Report: USAID in Pakistan
Soft Power, Influence, and Final Shutdown (1947–2025)
Guest Writer
Historical Overview of USAID in Pakistan
Early Cold War Era (1950s–1970s): U.S. assistance to Pakistan began soon after independence, intensifying as Cold War alliances formed. By the 1950s and 60s, Pakistan – a strategic U.S. ally in CENTO/SEATO – received heavy aid aimed at winning “hearts and minds” ( The erosion of American soft power ) ( The erosion of American soft power ). USAID (established in 1961) and predecessor programs funded major development projects. This included revolutionizing agriculture through the Green Revolution (introducing high-yield wheat and rice) and supporting institutions like the University of Agriculture in Faisalabad (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Economic assistance peaked in 1962 at over $2.3 billion (2010 dollars) ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ). Large infrastructure works were launched: USAID provided technical expertise for dams such as Tarbela (one of the world’s largest earth-filled dams) and helped upgrade Mangla and Warsak Dams to boost Pakistan’s energy capacity (USAID closure in Pakistan — end of an era or dawn of self-reliance?). However, aid flows were closely tied to geopolitics. Aid spiked under military rule (e.g. Gen. Ayub Khan’s regime) and plummeted when relations soured – for instance, U.S. military aid dropped sharply after the 1965 and 1971 Indo-Pak wars ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ). In the late 1970s, President Carter even suspended most aid in response to Pakistan’s nascent nuclear program ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ). Notably, U.S. aid consistently flowed more during Pakistan’s military dictatorships and shrank under civilian governments, a pattern observed by researchers (US Aid to Pakistan and Democracy - Institute of Policy Studies). This raised questions about America’s commitment to democracy, as authoritarian regimes like Ayub’s and later Zia-ul-Haq’s benefited disproportionately from U.S. support (US Aid to Pakistan and Democracy - Institute of Policy Studies).
Afghan Jihad and Aftermath (1980s–1990s): The Soviet invasion of Afghanistan in 1979 reset the relationship. During the 1980s, under Gen. Zia-ul-Haq’s martial law, Pakistan became the frontline of the anti-Soviet jihad (Operation Cyclone) and a top aid recipient. Billions in economic and military aid flowed through USAID and other channels to support Afghan rebels and Pakistan’s stability ( The erosion of American soft power ) (US Aid to Pakistan and Democracy - jstor). While this bolstered infrastructure and the economy, it also meant U.S. aid was bolstering a dictatorship, with Washington prioritizing strategic objectives over democratic ideals. Following the Soviet withdrawal and the end of the Cold War, U.S. aid again declined. The 1990 Pressler Amendment triggered a near-total aid cutoff due to Pakistan’s nuclear program – assistance in the 1990s fell to its lowest levels ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ). Throughout these swings, Pakistan remained among the largest long-term recipients of U.S. aid since 1948 ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ), but the volatility of aid mirrored the geopolitical climate. Military rulers benefited from generous aid that enhanced their rule, whereas democratic governments in the 1970s and 1990s often found U.S. aid curtailed – a dynamic that had lasting impacts on Pakistan’s political trajectory (US Aid to Pakistan and Democracy - Institute of Policy Studies).
Post-9/11 Resurgence (2001–2010): After the September 2001 attacks, Pakistan’s importance to the U.S. surged again. General Pervez Musharraf’s regime became a key ally in the “War on Terror,” unlocking massive aid packages. USAID re-opened full operations (after having been scaled down in the 90s) and funds poured into Pakistan to ensure its cooperation against terrorism and to stabilize vulnerable regions (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Between 2002 and 2010, the U.S. provided many billions in aid, including Coalition Support Funds (military reimbursements) and development assistance for western provinces and Afghan border areas. USAID’s programs during this period focused on infrastructure (e.g. expansions of Tarbela Dam with $150 million, starting new dams like Kurram Tangi and Gomal Zam with tens of millions (USAID closure in Pakistan — end of an era or dawn of self-reliance?)), economic revival, health, and basic education in regions susceptible to extremism. Notably, aid again peaked under an authoritarian setup (Musharraf), underscoring the strategic nature of U.S. assistance. After Pakistan’s return to civilian rule in 2008, the U.S. signaled a shift toward “democracy support” by passing the Kerry–Lugar–Berman Act (2009). This law tripled authorized civilian aid to ~$1.5 billion per year, aiming to show a long-term commitment to Pakistan’s people (as opposed to just its military) (Haq's Musings: NGO-ization of Pakistan) (Haq's Musings: NGO-ization of Pakistan). The Kerry–Lugar–Berman (KLB) period (2010–2014) saw USAID fund extensive social-sector projects – in health, education, and governance – as well as disaster relief (e.g. $676 million after the 2010 floods (USAID closure in Pakistan — end of an era or dawn of self-reliance?)). However, KLB’s stringent conditions triggered backlash in Pakistan. The military and conservative media decried it as an infringement on sovereignty – “a deliberate attempt by the U.S. to weaken the Pakistani army,” as one analysis noted (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill) (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill). A clause requiring the U.S. Secretary of State to certify Pakistan’s progress on civilian control of the military particularly angered the Army, which saw it as an unacceptable foreign intrusion into domestic civil-military relations (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill). Despite clarifications that the U.S. “does not seek to compromise Pakistan’s sovereignty,” many in Islamabad viewed the hefty aid package as a double-edged sword – vital for development yet laden with political strings (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill) (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill).
