A bolt from the red, white and blue: US funding cuts leave Iraq-based NGOs reeling

By Soran Rashid

Multiple U.S.-funded organizations in Iraq and the Kurdistan Region have suspended operations following the halt of U.S. Agency for International Development and State Department funding, affecting thousands of vulnerable Iraqis and leading to widespread staff layoffs. NGOs working on critical aid programs, including support for internally displaced persons and human rights initiatives, have been forced to shut down projects, leaving communities without essential services and creating uncertainty for aid workers.

On Feb. 3, 2025, Elon Musk said that USAID would be “shutting down”. Musk said President Trump “agreed” with the decision, describing USAID as “beyond repair.” The move has raised concerns about the future of U.S. foreign aid programs and their impact on global humanitarian efforts.

President Trump then told reporters that “it’s been run by a bunch of radical lunatics, and we’re getting them out, USAID run by radical lunatics, and we’re getting them out, and then we’ll make a decision.”

964media contacted over a dozen people from across Iraq with connection to activities impacted by U.S. funding freezes. Six requested anonymity to speak freely on the issue. An executive order in January said that all assistance would pause “pending reviews of such programs for programmatic efficiency and consistency with United States foreign policy, to be conducted within 90 days of this order.”

An official from a USAID-funded organization operating in Iraq—whose programs were implemented to facilitate the return of IDPs to their regions of origin—told 964media that “the executive order halted all our programs.”

They added, “Most of our programs are done in collaboration with local partners and vendors, civil society organizations, and government entities. So, it halted our ability to support those local partners as well. We did have many projects that were in the very middle of implementation and rehabilitation, but we need to halt these programs immediately.”

“It’s important for us to say that our program and many of our partner programs are willing and ready to work with the new administration, align our work with the foreign policy of the Trump administration. We, and I personally believe strongly, believe that these programs can support both USAID and Iraqi shared interest at the same time,” the source said.

The official said the organization had to terminate the contracts of dozens of Iraqi consultants.

Asked what they anticipate after the 90 days, the official said it is still unclear: “I do think that there will be some restructuring or changes to the way that foreign assistance and donor funding from USAID and from the U.S. is managed.”

“However, there are still many people, even in the Trump administration, and also within the U.S. Congress, who are very strong advocates of this work. You may be aware that in the first Trump administration, there was a significant increase in support to Iraq following the ISIS liberation. So we do know that there’s still a strong commitment from the U.S. and USAID to allies in the Kurdistan Region and to the partnership in Iraq,” the source said.

Major U.S.-funded organizations had been working on dozens of projects in Iraq. Almost all have been forced to suspend or reduce services. “It has created a lot of uncertainty, a lot of stress for our staff, our local partners, and the communities where we work,” one source said.

Meanwhile, the USAID website has gone offline. For weeks, the webpage would not load at all. Visitors are now greeted with the following message: “In order to be consistent with the President’s Executive Orders, this website is currently undergoing maintenance as we expeditiously and thoroughly review all of the content.”

A spokesperson for the State Department told 964media: “Each program is undergoing a review with the goal of restructuring assistance to serve U.S. interests.”

“We are meeting regularly with all of our partners and our vendors. I think they are very concerned, of course, about our ability to meet commitments that we’ve made to them, contracts that we have, grants that we have, and our ability to even pay for things that we’ve already committed to and work that’s already done,” one source said.

When asked whether the funding cut would prompt organizations, including U.S.-based ones, to seek support from other countries, a source explained, “Some organizations may attempt this, but in most cases, it is very difficult. USAID funds large organizations through multi-year commitments, typically spanning three to five years.”

On Feb. 6, 2025, USAID announced it was placing its staff in the United States and worldwide on administrative leave as it began recalling employees from overseas assignments.

On Feb. 13, a federal judge ordered a temporary halt for the freeze to U.S. aid and development funding, citing severe harm to nonprofits and organizations responsible for implementing U.S. assistance abroad. D.C. District Judge Amir Ali–appointed by Biden at the end of his term–said: “Defendants have not offered any explanation for why a blanket suspension of all congressionally appropriated foreign aid, which set off a shockwave and upended reliance interests for thousands of agreements with businesses, nonprofits, and organizations around the country, was a rational precursor to reviewing programs.”

However, the administration has been accused of refusal to comply.

Another senior official from an organization in the Kurdistan Region—one that had run several projects with U.S. funding—told 964media that these projects “are currently halted” due to the order.

“I think you’d be hard pressed to find at this point any NGO that’s not been affected to some degree, whether they were direct recipients of U.S. funding or whether they were not direct recipients,” the official said.

Because so many projects have been halted, NGOs can no longer refer clients to other providers. “Unfortunately, we’re seeing that it’s not one NGO, it’s all NGOs, meaning that currently within the [Kurdistan] region, there is a huge deficit. And I’m speaking Kurdistan, but also in Iraq, there’s a huge deficit in services available. We’re not able to make referrals, because the majority of NGOs, as mentioned, have been affected,” the source said.

