Trump Administration Plans USAID Restructuring, Blockchain Integration

The Trump administration has announced a significant restructuring plan for the United States Agency for International Development (USAID). The proposed changes include renaming the agency to US International Humanitarian Assistance (IHA) and placing it under the direct control of the State Department. This restructuring is part of a broader effort to modernize and streamline the 60-year-old agency, with a particular focus on integrating blockchain technology to enhance the tracking and distribution of aid.

The internal State Department memo outlines that the reorganized agency will leverage blockchain technology in its procurement processes. This integration aims to increase security, transparency, and traceability in aid distribution. The memo suggests that this technology will allow for more flexible programming focused on measurable impact rather than simply completing activities. However, the specifics of how blockchain technology will be implemented remain unclear, including whether it will involve cryptocurrency transactions, stablecoins, or simply using blockchain as a ledger to track aid disbursement.

This announcement comes amidst significant disruptions at USAID. Shortly after Trump’s inauguration, the State Department placed all agency staff on administrative leave and halted payments to numerous partner organizations worldwide. This action stopped nearly all foreign aid programs and created widespread uncertainty among staff and partner organizations. Many contracts deemed nonessential were terminated, including those providing lifesaving work in various regions around the world. A federal judge has since issued a preliminary injunction against the dismantling of the agency, but the memo suggests the administration plans to continue drastically cutting USAID and folding it into the State Department.

The plans for incorporating blockchain technology have caught many staffers off guard. Experts in the humanitarian sector express skepticism about the necessity of such technology for aid distribution. Linda Raftree, a consultant who helps humanitarian organizations adopt new technology, questioned the need for blockchain, stating that it feels like a fake technological solution for a problem that doesn’t exist. She added that she has never found an instance where blockchain offered advantages over existing tools. Giulio Coppi, a senior humanitarian officer at Access Now, shared similar concerns, describing the approach as “tech solutionist” without substantial real-world impact.

Despite these criticisms, there have been some examples of blockchain use in humanitarian work. In 2022, the United Nations High Commissioner for Refugees ran a small pilot providing cash assistance to displaced Ukrainians using stablecoins. Other pilot programs have been tested in Kenya by the Kenya Red Cross Society. The International Committee of the Red Cross also helped develop the Humanitarian Token Solution. One unnamed representative from an NGO that uses blockchain technology noted that stablecoins can sometimes provide faster money transfers in disaster areas. However, they cautioned that “introducing new systems means you’re setting up a new burden” for smaller organizations.

The restructuring proposal suggests funding should be contingent on outcomes rather than inputs. “Tying payment to outcomes and results rather than inputs would ensure taxpayer dollars deliver maximum impact,” the memo states. Some USAID employees point out that many contracts already function this way. Organizations are often paid after completing their work rather than receiving funding upfront. However, a USAID employee who requested anonymity noted that such arrangements aren’t always practical. “Those kinds of agreements are often not flexible enough for the environments we work in,” they explained, pointing out that conditions in conflict or disaster zones can change rapidly.

The Trump administration’s plan aims to focus USAID on areas deemed crucial to U.S. interests. These include global health, food security, disaster response, and countering China’s influence. The proposal argues that current development programs are “inefficient and fragmented.” It claims they are spread too thin across too many sectors and countries, resulting in poor outcomes. Under the new vision, all aid programs would have clear end dates. They would also be closely measured for success against predetermined metrics.