Multiple outlets reported on Thursday that the Trump administration plans to suspend most aid to a long-running United Nations program that supports Palestinian refugees, the latest in its efforts to exert leverage over Palestinian leadership on key elements of a Middle East peace process.
In 2016, the USA donated $355 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.
Since 2009, the annual contribution from the United States has ranged between $US233 million ($324 million) and almost $US400 million - about a quarter of the agency's budget.
But in January, the administration of President Donald Trump withheld more than half of its planned funding to Unrwa, saying it would keep back $65m unless the body carried out "reforms".
The US state department attacked the "fundamental business model and fiscal practices" of the UNRWA, and the "endlessly and exponentially expanding community of entitled beneficiaries".
UNRWA provides services to about 5 million Palestinian refugees.
The White House will make the announcement in a few weeks, according to the Post, eliminating for at least 90% of the people calling themselves "Palestinian refugees" their "right of return" to the homes their grandparents and great grandparents fled in 1948.
Dave Harden, a former US Agency for International Development official, told Foreign Policy that the decision to cut UNWRA funding could embolden Hamas.
He said "neither the United States nor else will be able to dissolve" UNRWA.
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The group, referring to the PA's "pay for slay" program, noted Congress adopted the Taylor Force Act, named after an American killed in Middle East terror, which prevents the US from funding the payments.
The Palestinian leadership has been openly hostile to any proposal from the administration, citing what it says is a pro-Israel bias, notably after Trump recognized Jerusalem as Israel's capital in December and moved the U.S. embassy there from Tel Aviv in May.
He welcomed increased and new donations from other members of the worldwide community which he said had gone some way to filling a funding gap created when the United States initially chose to reduce its contributions to UNRWA early this year.
Many Palestinians, however, say the United States is cutting the aid to pressure them into going along with the Trump administration's so-called "deal of the century" peace plan, and to strip the majority of Palestinians of their refugee status, erasing the issue of right of return altogether.
In a statement, it said the organisation was "irredeemably flawed".
"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 spokesman Nabil Abu Rdainah told Reuters.
In Gaza, the Islamist group Hamas also condemned the USA move as a "grave escalation against the Palestinian people".
Israeli Prime Minister Benjamin Netanyahu has previously called for Unrwa's funding to be cut gradually and its responsibilities transferred to the UN's global refugee agency, the UNHCR, arguing that it "perpetuates the Palestinian problem".