The United States is ending its decades of funding for the UN agency that helps Palestinian refugees, the State Department has announced.
The move comes a week after the country slashed bilateral aid for projects in the West Bank and Gaza.
The US supplies nearly 30% of the total budget of the UN Relief and Works Agency, or UNRWA, and had been demanding reforms in the way it is run.
The State Department said in a written statement that the United States “will no longer commit further funding to this irredeemably flawed operation”, cutting nearly 300 million dollars (£230 million) of planned support.
UNRWA said it rejected “in the strongest possible terms” the Trump administration’s criticism of the agency and expressing “deep regret and disappointment”.
The US decision comes as president Donald Trump and his Middle East pointmen, Jared Kushner and Jason Greenblatt, prepare for the rollout of a much-vaunted but as yet unclear peace plan for Israel and the Palestinians, and it could intensify Palestinian suspicions that Washington is using the humanitarian funding as leverage.
The Palestinian leadership has been openly hostile to any proposal from the administration, citing what it says is a pro-Israel bias, notably after Mr Trump recognised Jerusalem as Israel’s capital in December and moved the American embassy there from Tel Aviv in May.
The Palestinian Authority broke off contact with the US after the Jerusalem announcement.
In 2016, the US donated 355 million dollars (£275 million) to the UNRWA, which provides health care, education and social services to Palestinians in the West Bank, Gaza Strip, Jordan, Syria and Lebanon, and it was set to make a similar contribution this year.
In January the Trump administration released 60 million dollars (£45 million) in funds but withheld a further 65 million dollars (£50 million) it had been due to provide. The remaining amount had yet to be allocated.
“When we made a US contribution of 60 million dollars in January, we made it clear that the United States was no longer willing to shoulder the very disproportionate share of the burden of UNRWA’s costs that we had assumed for many years,” the statement said.
“Several countries, including Jordan, Egypt, Sweden, Qatar, and the United Arab Emirates have shown leadership in addressing this problem, but the overall international response has not been sufficient.”
The statement criticised the “fundamental business model and fiscal practices” of UNRWA, and what the department characterised as the “endlessly and exponentially expanding community of entitled beneficiaries”.
UNRWA responded by stating that its “programs have a proven track record in creating one of the most successful human development processes… in the Middle East.”
UNRWA added that it has been recognised by the World Bank “for running one of the most effective school systems in the region,” according to a statement released by the agency.
A spokesman for UN Secretary General Antonio Guterres’ office released a statement late on Friday regretting the Trump administration’s decision to cut UNRWA funding, saying the UN has appreciated years of US support for the agency.
“UNRWA has a strong record of providing high-quality education, health and other essential services, often in extremely difficult circumstances, to Palestine refugees who are in great need,” the statement added.
Hundreds of thousands of Palestinians fled or were forced from their homes during the war that led to Israel’s establishment in 1948. Today, there are an estimated five million refugees and their descendants, mostly scattered across the region – a figure that has become a point of contention.
Palestinian leaders assert the right of those refugees to return to land now under Israeli control.
Labour leader Jeremy Corbyn took to Twitter to criticise the decision, saying it was: “Shameful for the US to end its funding for UNRWA, a vital UN refugee agency. The UK must help to fill the gap by boosting its contributions. Support for Palestinian refugees is a vital commitment until there is a just and viable settlement of the Israel-Palestine conflict.”