Abstract

This paper examines the implications of recent budget cuts to the United States Agency for International Development (USAID), focusing on Vietnam. As a longstanding pillar of U.S. soft power, USAID has fostered reconciliation and development through war legacy remediation, public health initiatives, and higher education partnerships. The study argues that reducing USAID funding undermines decades of progress in U.S.–Vietnam relations and weakens American moral leadership. By contrasting the minimal cost of foreign aid with massive defense spending, the paper highlights how dismantling USAID threatens both U.S. strategic interests and global soft power influence. The study argues that foreign aid is not  wasteful expenditure, but a strategic asset that yields long-term benefits.

Introduction 

On the official White House website, President Trump - driven by an “American First” doctrine, the administration framed foreign aid -  namely United States Agency for International Development (USAID) as unnecessary, burden on taxpayer money, “funnels massive sums of money to the ridiculous - and, in many cases, malicious - pet projects of entrenched bureaucrats, with next-to-no oversight.” The proposed and enacted cuts to USAID reflected a broader trend toward isolationism (an ideology of which the U.S. followed during the 19th century) and transactional diplomacy. Rather framing foreign assistance as a long-term investment in global influence and diplomatic stability, the administration prioritized immediate economic returns. This shift marked a departure from bipartisan consensus that had traditionally supported foreign aid as an extension of American leadership and moral responsibility. Within this paper, Vietnam represents one of the most affected cases. Ever since the normalization of relations in 1995, USAID has served as a healing potion between former foes of war: advancing post-war legacies through dioxin cleanup, unexploded ordnance (UXO) removal, and public health initiatives. Furthermore, the agency’s program also supported education and institutional development through Fulbright University Vietnam: an emblem of bilateral cooperation and reconciliation. The cuts under the second Trump administration therefore risked undoing decades of progress, jeopardizing trust and weakening U.S. influence in a region increasingly shaped by competition with China.

Early Days of USAID in Vietnam

The United States Agency for International Development (USAID) was established under the 1961 Foreign Assistance Act, introduced during the presidency of John F. Kennedy. This initiative was designed to unify and streamline multiple U.S. foreign aid efforts under a single agency, reflecting a broader strategy to advance American soft power through international development. USAID's mission was not only humanitarian in nature - it was also strategic, aimed at expanding U.S. influence globally through financial, socioeconomic, healthcare, and educational assistance. However, during the Vietnam War, USAID was designated to serve in both military purposes as well as conducting social welfare in South Vietnam.

USAID's involvement in the post-war reconciliation program in Vietnam traces back to 1989, when U.S. Senator Patrick Leahy launched the Leahy War Victims Fund. The program provided essential services to Vietnamese civilians affected by the war. However, during this period, USAID’s operations in Vietnam remained narrowly focused on post-war humanitarian relief, as full diplomatic normalization between the two countries had yet to occur.

The groundwork for normalization began in the early 1990s. In 1991, as part of the post-war settlement efforts stemming from the Paris Peace Agreements on Cambodia, both nations agreed on a phased approach toward restoring relations. Vietnam committed to allowing former Republic of Vietnam military personnel to emigrate to the U.S. under the Humanitarian Operation program, as well as permitting civilian departures through the Orderly Departure Program. In turn, the United States agreed to lift the 25-mile travel restriction on Vietnamese diplomats, initiate normalization talks, and permit U.S. businesses to establish offices in Vietnam - opening the door for American investment and commercial exchange. Perhaps the most critical element of this roadmap was the joint U.S.-Vietnam pledge to cooperate on resolving the issue of missing-in-action (MIA) personnel from the Vietnam War. This collaboration became a linchpin in rebuilding trust between the two governments and their respective societies. Ultimately, these efforts culminated in 1995 when President Bill Clinton officially normalized diplomatic relations between the United States and Vietnam, marking the beginning of a new era of cooperation.