2010s Aid and Fluctuations: Under civilian governments in the 2010s, Pakistan continued to receive large USAID funding, though actual disbursements sometimes lagged behind pledges. USAID invested in long-term projects: power generation (e.g. upgrading thermal power plants, energy sector reforms totaling over $200 million (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM)), water and sanitation, and social programs. It also facilitated major humanitarian responses, providing $510 million after the devastating 2005 Kashmir earthquake and supporting relief after nationwide floods in 2010 (USAID closure in Pakistan — end of an era or dawn of self-reliance?). By one 2025 estimate, USAID had channeled nearly $30 billion into Pakistan over its seven decades of presence (USAID closure in Pakistan — end of an era or dawn of self-reliance?). However, after 2015 the relationship cooled again. Heightened distrust (fueled by incidents like the Bin Laden raid and drone strikes) led to tighter Pakistani scrutiny of U.S. activities (as seen in NGO expulsions in 2015, discussed later). In January 2018, President Donald Trump suspended security aid, accusing Pakistan of “lies and deceit” in counterterrorism – a move that also put some civilian aid on hold (US suspends $845m aid projects in Pakistan following Trump's ...) (What the US Aid Suspension Means for Pakistan - The Diplomat). Although the civilian aid was not entirely cut at that time, the climate of aid dependency vs. sovereignty became a hot debate in Pakistan. By the end of 2020, U.S. civilian assistance was tapering off, with Pakistan seeking other partnerships (China, Gulf states) to fund its needs.
Final Aid Freeze and Shutdown (2023–2025): In early 2025, a culmination was reached: the United States froze virtually all USAID funding to Pakistan, bringing an abrupt end to ongoing projects (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). This freeze, initiated by a new U.S. administration, was part of a global halt of American foreign aid. It immediately axed 39 development projects in Pakistan worth roughly $845 million (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today), ranging from energy and economic development initiatives to education and health programs. USAID’s on-ground operations in Pakistan began winding down, effectively marking the shutdown of USAID’s mission in the country after seven decades. The reasons behind this final pullout are discussed in detail below – rooted in both Washington’s shifting politics and controversies in Pakistan’s aid landscape. Islamabad suddenly faces a future without USAID, prompting debate over whether this is the “end of an era or the dawn of self-reliance” (USAID closure in Pakistan — end of an era or dawn of self-reliance?).
Key Sectors of USAID Influence and Soft Power Programs
USAID exercised soft power in Pakistan by funding a broad array of programs intended to win goodwill and shape development in line with U.S. ideals. Over the years, its assistance extended beyond bricks-and-mortar projects into Pakistan’s social fabric – education, media, civil society, and governance – in effect influencing internal affairs and democratic structures through ostensibly benevolent means. The major sectors and programs of USAID influence include:
Education and Curriculum Reform: Education has been a cornerstone of USAID’s mission in Pakistan. The agency has built or refurbished thousands of schools and classrooms (particularly in conflict-affected areas and for girls’ education), supplied millions of textbooks, and trained teachers nationwide. For example, USAID trained over 100,000 Pakistani teachers and invested in modernizing teacher education programs (developing new B.Ed. curricula) (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Initiatives like the Pakistan Reading Project (launched 2013) improved early-grade reading for over a million children (Pakistan Reading Project - World Learning). At higher levels, USAID funded exchanges and scholarships – the Fulbright program in Pakistan became one of the world’s largest, creating a pro-U.S. alumni network. These education programs were not purely altruistic; embedded within them was an effort to promote American values and democratic ideals. A 2008 U.S. briefing noted that USAID’s education projects sought to engender “democratic ideals” and critical thinking in young Pakistanis, alongside academic improvements ([PDF] Education Reform in Pakistan - FAS Project on Government Secrecy). In practice, this meant supporting moderate curricula and tolerance education to counter extremist influences in the school system. USAID also famously partnered with Pakistan’s state broadcaster in 2011 to create a local version of Sesame Street (“Sim Sim Hamara”) to teach children basic literacy and liberal values. While that $20 million project ended in a corruption scandal (detailed later), it exemplified the cultural soft power approach – using entertainment to impart pro-social, inclusive messaging.
Media Development and Journalist Training: Recognizing the influence of media on public opinion, USAID has heavily invested in Pakistani journalism and free media. U.S.-funded programs trained reporters in investigative journalism, conflict-sensitive reporting, and election coverage. According to a USAID fact sheet, by 2023 the agency funded training for 6,200 journalists and supported 707 independent media outlets globally (many in countries like Pakistan) (USA: Trump’s foreign aid freeze throws journalism around the world into chaos | RSF). In Pakistan, this translated to workshops, study tours, and grants delivered often via international NGOs (like Internews and IREX). The U.S. Consulate in Peshawar, for instance, regularly offered grants for media training in KP and the former tribal areas (Grants Opportunity for Media Training for Journalists in the Pakistan). Such programs aimed to strengthen Pakistan’s nascent independent press and counter misinformation. They also imparted American journalistic standards (ethics, fact-checking) and fostered narratives around human rights, religious tolerance, and civilian rule. USAID’s support extended to journalism schools and press clubs, and even to Pakistan’s state media – e.g. providing equipment to PTV or radio stations to modernize broadcasting. Media was a deliberate soft-power avenue: by empowering Pakistani journalists, the U.S. hoped to encourage a freer flow of information and a media landscape less dominated by anti-West or extremist voices. Critics, however, saw this as outsiders influencing the Pakistani media narrative. Indeed, many of these media development projects abruptly halted when U.S. aid was frozen in 2025, raising fears of a “surge in propaganda” as independent outlets lost funding (Trump's aid cuts will lead to a surge in propaganda ... - The Guardian). Reporters Without Borders warned that Trump’s aid cuts would “lead to a decline in independent media outlets… and a surge in misinformation” in countries like Pakistan (Trump's aid cuts will lead to a surge in propaganda ... - The Guardian), underlining how dependent some media initiatives had become on USAID grants.
