Gaza aid ops in peril as millions of promised USAID dollars frozen under Trump’s cuts
US president’s Musk-led cutbacks leave agency understaffed and unable to reimburse NGOs that have spent pledged funds, officials say; largest field hospital operating with skeleton crew
US President Donald Trump’s cuts to USAID have frozen hundreds of millions of dollars in contractual payments to aid groups, leaving them paying out of pocket, according to officials from the US humanitarian agency.
The cutbacks threaten to stall the gains aid workers have made combatting Gaza’s humanitarian crisis during the Israel-Hamas ceasefire, highlighted on Sunday when Israel halted the entry of humanitarian aid into Gaza, citing Hamas’s refusal to extend the ceasefire-hostage deal’s first phase.
The US backed Israel’s move, which was assailed by Arab and other Western countries.
During the ceasefire — which the then-incoming Trump administration helped broker in January — Israel was required to ramp up the flow of humanitarian aid into Gaza.
USAID was supposed to fund much of the aid to Gaza as the ceasefire progressed, and the Trump administration approved over $383 million on January 31 to that end, according to three USAID officials.
But since then, there have been no confirmed payments to any partners in the Middle East, they said. The officials, who have survived multiple rounds of furloughs, spoke on condition of anonymity for fear of retribution.
Two senior officials at aid organizations confirmed they have not received any of the promised funds, after spending millions of dollars on supplies and services.
They said they could not afford to continue aid operations indefinitely.
Some organizations have already reported laying off workers and scaling down operations, according to internal USAID information shared with the Associated Press.
The Gaza war began with the Hamas onslaught of October 7, 2023, when thousands of terrorists stormed southern Israel to kill some 1,200 people and take 251 hostages.
The deal’s 42-day first phase saw Hamas release 33 women, children, civilian men over 50 and those deemed “humanitarian cases,” in exchange for some 1,900 Palestinian prisoners, including over 270 serving life sentences for the murders of dozens of Israelis.
Prime Minister Benjamin Netanyahu has largely held off on negotiating the second phase, which would require Israel to withdraw from Gaza — a red line for the premier’s right-wing flank, which has also assailed the entry of aid into Gaza.
The second phase would see Hamas release remaining living hostages — all of them young men abducted in the Hamas onslaught.
USAID payments frozen, some NGOs scale down Gaza response
USAID has been one of the biggest targets of a broad campaign by Trump and the Department of Government Efficiency (DOGE), led by the US president’s billionaire ally Elon Musk, to slash the size of the federal government.
Before Trump took office, USAID had roughly $446 million to disperse to partner organizations in Gaza in 2025, the USAID officials said.
But after Trump froze global foreign assistance, USAID’s Gaza team had to submit a waiver to ensure funds for the Strip could continue to flow. The team received approval on January 31 to secure over $383 million in funding, some two weeks after mediators Qatar, Egypt and the US announced the Gaza ceasefire deal.
About $40 million was subsequently cut under a measure that no money be provided for aid in the form of direct cash assistance.
USAID then signed contracts with eight partner organizations, including prominent NGOs and UN agencies, awarding them money to flood supplies and services into Gaza.
Then, the officials said, they began hearing that organizations were not receiving the promised payments — even as they had already spent millions, expecting USAID reimbursement.
Some of those organizations are now spending less and scaling back programs.
The International Medical Corps, a global nonprofit that provides medical and development assistance, was awarded $12 million to continue operations at two hospitals in Gaza.
These include the largest field hospital in Gaza, whose construction was funded by USAID at the request of the Israeli government, according to internal USAID information.
It has now requested payback of over $1 million, said one USAID official, adding that the freeze has forced the organization to lay off some 700 staff members and offer only basic services at the hospitals, with a skeletal crew.
A former IMC staffer, who quit citing lack of stability, said the program providing life-saving treatment for malnutrition was almost frozen for lack of funds. The former staffer, who spoke on condition of anonymity to discuss the organization’s details, said the current nutrition services were at a minimum level.
Meanwhile, termination letters severing the contracts between USAID and Gaza partners were also sent out to organizations that were major providers of shelter, child protection and logistical support in the Gaza aid operation, a USAID official said.
Some of the termination letters seen by the AP were signed by new USAID deputy chief Peter Marocco — a returning political appointee from Trump’s first term. They instruct organizations to “immediately cease” all activities and “avoid additional spending chargeable to the award,” citing a directive from US Secretary of State Marco Rubio.
Jeremy Konyndyk, a former USAID official, said the downsizing at the agency could imperil the Gaza ceasefire.
“The US established very specific, concrete commitments for aid delivery under the ceasefire, and there is no way…to fulfill those as long as the funding freeze is in place,” said Konyndyk, now president of Refugees International.
Like many non-profits, the group has accused Israel of bringing Gaza to the brink of famine — a charge denied by Israel and challenged by pro-Israel groups — and failing to uphold legal obligations on humanitarian aid.
In November, the International Criminal Court issued arrest warrants against Netanyahu and former defense minister Yoav Gallant, alleging they had used starvation as a weapon of war. Israel has rejected the accusation as Hamas propaganda.
Efficiency drive leaves USAID in disarray, could diminish US global stance
In addition to the spending freeze, officials say USAID has been wracked by internal chaos and the introduction of arbitrary regulations since the new administration took office.
During the first phase of the Gaza ceasefire, Israel let at least 600 trucks of aid into Gaza a day, as well as 60,000 temporary homes and 200,000 tents.
Two USAID officials said the agency was originally supposed to buy 400 temporary homes that would make it into Gaza by the end of the first phase, and over 5,200 more during the next phase. That figure has since been slashed to just over 1,000.
USAID was never able to purchase the mobile homes because of newly imposed policies requiring extra approvals for procurements.
It was unclear how many mobile homes entered Gaza during the first phase. Netanyahu blocked them from entering in mid-February, but Egyptian media reported that the homes were rolling in, nonetheless. The premier’s office initially denied the reports, then called them exaggerated.
Meanwhile, on February 2, some 40% of the USAID Gaza team was locked out of their email accounts and software necessary to track awards, move payments and communicate with the organizations. An email sent immediately following the lockout came from Gavin Kliger, a DOGE staffer.
Access to the servers has now been restored, the officials said, but the team is smaller after waves of layoffs. From an original team of about 30 people, only six or seven remain.
With USAID in flux, the US risks losing its influence, said Dave Harden, the former USAID assistant administrator of Democracy, Conflict and Humanitarian Aid and a longtime director of the agency’s work in the Palestinian territories.
“US aid assistance to Palestinians…never, ever equated to US assistance to Israel, never quite balanced, but always gave us a seat at the table, always helped us to have real discussions with both the Palestinians and the Israelis about what the future might hold,” Harden said.
Now, he said, “We’re just simply not at the table in a meaningful way, and so I think the ceasefire is fragile.”
