At USAID, Funding for Terror-Tied Groups and Internal Hostility Toward Israel Goes Back Years

As the Trump administration works to shutter the United States Agency for International Development (USAID), current and former U.S. officials who worked closely with the embattled aid group say they watched for years as it funneled millions of dollars to anti-Israel advocacy groups and entities linked to terrorism.

That funding caused internal friction across multiple administrations, according to those who spoke with the Washington Free Beacon. In some cases, USAID fought to conceal how taxpayer funds were spent. And when it came to Israel, officials recalled battling USAID over funding for groups that worked to undermine the Jewish state or maintained ties to terror organizations.

"For those who believe in a strong U.S.-Israel relationship, elements of USAID have been problematic for years," said one former State Department official who worked with USAID during the Biden administration. "There was even a lack of embarrassment among some USAID staffers about being associated with terrorist organizations."

Some of the terror-tied funding initiatives are publicly known. In November 2022, for instance, USAID awarded $100,000 to a Palestinian activist group whose leaders hailed the Popular Front for the Liberation of Palestine, a designated terror group. Just six days before Hamas's Oct. 7 assault on Israel, USAID handed $900,000 "to a terror charity in Gaza involved with the son of Hamas leader Ismail Haniyeh."

USAID's hostilities toward the Jewish state, however, ran deeper than the agency's grantmaking.

Under Samantha Power, former president Joe Biden's pick to run USAID, agency officials fought pro-Israel policymaking at the State Department, often urging their colleagues at Foggy Bottom to pare down statements that praised the Jewish state, former officials said. In 2021, during a period of conflict with Hamas, Power herself refused to meet with Israel's ambassador unless Israel reached a ceasefire with the Iran-backed terror group. The decision put Power at odds with the White House National Security Council, which had signed off on the meeting, emails obtained by the Free Beacon show.

Years later, in September, Power's USAID accused Israel of deliberately blocking Gazan aid deliveries, which Hamas is known to steal for its own use and for black market sales that fund its terror activities. USAID staffers went as far as to urge the Biden State Department to end military aid to Israel. Former secretary of state Antony Blinken rejected the request.

"They weren't even in line with some of the Biden administration's policies," the State Department official who worked under Biden and Blinken told the Free Beacon. "It's more than just problematic grants to anti-Israel organizations. It's also their role in the internal approval processes and statements within the administration. There's an entire bureaucratic process they're a part of. They carry out their obstructionist ideology on that front as well."

The rogue nature of USAID under Power has motivated the Trump administration's push to dismantle the agency. During his recent trip to El Salvador, Secretary of State Marco Rubio described a longstanding "frustration" with the agency, which he called "completely unresponsive." The "level of insubordination," Rubio said, "makes it impossible to conduct a sort of mature and serious review that I think foreign aid writ large should have."

Federal investigations lend credence to that assessment. A January memo from inspector general Paul Martin, for example, noted that the agency "does not maintain a comprehensive internal database of subawardees." In other words, the foreign entities that work with a primary grantee on a USAID project often go unreported, impeding the ability of agency investigators to vet "fraud allegations," according to the memo.

Such allegations often include the diversion of taxpayer-funded aid to terrorist organizations. In a November report, for example, Martin "identified deliberate interference and efforts to divert humanitarian assistance" by foreign terrorist organizations, including "systemic coercion of aid workers by FTOs" and "FTO influence over beneficiary selection."

Those diversion efforts are particularly pronounced in Hamas-controlled Gaza. 

A February report from the Middle East Forum think tank found that USAID had awarded "millions of federal dollars" to "organizations directly in Gaza controlled by Hamas." In one Biden-era case, USAID funded an "educational and community center in Gaza" controlled by a local group called the Unlimited Friends Association. The association openly collaborated with Hamas, inviting the terror group's officials to its office and boasting of U.S.-funded projects in Hamas-controlled newspapers. In 2021, its director called for Jerusalem to be cleansed "from the impurity of the Jews."

A separate report, released in January by Israeli research organization NGO Monitor, outlined millions in USAID funding for two nonprofits—Mercy Corps and American Near East Refugee Aid—that "have closely coordinated with a Gaza-based ministry, run by a senior Hamas official identified by the U.S. Treasury Department as previously responsible for part of Hamas’ smuggling operation."

When it resumed funding for the Palestinians in 2021, the Biden State Department issued an internal warning that there was a "high risk" Hamas would steal U.S. aid. But information about terror-tied grant recipients in Gaza and elsewhere came mostly from watchdog groups. When members of Congress pressed USAID on those grants, they were often obstructed.

In a letter sent to Rubio last week, Sen. Joni Ernst (R., Iowa) detailed USAID's "willful sabotage of congressional oversight." The agency, she wrote, falsely claimed that certain grants were classified in a "desperate attempt to limit congressional oversight of public information." 

Sen. Ted Cruz (R., Texas) described similar interactions with USAID staffers. In some cases, he told the Free Beacon, USAID "refused to disclose what groups were getting money and gave tens of millions in American cash to be distributed without American supervision."

"Before and after Oct. 7, USAID flowed uncountable hundreds of millions of dollars toward Hamas that enabled it to launch the attack and keep battling Israel afterwards," Cruz said. "The full story of USAID funding Hamas is vast and much of it was done in secret."

U.S. officials involved in foreign policy emphasized in interviews with the Free Beacon that, despite its many issues, USAID does fund essential work providing medicine and other lifesaving aid. Rubio has made similar statements, expressing his desire to continue funding programs "providing food or medicine or anything that is saving lives and is immediate and urgent." 

Over time, however, "more and more money flowed to groups and organizations whose work is contrary to the interests of the United States," one official who has worked closely with USAID across multiple administrations told the Free Beacon. "How bad it got is finally coming to light and there is finally transparency."

The Trump administration plans to scale back the agency by dissolving it and placing its core functions within the State Department, where roughly 600 current USAID staffers would work. The agency employed some 10,000 staffers when President Donald Trump took office last month.

The overwhelming majority of those staffers were set to go on leave by midnight Saturday. A federal judge blocked the action until Feb. 14, though the decision is temporary and the case is expected to go to the Supreme Court. Democratic lawmakers have vehemently opposed the cuts, arguing that they endanger millions of vulnerable people across the globe.

"People can quibble about this or that," the current U.S. official said of the Democratic attention surrounding USAID. "But let's not make the perfect the enemy of the good. This is long overdue."

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