Civil Society and NGOs Support: A significant portion of U.S. aid has been funneled through Pakistani non-governmental organizations (NGOs) and community-based groups. Especially after 2001, there was an “NGO boom” fueled by foreign aid. The number of NGOs in Pakistan skyrocketed from around 12,000 in 2001 to as many as 100,000–150,000 by 2016, largely due to U.S. funding infusions (Haq's Musings: NGO-ization of Pakistan) (Haq's Musings: NGO-ization of Pakistan). USAID’s Small Grants and Ambassador’s Fund programs awarded grants to dozens of local NGOs for projects in human rights, women’s empowerment, youth engagement, and more (Haq's Musings: NGO-ization of Pakistan). The rationale was to strengthen Pakistan’s civil society as a bulwark for democracy and development at the grassroots. For example, USAID partnered with advocacy groups to promote gender equality and education in conservative areas. It funded think tanks like PILDAT (Pakistan Institute for Legislative Development and Transparency) to conduct research and public forums on democratic reforms. It supported election observer groups like FAFEN (Free and Fair Election Network) and provided civic education grants to NGOs working on voter awareness, right-to-information laws, and legal aid for citizens. All these efforts injected resources into Pakistan’s civil society, arguably increasing its voice and capacity. Soft power influence: By selectively funding liberal, progressive NGOs, the U.S. nudged Pakistani society toward values aligned with liberal democracy and human rights. USAID proudly noted its support for “women’s empowerment and governance reforms” as part of its expanded mandate ( The erosion of American soft power ). At the same time, skeptics argue this NGO-ization created a class of local organizations more attuned to donor priorities than to local constituencies. Many NGOs relied on USAID for survival; the 2025 aid cutoff thus imperiled countless civil society jobs (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Moreover, the sheer scale of U.S.-funded NGOs raised suspicions among Pakistan’s security agencies, who often viewed them as fronts for Western interests (this culminated in a backlash and regulatory crackdowns discussed later).
Governance, Elections, and Local Government: A core focus of USAID, especially in the 2010s, was strengthening Pakistan’s democratic institutions and local governance. Under its Democracy and Governance portfolio, USAID ran programs to build the capacity of the Election Commission of Pakistan (ECP), train parliamentarians and staff, support political party development, and assist devolution to local authorities. For instance, the Pakistan Legislative Strengthening Project (PLSP) (mid-2000s) helped train committee staff and provided expert advice to the National Assembly and provincial legislatures (Pakistan—Legislative Strengthening Program (PLSP) - DAI). Another program in the mid-2010s spent $19.1 million to “strengthen electoral and legislative processes” (USAID closure in Pakistan — end of an era or dawn of self-reliance?), including upgrading election technologies and educating voters. From 2016–2023, the U.S. (via USAID and State Department funds) gave roughly $13–15 million to the ECP through a UNDP-managed project to support free and fair elections (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Activities included training election officials, developing voter outreach campaigns, and improving the results management system. USAID also worked at the sub-national level: it assisted Pakistan’s efforts to revive elected local governments by funding training for councilors and supporting city management systems. In Khyber Pakhtunkhwa and Sindh, USAID pilot projects advised provincial authorities on decentralization and service delivery improvements. Through such initiatives, USAID exerted considerable influence on Pakistan’s governance reforms – often behind the scenes as a technical adviser and funder. It promoted transparency laws (funding NGOs to lobby for Right to Information acts in Punjab and KP), and helped stand up accountability bodies. These interventions were meant to strengthen democracy, but they also meant an external actor was deeply involved in shaping Pakistan’s administrative and electoral frameworks. U.S. officials argue this support was invited by Pakistani governments and benefited the public. Indeed, many tangible outcomes (modernized electoral rolls, more capable local officials, etc.) are credited to these programs. Yet the notion of foreign-funded democracy left some Pakistanis uneasy, feeding narratives that Washington was micro-managing Pakistan’s political system via “soft” tools.
Impact on Political and Democratic Institutions
Strengthening vs. Interference – a Dual Legacy: USAID’s impact on Pakistan’s political and democratic institutions has been profound but ambivalent. On one hand, U.S. assistance undoubtedly helped build or bolster key institutions of democracy. The Election Commission today is better equipped (with data centers, trained staff, and modern voter ID systems) partly due to donor-funded projects (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Pakistan’s parliaments benefited from USAID-funded research services and legislative training, enhancing their lawmaking and oversight capacity (Pakistan—Legislative Strengthening Program (PLSP) - DAI). Civil society organizations empowered by USAID have advocated for legal reforms, government accountability, and minority rights, contributing to a more vibrant public discourse. Even USAID’s critics concede that such aid “helped create goodwill” and had a positive role to some extent in Pakistan (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (USAID closure in Pakistan — end of an era or dawn of self-reliance?). For example, USAID scholarship programs enabled tens of thousands of Pakistanis to study in the U.S. or local universities, producing educated citizens (and some future leaders) with more cosmopolitan, democratic outlooks ( The erosion of American soft power ) ( The erosion of American soft power ). These are soft power successes where U.S. aid cultivated pro-democracy norms and pro-American sentiment within Pakistan’s elite and middle class.
