UN Palestinian agency sees 'most severe' crisis ever after US freeze

"The US has announced it will contribute $60 million to the programme budget. There is for the moment no other indication of possible funding," UNRWA spokesman Chris Gunness said.

"This dramatically reduced contribution results in the most severe funding crisis in the history of the agency."​

The Palestine Liberation Organisation (PLO) warned on Tuesday that Washington’s decision to cut funds to UNRWA could affect the most vulnerable Palestinian refugees.

"The US Administration seems to be following (Israeli Prime Minister Binyamin) Netanyahu’s instructions to gradually dismantle the one agency that was established by the international community to protect the rights of the Palestinian refugees and provide them with essential services," said Hanan Ashrawi, member of the PLO Executive Committee.

"This administration is thereby targeting the most vulnerable segment of the Palestinian people and depriving the refugees of the right to education, health, shelter and a dignified life," she said in a statement.

Cutting funds to UNRWA will achieve nothing except push millions of Palestinians further into poverty and despair, taking food from their tables, the roofs above their heads, and the schools they send their children to

The Norwegian Refugee Council last week warned that Palestinians would be victim to the same fate.

NRC Secretary General Jan Egeland warned that the most vulnerable Palestinians, including those in refugee camps across the region, will be at most risk because of US threats to cut aid to the Palestinian refugee agency.

"Threatening to cut aid for political purposes to millions of civilians who need it is what we've come to expect of undemocratic regimes, not the world's biggest humanitarian donor," Egeland said in a statement on Wednesday. 

"Cutting funds to UNRWA will achieve nothing except push millions of Palestinians further into poverty and despair, taking food from their tables, the roofs above their heads, and the schools they send their children to," he warned.

Earlier this month, US President Donald Trump admitted the Middle East peace process was in difficulty and threatened to cut US aid to Palestinians, currently worth more than $300 million a year.

Trump's move has been welcomed by Tel Aviv.

UNRWA runs hundreds of schools for Palestinian refugees in the Gaza Strip, the occupied West Bank, Israeli-annexed east Jerusalem, Lebanon, Jordan and Syria.

It also distributes aid and provides teacher training centres, health clinics and social services.

Many analysts, including Israelis, warn that closing the agency without having an effective replacement could lead to further poverty and perhaps violence.

Agencies contributed to this report