As of April 2024, around 4.87 million IDPs in Iraq had returned to their areas of origin following the ISIS conflict. However, around 1 million remain displaced. Many relied heavily on NGO-provided assistance and continue to face long-term challenges, often living in camps or urban areas without permanent housing. “They no longer have access to care because it’s all NGOs that have unfortunately been impacted and put on freeze. And it’s not clear yet when the services, if the services and when, would be restarting,” the source said.

Another senior figure at an NGO working in Iraq told 964media the suspension of USAID-funded programs has left thousands of vulnerable Iraqis without essential aid, compounding post-conflict challenges.

“Now that most NGOs have been impacted in one way or another, thousands—tens of thousands—of individuals who relied on aid are now unable to access it. We’re hearing from people who don’t know where to turn. There’s no referral mechanism in place, meaning we cannot direct them to another NGO because there may not be one operating in their area or able to provide the services they need, leaving them with no other recourse.”

This disruption, the official warned, could reverse much of the progress achieved by displaced Iraqis who have been working toward reintegration.

“This could obviously lead to a rollback in their recovery. Many had taken steps forward—toward reintegration, toward rebuilding their lives—but now they no longer have access to essential care, and that could push them backward in their recovery process. For those experiencing deep trauma, the risk becomes even greater. They face increased vulnerability to worsening mental health, which in some cases could lead to suicidal ideation.”

Despite these obstacles, an official from another major organization said it remains committed to providing services in critical situations. “We have clients we are determined to continue serving because the work we do, particularly for survivors of violence, is life-saving. We must ensure that none of our clients are abandoned during this time.”

“We are finding alternative ways to sustain this work because, as I mentioned, without it, lives could be at risk,” the source added.

Heartland Alliance International, a U.S.-based nonprofit, suspended three projects in Iraq and the Kurdistan Region following the halt of U.S. State Department funding. The affected programs include Justice for All, Combating Human Trafficking in Iraq, and Minority Rights. Two had been running for over a year, while the third had only recently begun.

Hazhar Qadir, a former project manager at Heartland Alliance International, told 964media, “All activities have been suspended, offices shut down, and every staff contract has been terminated.”

He estimated that “around 60 to 65 staff members lost their jobs. The impact was immediate, sudden, and direct. It was psychologically distressing and traumatic, especially given the Kurdistan Region’s existing financial and economic struggles. This will only worsen the already high unemployment rate, as nearly 5,000 national staff across various organizations have been affected by the order.”

In a LinkedIn post, Tara Sharif, a former translator and interpreter at SEED Foundation–a women-led NGO with a focus on aiding the recovery of survivors of violence–wrote, “Most of our staff lost their jobs, and critical programs that thousands relied on were forced to shut down.”

“This isn’t just about budgets and policies—it’s about real people. Families losing access to essential services. Survivors left without the support they need. Dedicated professionals are suddenly out of work, despite years of commitment to making a difference,” she added.

Former USAID chief Samantha Power criticized President Donald Trump over efforts to dismantle the agency, saying the move threatened America’s national security and global standing.

“We are witnessing one of the worst and most costly foreign policy blunders in US history,” wrote Power, who led USAID throughout former President Joe Biden’s term, in The New York Times.

From 2015 until March 2023, USAID supported more than 900 projects in Iraq aimed at rehabilitating schools, water treatment plants, health care facilities, and power substations—efforts that helped displaced Iraqis return to their communities and improved access to basic services.

Founded in 1961, USAID operating costs accounted for less than half a percent of the federal government’s nearly $7 trillion in annual spending.

964media sought comment on what steps had been taken to assess the impact of President Trump’s order to halt funding on Iraq. The inquiry also sought clarification on the possibility of the order being reversed or modified to restore funding. A State Department spokesperson told 964media:

Each program is undergoing a review with the goal of restructuring assistance to serve U.S. interests.

The Department of State and USAID have formed a Coordination Support Team (CST) incorporating several working groups to ensure that both the foreign aid review and USAID staff are held accountable, operate with transparency, and adhere to constitutional duties.

Programs that serve our nation’s interests will continue. However, programs that aren’t aligned with our national interest will not.

Secretary Rubio’s emergency humanitarian waiver dated January 28 enabled core life-saving medicine, medical services, food, shelter, and subsistence assistance to continue so that lives are not lost while we undertake this review.

To set the record straight, this emergency humanitarian waiver includes life-saving aspects of PEPFAR, the President’s Emergency Plan for AIDS Relief, including HIV treatment and care as well as prevention of mother-to-child transmission.

Unfortunately, the Department found that many activities that have previously been described as life-saving humanitarian assistance have in reality involved DEI or gender ideology programs, transgender surgeries, or other non-life-saving assistance and efforts that explicitly go against the America First foreign policy agenda set forth by the President. Those activities do not reflect American interests and cannot, and will not, continue.

The team is actively working to ensure that truly lifesaving, emergency assistance continues – including where international organizations serve as implementers – but we must ensure that activities that run contrary to our national interests are not being pushed through or disguised as life-saving humanitarian aid to take advantage of the exemption and circumvent the President’s direction.

As we work through this, stop work orders for applicable programs have been lifted and emergency food aid is being provided, as is PEPFAR assistance covered by their partial waiver.

Additional temporary exceptions are continuously being submitted and approved daily. More than 180 waiver requests have been approved.