On the other hand, USAID’s involvement in political institutions has been viewed by many as undue external interference in Pakistan’s sovereignty. The most glaring issue is the U.S. historical tendency to favor stability over democracy in Pakistan. As noted, military rulers received far more U.S. aid than democratic governments in Pakistan’s history (US Aid to Pakistan and Democracy - Institute of Policy Studies). For example, General Zia’s regime (1977–88) and General Musharraf’s regime (1999–2008) each enjoyed lavish aid flows, which arguably buttressed their undemocratic rule – providing them economic breathing space and development gains that helped legitimize their governments. In contrast, elected governments in the 1990s were squeezed by sanctions and got relatively little support, exacerbating their struggles with the economy. This pattern, observed by think tanks and even the U.S. Congress’s own studies, indicates American aid often undermined democratic accountability by strengthening Pakistan’s military establishment (US Aid to Pakistan and Democracy - Institute of Policy Studies). For instance, during the 1980s, USAID projects built infrastructure and gave Pakistan’s government resources, while the regime tightly controlled society and suppressed dissent; the public credited the government (or sometimes the U.S.) for improvements, but had no democratic say in their execution.
Furthermore, when USAID turned to explicitly promoting democracy in the 2000s, it sometimes backfired politically. The Kerry–Lugar aid package with its democracy conditions became a case in point: the Pakistani Army and opposition lambasted the civilian government for accepting an aid law that “binds Pakistan to America” and meddles in internal affairs (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill) (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill). Though the money was for civilian uplift, the perception of an external hand measuring Pakistan’s civil-military balance was seen as a blow to national dignity. Similarly, USAID’s funding of governance NGOs and poll observer missions, while bolstering transparency, led some ruling parties to suspect the U.S. of empowering their domestic critics. For example, election monitoring groups that received USAID grants (like FAFEN) have exposed electoral malpractices, embarrassing incumbents – leading to occasional accusations that they serve a “foreign agenda.”
Influence on Democratic Discourse: Through its civil society partners, USAID influenced the content of Pakistan’s democratic discourse. It promoted issues like women’s political participation, rights of marginalized communities, and civic tolerance – issues sometimes at odds with traditional power brokers (clerics, feudal lords, etc.). This influence is double-edged: it has liberalized and modernized Pakistan’s discourse to a degree, but also fueled conservative pushback against “Western values.” For instance, U.S.-funded gender equality programs encouraged women to vote and run for office, contributing to record female turnout in recent elections. Yet extremists paint such programs as cultural infiltration.
Notably, USAID’s support to Pakistani media and NGOs has been critical in holding state institutions accountable, an essential democratic function. Investigative journalism units trained with USAID help uncovered corruption scandals in provincial governments. Watchdog NGOs funded by USAID have monitored parliament and exposed poor performance – e.g. PILDAT and FAFEN regularly publish report cards on legislators, enabled in part by donor funding ([PDF] Performance of the 13th National Assembly). These efforts improved transparency. However, when foreign funding was yanked away in 2025, experts warned Pakistan’s capacity to maintain electoral transparency and civic engagement would suffer (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). The Election Commission, for example, will have fewer resources for election monitoring and training without U.S. assistance (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). The sudden vacuum could be exploited by anti-democratic forces, as a Pakistani think-tank official cautioned – “this leaves a vacuum that authoritarian forces could exploit” (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM).
Regime Change Allegations: Beyond development, USAID has occasionally been linked (rightly or wrongly) to U.S. geopolitical meddling in Pakistan’s politics. Pakistani officials have accused USAID of involvement in “dubious missions… for example regime change” (Aid dependency - Newspaper - DAWN.COM). While direct evidence of USAID toppling governments in Pakistan is scant, the agency’s broader role in U.S. foreign policy (supporting pro-democracy movements elsewhere) fuels such suspicions. One high-profile example was the 1980s Afghan war, where USAID contractors were reportedly used as cover for clandestine support to mujahideen – essentially blurring lines between aid and covert ops. More concretely, the Pakistani establishment points to events like the 2011 Bin Laden raid fiasco (discussed later) and increased NGO scrutiny thereafter as times when U.S. “aid” activities directly interfered with Pakistan’s internal security affairs. The Interior Ministry in 2015 explicitly accused certain U.S.-funded NGOs of an “anti-Pakistan agenda” and hinted they were meddling in domestic politics (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian). Thus, even as USAID strengthened some democratic structures, it simultaneously garnered a reputation (fair or not) as a tool for Washington to influence who holds power in Islamabad.
Economic Dependencies and Policy Shaping by USAID
Decades of American aid created economic dependencies in Pakistan that have significantly shaped national and provincial policies. An influx of foreign aid often allowed Pakistani governments to postpone difficult reforms or slack on revenue generation, fostering a “dependency syndrome” (Aid dependency - Newspaper - DAWN.COM). Officials could rely on donor-funded projects to deliver services rather than allocating domestic budgets – a dynamic seen in sectors like health, education, and energy.
