RAMALLAH, WEST BANK – Cuts in aid for Palestinians that the U.S. has announced will advance Israel’s interests but risk compromising a U.S.-led peace push and raise tensions in the Middle East, analysts and diplomats said Saturday.
The Trump administration said Friday it would no longer provide any funding to the United Nations agency for Palestinian refugees (UNRWA), a week after cutting over $200 million in separate aid to Palestinians.
They were the latest in a series of controversial moves by the Trump administration that have thrilled Israel’s government but caused shock and dismay among international powers and Palestinians, making their dream of an independent state more distant than ever.
The cuts come as the international community seeks to reach an agreement to deliver significant humanitarian aid to the poverty-stricken Gaza Strip, where most residents rely on external handouts.
The U.S. has long been the largest single donor to UNRWA, providing more than $350 million a year.
The agency provides support to Palestinians who fled their homes in the 1948 war surrounding the creation of Israel, as well as their descendants.
Israel and the U.S. object to the fact that Palestinians can pass refugee status to their children, and want the number of refugees covered by UNRWA to be sharply reduced.
The Palestinians accuse the U.S. of blatant bias and of seeking to strip them of their rights.
A week earlier, the U.S. government ended Palestinian funding by USAID, which amounted to more than $200 million a year.
In December, the U.S. recognized Jerusalem as Israel’s capital, breaking decades of international consensus that the status of the disputed city should be negotiated between Israelis and Palestinians.
The May opening of the U.S. embassy in the city triggered Palestinian protests that saw dozens of demonstrators in Gaza shot dead by Israeli forces.
A European diplomat said Saturday the U.S. moves, taken in conjunction with an American pledge to veto any motions criticizing Israel at the U.N. Security Council, were emboldening Israel’s government, considered the most right-wing in the country’s history.
Israel is increasingly convinced it has a free hand to accelerate settlement growth and even advocate for annexing parts of the West Bank, the diplomat said.
Alan Baker, a former Israeli diplomat-turned-analyst, said the government would be thrilled by the aid cuts.
“The UNRWA thing is very logical as it has become an anachronistic organization — maintaining the refugee status rather than trying to solve it.”
Baker said the aim of the cuts was also to force the Palestinians back to the negotiating table, though others said that was unlikely.
President Donald Trump’s team, led by his son-in-law Jared Kushner and Middle East envoy Jason Greenblatt, has been pushing for what the U.S. leader has called the “ultimate deal,” but the Palestinians have boycotted his administration since its Jerusalem announcement.
The cuts mean the U.S. is providing very little aid to Palestinians, and another European diplomat said the move weakened Trump’s hand.
“When you have no money left to threaten them with, you have reduced your leverage,” he said.
Palestinian economist Nasser Abdel Kareem said the cuts would hurt Palestinians but have little impact on the government.
Unlike some European states, the U.S. does not provide direct budgetary support to the Palestinian Authority.
The only part of U.S. funding that goes directly to the PA — for security coordination with Israel — was not cut.
The cut “will not harm the treasury of the Palestinian Authority,” Kareem said.
Nadia Hijab, president of the Palestinian think tank Al-Shabaka, said returning to negotiations would be extremely unpopular among Palestinians.
But she fears that with full U.S. support, Israel will have free reign to increase settlement growth.
“If the PA goes back and talks to the Americans it is giving them a green light to do whatever they want to do, and if they don’t go back, they are going to do what they want to do,” she said.
“At the moment it is a lose-lose situation.”
Hugh Lovatt, of the European Council on Foreign Relations, agreed.
“If anything, the Palestinians will now double down on their current approach, which is to boycott the U.S. administration and attack the yet-to-be unveiled U.S. peace plan,” he said.
Hijab and many Palestinians do not believe the U.S. is seeking to get the Palestinian leadership back to the table.
Instead, she said, they believe the U.S. is trying to help Israel “end the conflict on its terms and legalize its occupation.”
That would mean stripping refugees across the region of their rights, specifically the idea they could one day return to historic Palestine.
In both Jordan and Lebanon, Palestinian refugees have fewer rights than citizens and rely on UNRWA services for education, health care and other basic services.
In Gaza, run by the Islamist movement Hamas, the majority of the 2 million residents are refugees, meaning the UNRWA cuts will hit particularly hard.
Job losses for a few hundred of the agency’s staff have already sparked major protests.
The Gaza Strip suffers from desperate poverty and is largely sealed off by both Israel and its other land neighbor, Egypt.
Hamas and Israel have fought three wars since 2008.
Some in the Israeli security services quietly express concern that immediate cuts to UNRWA could increase tensions with Israel in Gaza and the West Bank.