Palestinians reacted angrily Saturday to a U.S. decision to end all funding for the UN agency that assists millions of refugees, seeing it as a new policy shift aimed at undermining their cause.

Washington, which until last year was by far the biggest contributor to the UN Relief and Works Agency for Palestine Refugees (UNRWA), announced on Friday that it would no longer make any contributions to the “irredeemably flawed operation”.

“The administration has carefully reviewed the issue and determined that the United States will not make additional contributions to UNRWA (United Nations Relief and Works Agency),” State Department spokeswoman Heather Nauert said in a statement.

She said the agency’s “endlessly and exponentially expanding community of entitled beneficiaries is simply unsustainable and has been in crisis mode for many years”.

‘Already marginalised’

The move by President Donald Trump’s administration was described as “cruel and irresponsible” by senior Palestinian official Hanan Ashrawi.

“The Palestinian refugees are already the victims who have lost their homes, livelihoods and security as a result of the creation of the state of Israel,” she said.

The U.S. has backed Israel in accusing the agency of perpetuating the conflict by maintaining the idea that many Palestinians are refugees with a right to return to homes in what is now Israel. But to Palestinians, the right of return for the hundreds of thousands who fled or were expelled during the 1948 war that accompanied Israel’s creation is central to their cause.

Chief Palestinian negotiator Saeb Erekat said the American administration was invalidating future peace talks by “preempting, prejudging issues reserved for permanent status” negotiations. Palestinian and Israeli “elements that want to achieve peace peacefully, based on a two-state solution, are being destroyed,” he told AFP.

Mr. Trump had already angered Palestinians by his December recognition of the disputed city of Jerusalem as Israel’s capital and axing more than $200 million in bilateral aid for Gaza and the West Bank.

The new policy on Jerusalem overturned decades of precedent and prompted the Palestinian leadership to break off relations with the White House.

‘It promotes terrorism’

Palestinian presidential spokesman Nabil Abu Rudeina said Washington’s decision “promotes terrorism” and was a violation of UN resolutions.

UNRWA, which was established in 1949, was already facing a financial crisis after Trump announced a $300 million funding freeze in January.

The agency, which assists more than five million registered Palestinian refugees, says it now faces the threat of major closures to its network of schools and health centres.

Mahmoud Mubarak, director of the community-run committees that run the 19 refugee camps in the West Bank which accommodate some 5,00,000 Palestinians, warned of the “very serious repercussions” of the U.S. move. Mr. Mubarak said representatives of the committees would be meeting on Tuesday to discuss their options.

In the impoverished Gaza Strip, where most children attend UNRWA schools, 55-year-old Hisham Saqallah said the US move was “political blackmail” that would merely increase unrest.

$217 million shortfall

UNRWA spokesman Chris Gunness said the agency would try to make up a $217 million shortfall. “If not, some of the most marginalised and vulnerable people on the planet may well suffer,” he told AFP.

“People are going to become more desperate and marginalised,” he said, warning of “dramatic, widespread, profound and unpredictable” consequences.

Jordan, which is one of just two Arab countries to have signed a peace treaty with Israel, already announced plans to organise a fundraising conference on the sidelines of the UN General Assembly in New York next month.

State Department spokeswoman Nauert said the U.S. would “intensify dialogue with the United Nations, host governments and international stakeholders about new models and new approaches” for assisting needy Palestinians.

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