Budgetary Relief and Complacency: USAID poured money into Pakistan’s public services – building hospitals, funding immunization drives, training teachers, etc. While beneficial, this enabled successive governments to shirk their primary responsibility of providing these services (Aid dependency - Newspaper - DAWN.COM). For example, if USAID was financing a large anti-polio campaign or a rural clinic program, the federal and provincial governments could get by with lower health spending. Similarly, donor-funded textbooks and school construction in the 2000s took pressure off Pakistan’s own meager education budget. Over time, reliance on aid became entrenched. As the Dawn editorial board observed in 2025, “foreign aid addiction…allows governments to shirk duties in the social sector”, whereas it should be “the primary responsibility of developing nations to provide health, education, security, etc.” (Aid dependency - Newspaper - DAWN.COM). This dependency warped policy priorities – infrastructure or defense often received domestic funds, while social development was left to donors. When aid disappears, as now in 2025, Pakistan faces the risk of essential services stalling because local authorities did not plan to sustain them without external funds (USAID closure in Pakistan — end of an era or dawn of self-reliance?).
Policy Influence and Conditionality: U.S. aid frequently came with policy strings attached, subtly steering Pakistan’s economic and governance decisions. Throughout the 1960s and 70s, USAID advisors promoted market-oriented agriculture and capital-intensive industry, aligning with U.S. Cold War development philosophy. In more recent times, programs under USAID encouraged economic policies aligning with American interests – such as regulatory reforms to open Pakistan’s markets. For instance, USAID-backed projects in the energy sector pushed for privatization of power distribution and cutting subsidies ( The erosion of American soft power ). Aid in the 2010s was often conditioned on Pakistan undertaking fiscal reforms, anti-corruption measures, and counter-terror steps (as per KLB and later congressional mandates). One example is how the Kerry–Lugar Act tied $7.5 billion aid to benchmarks on combating militants and nuclear proliferation, effectively pressuring Islamabad to alter its security policy and improve financial oversight (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill) (The Politics of Aid: Controversy Surrounds the Pakistan Aid Bill). Another example: USAID’s economic growth funds supported Pakistan’s trade liberalization and WTO compliance, reflecting U.S. preferences for free-market policies.
At the provincial level, donor-funded development schemes sometimes influenced local policy choices. In Sindh, the USAID Sindh Basic Education Program (a $155 million initiative) built schools and formed public-private partnerships for school management. This nudged the Sindh government towards the controversial policy of handing public schools to private NGOs – a move sustained by donor support. In KP, USAID’s partnered projects for municipal services encouraged city governments to adopt new budgeting software and transparent procurement rules. These are positive influences, but nevertheless externally driven.
Creating Economic Stakeholders: U.S. aid also created domestic interest groups invested in its continuation. Thousands of local staff, contractors, and NGOs thrived on USAID projects, forming an “aid industry” within Pakistan. This constituency sometimes lobbied the government on policy – for example, urging adoption of certain development strategies to secure donor funding. Critics argued that Pakistani elites learned to “live on aid” and avoided taxing their own wealth or expanding the base, contributing to Pakistan’s chronic fiscal weakness (Aid dependency - Newspaper - DAWN.COM). Aid cushioned the impact of poor governance; as long as foreign money flowed, hard decisions (like widening the tax net or cutting loss-making state enterprises) could be deferred. Economists have long warned that aid can create a moral hazard, and Pakistan exemplified this: reliance on aid and loans became habitual, undermining self-reliant growth.
That said, U.S. aid did help plug Pakistan’s huge infrastructure gaps. Major power projects funded by USAID – such as improvements to Tarbela Dam (adding Tari units of 4,888 MW) (USAID closure in Pakistan — end of an era or dawn of self-reliance?) and new dams like Gomal Zam – expanded electricity supply, arguably enabling more economic activity. USAID’s economic development grants in the 2000s (about $43.5 million in one portfolio (USAID closure in Pakistan — end of an era or dawn of self-reliance?)) supported farmers and small businesses in conflict regions, trying to wean populations off illicit economies. In short, USAID money has been a significant input in Pakistan’s economic planning. Whole development schemes in education, health, agriculture, and governance were incorporated into official plans on the assumption of donor funding. With the cessation of aid in 2025, these plans face upheaval. Pakistan must now either find alternative funding (e.g. from China or domestic revenue) or scale back those initiatives, a reckoning that might force long-delayed reforms. Some Pakistani voices see a silver lining: “Aid kept us dependent – we should see this as an opportunity to stand on our own feet”, argues a former Pakistani ambassador, advocating self-reliance in the wake of USAID’s exit (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Whether Pakistan can fill the economic void left by USAID without social fallout remains an open question.