 Reconciliation Erosion post-USAID Cut

War Legacies

A major issue surrounding USAID’s slashing that would affect Vietnam is the question of War Legacies. The United States' decision to slash USAID has had profound and far-reaching consequences on the effort to reconcile the warring past between both nations. That said, the abolishment of USAID includes detoxicating the dioxin-contaminated soil, removing unexploded ordnance, and supporting Agent Orange victims in Vietnam. Before Trump’s second presidency, USAID had been pivotal for these efforts, in both aspects of funding and technical expertise. However, the sharp budget cut and essentially ending USAID have hindered, if not undermined, the progress on the ground as well as the trust between the two countries, especially the trust of the Vietnamese government towards the United States’ government.

One of the significant setbacks that this decision has caused has been at Bien Hoa Airbase. Formerly, the airbase was under the control of the Republic of Vietnam Airforce, essentially was a joint custody between the United States and RVN’s Air Force. Served as a logistic hub to store Agent Orange - herbicide chemical used to defoliate jungles or damaging National Liberation Front crop fields -  Bien Hoa Airbase is now one of the most severely contaminated sites. USAID, in partnership with the U.S. Department of Defense, had pledged $430M over 10 years to clean up the base and surrounding areas, which would take up to 100,000 cubic meters of toxic soil. This effort has been crucial for advancing reconciliation between the two countries after the Vietnam War, helping to transform the United States from a former adversary into a trusted partner and strengthening its soft power not only in Vietnam but across the Asia-Pacific region. Per PBS NewsHour, the funding’s abrupt end delayed the treatment process and thus compromised over 8600 local residents with health and environmental hazards as well as development plans. 

Unexploded ordnance remains another deadly yet lingering legacy of the war, as the U.S. Air Force dropped approximately seven million tons of ordnance on Vietnamese soil during the war, a vast portion failed to detonate, leaving behind a deadly legacy that continues to endanger communities today. Project RENEW, in partnership with the U.S. Department of State, the U.S. The Department of Defense, and USAID, has been helping to eradicate the problems by disposing of the unexploded ordnance and providing community services in Quang Tri Province, the most heavily bombed region with 62,000 hectares of land still ridden with bombs. The cut in funding would greatly disrupt the effort, leaving thousands of acres at risk of accidental explosions.

War legacy funding also directly affects victim assistance and rehabilitation. Post-war Vietnam sees vast amounts of Vietnamese living with disabilities or illnesses caused by Agent Orange and exploding incidents caused by ordnance. For years, USAID has provided prosthetics, mobility aids, physical therapy, and job training for the war victims. With USAID no longer existing, the question of morality and post-war responsibility wages against Trump’s administration. According to Asia News, some of the projects are continuing, yet on a limited basis. That said, those projects have been put into the limbo of uncertainty, especially when the current U.S. administration  has become increasingly hostile towards foreign aid and assistance. 

It is safe to say that the U.S.-Vietnam relations have been challenged heavily since both countries went on diplomatic normalization. In particular , the funding of war legacy ended just over a year after former President Biden’s visit to Vietnam and both sides had upgraded their diplomatic status to Comprehensive Strategic Partner. Regarding the war legacy issue, the White House, via USAID, announced in 2023 that it will establish new funding initiatives aimed at clearing un-exploded ordnance and supporting war victims through projects such as Raising Voices, Creating New Opportunities II, and Hold My Hand II, which are worth $4 million. The recent cut in funding would make Vietnam even more cautious than it has already been towards the United States, especially during Trump’s administration or even after.

The Case of Fulbright University Vietnam

The slashing of USAID also affects Vietnam’s higher education as well. Established in 2018, Fulbright University Vietnam (FUV) was a pledge made by former President Barack Obama to bring a not-for-profit Liberal Arts university to Vietnam. From then on, FUV embodies the collaborative spirit of both countries. Not only does it serve as a symbol of reconciliation, aiming to foster mutual understanding and cooperation through education, but it also contributes to U.S. soft power through educational investments. USAID has been crucial for FUV, with planned funding of $25 million through 2025, which helps the institution in academic programs, faculty development, and scholarships. The funding cuts risk weakening Fulbright University Vietnam (FUV) and, by extension, U.S.–Vietnam relations, as the institution stands as a testament to the progress made in bilateral ties and the nations’ shared commitment to mutual respect and common values.

