The U.S. State Department has terminated a major initiative by the U.S. Agency for International Development (USAID) that funneled hundreds of millions of dollars into restoring Ukraine’s energy grid, according to two USAID officials involved in the agency’s Ukraine mission. The decision comes as Ukraine continues to suffer relentless Russian attacks targeting its critical infrastructure.

Power outages have been reported overnight in multiple regions due to the continued strikes, with Ukraine’s energy system enduring near-constant damage throughout the three-year conflict.

Concerns Over U.S. Withdrawal

One USAID official, speaking to NBC News, warned that the move could weaken the U.S. administration’s negotiating power in ceasefire discussions while also sending a troubling message to Russia.

“It significantly undercuts this administration’s abilities to negotiate on the ceasefire, and it’d signal to Russia that we don’t care about Ukraine or our past investments,” the official stated.

The official further noted that Russia’s offensive is not only military but economic, aiming to cripple Ukraine’s economy. USAID has played a key role in mitigating these effects by supporting the energy grid and helping to stave off a broader economic crisis.

Drastic Downsizing of USAID Presence

In addition to terminating the Ukraine Energy Security Project, USAID is also significantly scaling back its personnel in the country. Previously, 64 American government employees and contractors were working on the ground in Ukraine, but after recent State Department directives, only eight will remain. The remaining USAID staff worldwide have been placed on administrative leave, with non-essential personnel ordered to return to the U.S.

Officials warn that USAID’s withdrawal leaves Ukraine’s energy grid highly vulnerable, particularly as winter approaches and the country faces intensified Russian missile strikes.

Financial Oversight at Risk

Beyond energy infrastructure, USAID also played a central role in ensuring that U.S. financial aid to Ukraine was used appropriately. According to an NBC News report, the State Department has also ordered the termination of a financial sector reform initiative, further limiting oversight.

“We won’t have the eyes on where this money has gone over the last few years,” one USAID official cautioned.

USAID’s Bureau for Europe and Eurasia, which oversees the Ukraine mission, is also undergoing a sharp reduction in staff. Of its 115 employees based in Washington, D.C., only 29 are expected to remain active.

The State Department has yet to issue an official response regarding the decision.