Controversies, Manipulation and Misuse of Funds
While USAID brought many benefits, its operations in Pakistan have not been free of manipulation, misuse, and controversy. Both the U.S. and Pakistani sides have been implicated in episodes where aid money was misdirected or exploited in ways that undermined public interest and democratic norms. Below we detail some notable controversies and identify entities accused of acting against the public interest with USAID support:
Covert Operations Under Aid Cover: Perhaps the most damaging episode was the revelation that the CIA ran a fake vaccination campaign in Pakistan (2011) as part of the hunt for Osama bin Laden. Dr. Shakil Afridi, a Pakistani physician, was recruited to conduct a door-to-door hepatitis immunization drive in Abbottabad – ostensibly a public health effort, but in fact a covert DNA collection scheme to pinpoint Bin Laden (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian). Although this was a CIA operation, it exploited the goodwill created by health aid programs. The fallout was severe: once exposed, it fueled militant propaganda that polio and other vaccination campaigns were Western spying plots, leading to a ban on vaccinations by the Pakistani Taliban and deadly attacks on polio workers (Polio eradication: the CIA and their unintended victims - The Lancet) (Polio eradication: the CIA and their unintended victims - The Lancet). Pakistan saw a frightening spike in polio cases as immunization drives were derailed (66 cases in 2014 vs. 14 the previous year) (Polio eradication: the CIA and their unintended victims - The Lancet) (Polio eradication: the CIA and their unintended victims - The Lancet). The public health impact was disastrous, setting back global polio eradication. Moreover, Pakistan’s intelligence agencies grew deeply suspicious of international NGOs in the health sector. In 2015, the government outright expelled Save the Children, a major INGO, accusing it of abetting foreign espionage under aid cover (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian). (A leaked inquiry alleged a Save the Children official had unwittingly facilitated Dr. Afridi’s introduction to the CIA (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian), though the NGO denies involvement.) The Interior Minister railed that NGOs “funded by US, Israel and India” were pursuing an “anti-Pakistan agenda” and vowed to shut any found undermining national interests (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian). This incident epitomizes how the misuse of aid (turning a health program into spycraft) violated public trust and gave credence to those claiming USAID and Western NGOs interfere in Pakistan’s internal affairs.
Funding of Suspect Organizations: There have been cases where USAID funds ended up in the wrong hands due to inadequate oversight. A 2024 U.S. congressional inquiry revealed that USAID had given grants to an NGO called Helping Hand for Relief and Development, despite it being under investigation for links to a Pakistan-based terrorist group (Falah-e-Insaniat Foundation, the charitable front for Lashkar-e-Taiba) (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa) (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa). Congressman Darrell Issa termed it “disturbing” that American aid may have inadvertently financed a terror-linked outfit, calling for USAID to come clean (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa). In this instance, about $110,000 was allegedly channeled to the jihadist-linked group before the grant was frozen (From LeT to Hamas: Read how USAID has been funding terror ...). The scandal highlights lapses in vetting local partners – a misuse of U.S. taxpayers’ money that also compromises Pakistan’s security. Pakistani militant charities have tried to pose as NGOs to tap donor funds; the Helping Hand case showed USAID’s vulnerability to manipulation by extremist elements. Following these revelations, the Trump administration cited such misuse as part of justification to halt aid (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa).
Corruption and Embezzlement Scandals: Some USAID-funded projects in Pakistan have been marred by corruption on the Pakistani side, undermining their purpose. A notorious example is the Pakistani Sesame Street project (“Sim Sim Hamara”). USAID committed $20 million (via local partner Rafi Peer Theatre Workshop) to produce a Urdu-language Sesame Street TV series to educate children. In 2012, after one season, the U.S. Embassy terminated the funding amid credible allegations that the local organizers embezzled funds and kept fraudulent records (US ends funding for Pakistan 'Sesame Street' | Arts and Culture) (US pulls funding from Pakistan's Sesame Street - The Guardian). Reports claimed the puppet theatre group had misappropriated grant money to pay off old debts and awarded lucrative contracts to relatives (Sesame Workshop 'Dismayed' By Pakistan Corruption Allegations). The show was canceled, wasting what had been a high-profile effort to spread learning and tolerance among Pakistani kids. An audit found “discrepancies” in the project’s accounts (Aid Withdrawal and Fallout - jstor). This fiasco was deeply embarrassing: it showed how USAID’s lack of strong financial controls with local partners led to development funds being siphoned off for private gain, clearly against the public interest. Similarly, other audits by USAID’s Inspector General have flagged millions in “questioned costs” in Pakistan – e.g. $2.35 million of funds were identified as misused in one semi-annual period ([PDF] Semiannual Report To Congress April 1, 2017—September 30, 2017). There were also instances of Pakistani officials misdirecting aid: for example, allegations surfaced that in Khyber Pakhtunkhwa, vehicles and perks were procured under USAID-funded projects that did not reach intended beneficiaries (though specifics often remained hushed). Such corruption scandals eroded Pakistani public faith in donor projects and gave ammunition to aid skeptics.
Local NGOs and Individuals “Against Public Interest”: Pakistani critics often single out certain Western-funded NGOs, think tanks, media outlets or activists as working against Pakistan’s societal norms or interests. While these accusations are typically subjective, some instances stand out. In 2023, Pakistan’s government scrutinized two health advocacy NGOs (Campaign for Tobacco-Free Kids and Vital Strategies, funded by Michael Bloomberg) for allegedly operating without authorization, influencing domestic health policies (anti-tobacco laws) and even sponsoring officials’ foreign trips as lobbying tactics (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). Their local bank accounts were frozen for financial irregularities and unregistered activities (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). Although not USAID-funded, this reflects a broader suspicion toward foreign influence via NGOs. The authorities’ message was clear: overseas organizations (and their local collaborators) would be shut down if found “undermining national interests” (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). The earlier expulsion of Save the Children in 2015 (with 1,200 Pakistani staff put out of work) is another case of an INGO deemed against the national interest (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian). On the media front, some Pakistani commentators accuse certain journalists and outlets of carrying water for foreign agendas after having received training or grants. For example, voices in Pakistan’s right-wing media have alleged that liberal talk show hosts and writers are “USAID-funded” and thus promote secular or pro-West narratives – although concrete evidence of individual payments is rarely produced publicly. Nonetheless, the U.S. did fund journalism fellowships that benefited notable media persons, and detractors seize on that to question their loyalties. Even the Election Commission was not above suspicion: after the 2024 elections, former President Arif Alvi claimed that because the ECP had taken ~$15 million from USAID for election support, it was part of a tainted process (he alleged the 2024 polls were rigged) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Dr. Alvi applauded the U.S. aid halt, insinuating that a foreign-funded ECP could not be trusted (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Although data shows the funding was for long-term capacity-building, not the election itself (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM), this illustrates how even legitimate aid can cast doubt on an institution’s neutrality in the eyes of some.
