How the USAID collapse helps Putin

Disagreements in Washington about US aid for Ukraine usually revolve around military hardware. But throughout the full-scale war — and before, during Trump’s first term — energy assistance through USAID has been foundational to the US strategy there, just as destroying energy systems has been foundational to Putin’s. Helping Ukraine keep the lights on, and transition from its reliance on Soviet-era coal plants to cleaner, more diversified energy sources, is essential for keeping Ukraine’s economy and morale afloat, and for undermining Putin’s effort to force a peace deal unfavorable to the West.

That work is now up in the air: Power transformers and generators, as well as other supplies for front-line energy engineers including body armor, armored vehicles, lights, communications equipment, winter clothing, and medical kits are among the piles of energy aid now stuck outside Ukraine because of the aid freeze and USAID disintegration, said Dan Kaine, managing partner of the intelligence and risk advisory service Inherent Risk, which provides crisis response and logistical support for companies and NGOs administering USAID-backed projects in Ukraine. “It’s literally everything, which is what I don’t think people really are grasping,” Kaine said. Rep. Eugene Vindman (D-Va.), a Ukraine-born former National Security Council official in Trump’s first term, also confirmed that energy assistance programs have been suspended.

The halt threatens to escalate blackouts in the near term, since USAID had been at the forefront of helping Ukraine’s energy ministry source the long list of hardware urgently in need of replacement or repair. Longer-term, it also sets back progress toward opening Ukraine’s energy market to US and European investors, a goal that Trump seemed interested in pursuing when he said on Monday that a deal on critical mineral mining could be a condition for continued military support. Numerous US companies involved in gas, grids, renewables, energy storage, and nuclear power are contemplating projects in Ukraine, but are held back by inadequate wartime insurance and policy issues in Ukraine. Many of those issues were meant to be addressed in a $825 million repair and reform agenda the Biden administration signed with Kyiv in December — with USAID responsible for much of the work.

Rather than continue to build investor confidence, Trump’s aid freeze signals that investors should think twice before committing to any energy projects in Ukraine that rely even partially on US government support. The freeze is also an obstacle for US LNG exporters, who just made their first delivery to Ukraine last month. Ukraine’s Foreign Minister Andrii Sybiha said in a press conference Wednesday that his country is keen to buy more US LNG. That will be hard to do if the power plants, pipelines, and storage facilities to receive it are in ruins, as many still are.

Rep. Mike Quigley (D-Illinois), a co-chair of the Congressional Ukraine Caucus, said the Trump administration should carve out an exemption to the aid freeze for Ukraine. Spokespeople for Sen. James Risch (R-Idaho), who chairs the Foreign Relations Committee, and other Ukraine-focused Republicans contacted by Semafor declined to comment, as did the US Embassy in Kyiv.

“[USAID] has been critical in supporting Ukraine’s wartime energy needs and has supported its goal of integrating into Europe’s energy markets,” Quigley said. “Without the institutional knowledge and expertise that USAID career employees provide, I fear that there will be a massive gap in meeting Ukraine’s immediate and long-term needs.”

USAID’s energy activities in Ukraine weren’t perfect. Some of the equipment it procured, including a 28-megawatt gas turbine, took much longer to set up than expected, or were missing necessary pieces to connect to Ukrainian power and gas networks. Some review of USAID’s energy programs is probably warranted. In the meantime, the immediate energy crisis is helped by the fact that this winter has been relatively warm so far, and air defense systems have worked mostly effectively. And there are still other groups ready to pick up some of USAID’s slack. EU energy donations are still coming through. The humanitarian group Hope for Ukraine is now stepping up its distribution of small household solar power kits for front-line towns, founder Yuriy Boyechko said. And Kaine is supporting a network of foreign investors that is planning to survey energy investment opportunities left open by the aid freeze, if they can get guarantees from other ally governments.

“There are private capital and banking firms with capital that’s committed to Ukraine now saying, ‘Hold on a second, if we’d have invested in that particular project, look how much money we’d now have to pay out to keep that project going without any USAID funding’,” he said. “But on the other hand if we can commit some amount of capital and get the UK or EU to underwrite it, we may be in a better position rather than being controlled by USAID.”