U.S. halts funding to UN agency for Palestinian refugees

The United States on Friday halted all funding to a UN agency that helps Palestinian refugees in a move likely to further heighten tensions between the Palestinians and the Trump administration.

A spokesperson for Palestinian President Mahmoud Abbas denounced the decision as "a flagrant assault against the Palestinian people and a defiance of UN resolutions."

U.S. State Department spokesperson Heather Nauert said the business model and fiscal practices of the United Nations Relief and Works Agency (UNRWA) were an "irredeemably flawed operation."

"The administration has carefully reviewed the issue and determined that the United States will not make additional contributions to UNRWA," she said in a statement.

Nauert said the agency's "endlessly and exponentially expanding community of entitled beneficiaries is simply unsustainable and has been in crisis mode for many years."

Agency rejects criticism

The latest announcement comes a week after the administration said it would redirect $200 million US in Palestinian economic support funds for programs in the West Bank and Gaza.

The UNRWA said Friday it was disappointed and surprised by the U.S. decision.

"We reject in the strongest possible terms the criticism that UNRWA's schools, health centres and emergency assistance programs are 'irredeemably flawed,'" Chris Gunness, a spokesperson for the agency, said on Twitter.

UNRWA said it provides services to about five million Palestinian refugees in Jordan, Lebanon, Syria and the West Bank and Gaza. Most are descendants of people who fled or were forced out of the British Mandate of Palestine in the 1948 war that led to the creation of the state of Israel.

U.S. previously withheld funding

U.S. President Donald Trump and his aides say they want to improve the Palestinians' plight, as well as start negotiations on an Israeli-Palestinian peace agreement.

But under Trump, Washington has taken a number of actions that have alienated the Palestinians, including the recognition of Jerusalem as Israel's capital. That move — a reversal of longtime U.S. policy — led Palestinian leadership to boycott Washington's peace efforts.

The United States paid out $60 million to UNRWA in January but withheld another $65 million pending a review.

"Such a punishment will not succeed to change the fact that the United States no longer has a role in the region and that it is not a part of the solution," Abbas spokesperson Nabil Abu Rdainah told Reuters.

He said "neither the United States nor else will be able to dissolve" UNRWA.

In Gaza, the Islamist group Hamas also condemned the U.S move as a "grave escalation against the Palestinian people."

"The American decision aims to wipe out the right of return and is a grave U.S escalation against the Palestinian people," said Hamas spokesperson Sami Abu Zuhri.

Germany ups contributions

Abu Zuhri told Reuters the "U.S leadership has become an enemy of our people and of our nation and we will not surrender before such unjust decisions."

Earlier on Friday, German Foreign Minister Heiko Maas said Germany would increase its contributions to UNRWA because the funding crisis was fuelling uncertainty. "The loss of this organization could unleash an uncontrollable chain reaction," Maas said.

UNRWA has faced a cash crisis since the United States, long its biggest donor, slashed funding earlier this year, saying the agency needed to make unspecified reforms and calling on the Palestinians to renew peace talks with Israel.

The last peace talks collapsed in 2014, because of Israel's opposition to an attempted unity pact between the Fatah and Hamas Palestinian factions and as a result of Israeli settlement building on occupied lands that Palestinians seek for a state, among other factors.

Nauert said the United States would intensify talks with the United Nations, the region's governments and international stakeholders that could involve bilateral U.S. assistance for Palestinian children.

"We are very mindful of and deeply concerned regarding the impact upon innocent Palestinians, especially school children, of the failure of UNRWA and key members of the regional and international donor community to reform and reset the UNRWA way of doing business," she said.