In sum, USAID’s history in Pakistan has seen unfortunate instances of funds being misused, misdirected, or caught up in espionage and politics. These incidents have had real consequences: development projects derailed, public health campaigns sabotaged, trust between the U.S. and Pakistan damaged, and segments of Pakistani society deeply skeptical of any foreign-funded entity. The Pakistani state’s crackdown on NGOs from 2015 onward was a direct response to these concerns – an effort to “prevent foreign funding from undermining national interests” (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). Likewise, the U.S. freeze in 2025 was in part a reaction to perceived waste and abuse of aid dollars (e.g. the discovery of $17 million misused) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). Such controversies underscore a central tension in USAID’s mission: using soft power to influence another society always risks blowback if not done transparently and accountably.
Final Shutdown of USAID in Pakistan (2025) – Causes and Consequences
By early 2025, the long chapter of USAID in Pakistan came to an abrupt close. The “final shutdown” of USAID operations in the country was driven by a confluence of American political shifts and Pakistani realities. The immediate trigger was the U.S. administration’s decision to freeze all USAID funding worldwide for a comprehensive review, as ordered by President Trump in January 2025 ( The erosion of American soft power ) ( The erosion of American soft power ). This unprecedented halt was part of a broader move to dismantle or radically reshape U.S. foreign aid. Trump, having regained office, questioned the value of soft power programs, calling them wasteful and vowing to put “America First” ( The erosion of American soft power ). Top officials in the new administration went so far as to label USAID a “criminal organization” and indicated “we’re shutting it down” (USA: Trump’s foreign aid freeze throws journalism around the world into chaos | RSF). In Washington, USAID’s budget was frozen, its employees sent home, and plans floated to fold its functions into the State Department (USA: Trump’s foreign aid freeze throws journalism around the world into chaos | RSF). The agency that had long been “a critical instrument of American soft power” (The National Security Impact of Shutting Down USAID) now found itself crippled by its own government.
For Pakistan, this translated to an immediate cessation of ongoing projects. Roughly $169 million worth of active USAID projects ground to a halt overnight (USAID closure in Pakistan — end of an era or dawn of self-reliance?), and in total some $845 million in planned aid was suspended (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Thousands of Pakistani staff working for USAID-funded NGOs, contractors, and programs faced sudden unemployment (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Critical initiatives were cut off mid-stream – from community health clinics to agricultural support in remote areas. Pakistani officials were informed that no new funds would be disbursed and that program offices would be closing. Essentially, the USAID mission in Islamabad began shutting its doors after 62 years of operation.
Underlying Reasons: The final shutdown was precipitated not only by U.S. domestic politics but also by mounting concerns about aid effectiveness and misuse. Reports of that ~$17 million in USAID funds misappropriated in Pakistan (mentioned earlier) raised red flags (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today). Although that sum is a fraction of total aid, it fed a narrative in Washington that U.S. taxpayer money was being squandered or even harming U.S. interests. A senior House Foreign Affairs member stated that “every misspent dollar makes engagement abroad harder to sustain” (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa), reflecting Congress’s fatigue with problems in Pakistan’s aid program. Additionally, influential voices like Elon Musk (appointed to a government efficiency role) and conservative think-tanks lambasted the entire foreign aid enterprise – Musk publicly attacked organizations like the National Endowment for Democracy (NED) as “evil” and interfering in other countries (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). This ideological shift in Washington – viewing institutions that promote democracy abroad as meddling and “not aligned with U.S. interests” (USA: Trump’s foreign aid freeze throws journalism around the world into chaos | RSF) – directly impacted USAID’s mandate. In the case of Pakistan, such views aligned oddly with those of Pakistan’s own anti-NGO lobby, albeit for different reasons.
From the Pakistani perspective, the writing was on the wall when the U.S. halted democracy/human-rights aid programs in late 2024, including support to the Election Commission and civil society (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). By February 2025, it was clear that what began as a temporary “pause” was becoming a full termination. Pakistani development professionals described the situation as “sending shockwaves across Pakistan’s development sector” (USAID closure in Pakistan — end of an era or dawn of self-reliance?). There was also an element of Pakistan’s internal politics influencing the end: as mentioned, some in Pakistan (particularly the ousted PTI party) approved of the U.S. suspending aid that they believed propped up the rival government or compromised institutions like the ECP (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Thus, there was little domestic political cost for Pakistan’s rulers in letting USAID go – in fact, the narrative of “dawn of self-reliance” was touted by officials who spun the crisis as an opportunity to finally shed dependency (USAID closure in Pakistan — end of an era or dawn of self-reliance?).