The True Return of USAID

The Trump administration has been touting how “wasteful” USAID is and how it has been hurting the United States’ budget, which implies that foreign aid drains the national budget and has little to no return. However, according to both Pew Research and USA Fact, USAID only takes up 0.3% of the U.S. yearly budget in Fiscal Year 2024. In stark contrast, the U.S. military budget for Fiscal Year 2024 stood at $883.7 billion, with $841.4 billion allocated to the Department of Defense. By comparing the Department of Defense budget with USAID, we can highlight the unbalanced U.S. government spending. While the country increasingly seeks military power dominance, the U.S. (under Trump’s second presidency) has overlooked the benefit of diplomatic and humanitarian tools brought to the table. What President Trump and his aides seek is a visible, tangible result that military companies could offer, while there is no measurement for soft power. However, throughout history, the U.S. earns the spot of the world’s leading power through soft power. Post-World War sees the U.S. rejuvenate Western Europe through the Marshall plans, essentially reviving the region’s economy and political foundation from wreckage and economic hardship. What makes USAID important in international diplomacy is not just the aid it provides; moreover, it acts as the strategic leverage and moral credibility it brings to the U.S. Many contractors that USAID has partnered with came from America, which means the capital flows back to the U.S., and the recipients (Vietnam for this instance), gets the result. For instance, U.S. company Tetra Tech received $32 million to clean up dioxin-contaminated soil in Bien Hoa Air Base. In that way, USAID blocked out any chances of corruption from local officials, at least in the case of Vietnam.

The Global Effect of Foreign Aid cuts

Countries that receive development assistance often become long-term partners with the U.S., fostering not only economic growth but can also provide political stability. Through aid and development programs, the U.S. builds mutual trust and influence, creating a network of allies of which share the same values and interests. These relationships help reduce the likelihood of conflict. In many ways, USAID acts as the foundation of U.S. soft power - an instrument that enables America to lead by example and persuasion. For the case of Vietnam, a country on its way to become a leading economic character in Southeast Asia, the U.S. should engage through aid and development to ensure its stance as China’s counterweight.

Abolishing USAID would mean that the U.S. has surrendered its moral and strategic leverage to China. In recent years, China has effectively advanced its “Community of Common Destiny” initiative - a framework aimed to challenge Western’s sphere of influence. Beijing, in recent years, has extended its influence deep into Africa, Southeast Asia and Latin America. If the U.S. retreats from development assistance, China will be more than eager to fill the vacuum; changing decades-worth of norms and diplomatic values set by America. On that note, the risk of ceding decades of accumulated soft power on the U.S. side of the aisle is immeasurable. 

However, President Trump’s transactional worldview reduces foreign aid to cost-benefit calculation rather than a strategic diplomatic tool. He expects other countries should be able to take care of itself rather than relying on U.S. support reflects a business mindset that prioritizes immediate returns over long-term influence. This approach overlooks the essence of international development: fostering trust, building stability, and securing alliances through cooperation rather than competition.

Conclusion

Dismantling of USAID, particularly as it relates to the former foe, Vietnam, represents a critical misstep and shortsighted policy made by President Trump. Even before the diplomatic normalization, USAID has been a cornerstone for postwar healing. The agency’s programs in postwar remediation stand as a concrete commitment to historical accountability and reconciliation. Perhaps most symbolic of the consequences of the USAID funding cuts is the impact on Fulbright University Vietnam, the institution that symbolizes the very best of the U.S.-Vietnam relations: commitment to education, giving-back-to-the-society spirit. On another note, USAID is a great metaphor for the U.S.-Vietnam relation, from a former foe to genuine partners. Once associated with the war-torn past, USAID’s early involvement in Vietnam was marked by conflict and suspicion. Yet, over time, it has come to symbolize reconciliation, trust, and shared progress. Preserving and strengthening USAID is not merely a humanitarian concern - it is a strategic imperative. U.S. credibility, moral leadership, and global influence depend not only on military might, but on the power of diplomacy, development, and enduring partnerships like that with Vietnam.