Consequences and Outlook: The shutdown of USAID marks the end of an era in Pakistan. Over 70+ years, U.S. aid had become deeply entwined with Pakistan’s development. With its removal, immediate impacts are being felt. More than 60 donor-supported health facilities (many serving Afghan refugees and remote communities) have closed, cutting off services for ~1.7 million people (US aid suspension to hit 60 health facilities in Pakistan - Dawn). Programs providing clean water and maternal care in desert areas like Thar, or entrepreneurship training in Gilgit-Baltistan, have stalled (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Education projects, including school construction and scholarship funding, are in limbo. Media and watchdog groups that relied on grants have lost funding, potentially silencing some independent voices (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). Pakistani civil society is bracing for a contraction, with some NGOs likely to shut down without alternate funding. Economically, the loss of hundreds of millions in annual grants adds stress to Pakistan’s already fragile finances. The Pakistani Rupee and development budgets could face added pressure, although the amounts are small relative to say IMF packages.
Strategically, the U.S. has lost a key lever of influence in Pakistan. The goodwill generated by USAID’s visible projects – often the “soft image” of America through roads, dams, and hospitals carrying the USAID logo – will fade (USAID closure in Pakistan — end of an era or dawn of self-reliance?). As one journalist noted, USAID spending was barely 1% of the U.S. budget but it helped create significant goodwill in countries like Pakistan (USAID closure in Pakistan — end of an era or dawn of self-reliance?). Now that influence is waning; China’s footprint, for instance, may loom larger as it fills some infrastructure investment gaps (though Chinese aid tends to be loans, not grants). Pakistan’s ruling circles will have one less reason to listen to Washington on matters of governance or reforms. This comes at a time when U.S.-Pakistan relations are already lukewarm, meaning the U.S. has forfeited a soft power asset just as great power competition in the region intensifies.
Domestically, opinions are split. Optimists argue Pakistan can use this jolt to build self-reliance: “Aid kept us dependent… we must stand on our own feet,” urged a former Foreign Secretary, calling for reforms to reduce reliance on any aid (USAID closure in Pakistan — end of an era or dawn of self-reliance?). They point to countries that graduated from aid and took charge of their development. Pessimists worry that in the short run, the vacuum left by USAID will deepen social vulnerabilities and slow democratic progress (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (USAID closure in Pakistan — end of an era or dawn of self-reliance?). For instance, fewer resources for election oversight could make future polls more contentious, and cuts in social programs might heighten public discontent. It is a pivotal moment: Pakistan must either step up with domestic solutions or risk regression in sectors that had seen improvement due to donor inputs.
As of March 2025, USAID’s Pakistan mission is being wound down and its staff reassigned or laid off. There is uncertainty if the agency will re-emerge in a new form after the U.S. “restructuring” is over (Aid dependency - Newspaper - DAWN.COM). The global context is also grim for aid – other countries are affected by the U.S. retreat, and institutions like NED faced shutdown of their U.S. Treasury accounts amidst the overhaul (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM). In Pakistan’s case, this is indeed the conclusion of a long, complicated relationship. From building dams in the 1960s, to fighting communism and extremism, to fostering education and democracy, USAID’s legacy is interwoven with Pakistan’s modern history. Its use of soft power achieved notable successes in development, but also drew criticism for meddling in Pakistan’s affairs. With its final departure, Pakistan enters a new phase where it must navigate development and democracy with far less American support. Whether this leads to greater self-reliance or deeper crisis remains to be seen – as one commentary put it, Pakistan now stands at a crossroads, and “the answer, for now, remains uncertain.” (USAID closure in Pakistan — end of an era or dawn of self-reliance?)
Sources:
Azaz Syed, The News International – “USAID closure in Pakistan — end of an era or dawn of self-reliance?” (Feb 5, 2025) (USAID closure in Pakistan — end of an era or dawn of self-reliance?) (USAID closure in Pakistan — end of an era or dawn of self-reliance?).
Syed Mohammad Ali, Express Tribune – “The erosion of American soft power” (Feb 7, 2025) ( The erosion of American soft power ) ( The erosion of American soft power ).
Anwar Iqbal, Dawn – “Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan” (Feb 24, 2025) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM) (Situationer: Trump’s aid cuts to hurt pro-democracy projects the most in Pakistan - Newspaper - DAWN.COM).
Dawn Editorial – “Aid dependency” (Mar 3, 2025) (Aid dependency - Newspaper - DAWN.COM) (Aid dependency - Newspaper - DAWN.COM).
Riaz Haq’s Musings – “NGO-ization of Pakistan” (Jul 5, 2018) (Haq's Musings: NGO-ization of Pakistan) (Haq's Musings: NGO-ization of Pakistan).
Washington Examiner / Rep. Issa Press Release – Funding of terror-linked NGO (Mar 4, 2024) (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa) (ICYMI - Issa to USAID: Come Clean About Funding Groups with Terror Ties | Representative Darrell Issa).
The Guardian – “Pakistan shuts down Save the Children…” (Jun 12, 2015) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian) (Pakistan shuts down Save the Children offices in Islamabad | Pakistan | The Guardian).
Reuters / Al Jazeera – reports on Pakistan Sesame Street project corruption (2012) (US ends funding for Pakistan 'Sesame Street' | Arts and Culture).
Lancet – “Polio eradication: CIA and their unintended victims” (May 2014) (Polio eradication: the CIA and their unintended victims - The Lancet) (Polio eradication: the CIA and their unintended victims - The Lancet).
Pakistan Today (Profit) – “Unregulated INGOs, illicit trade, and the $845 million aid fallout” (Mar 19, 2025) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today) (Unregulated INGOs, illicit trade, and the $845 million aid fallout - Profit by Pakistan Today).
Center for Global Development / Guardian – U.S. aid historical data (2011) ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ) ( Sixty years of US aid to Pakistan: Get the data | Global development | theguardian.com ).