Israel supports 'gradual' US funding cut for Palestinian refugees

Israel supports US proposals to cut funding for Palestinian refugees but prefers it be carried out gradually over time, a senior Israeli official said on Saturday.

Last week 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.

The aid cuts include payments to the UN Relief and Works Agency (UNRWA), an agency set up in 1949 to provide for hundreds of thousands of Palestinians displaced during Israel's creation.

UNRWA provides education, health and other social services to around five million Palestinian refugees in Jordan, Lebanon, Syria, Gaza, and the West Bank.

"Prime Minister (Binyamin Netanyahu) supports a gradual cut to UNRWA," said the senior Israeli official speaking on condition of anonymity, Reuters reported.

Netanyahu's office said in a brief statement that the premier "supports President Trump's critical approach and believes that practical steps should be taken to change the situation in which UNRWA is perpetuating the Palestinian refugee problem rather than resolving it".

Palestinian officials have slammed Trump's threats to cut aid, labelling them as "blackmail".

"We are not against going back to negotiations, but (these should be) based on international laws and resolutions that have recognised an independent Palestinian state with east Jerusalem as its capital," Palestinian President Mahmoud Abbas' spokesman Nabil Abu Rudeina said last week.

The Axios news website reported on Friday that the United States had frozen $125 million in funding for UNRWA, but a State Department official said no decision had been made.

The United States is the largest donor to the agency, with a pledge of nearly $370 million as of 2016, according to UNRWA's website.

UNRWA supports much of the population in the Gaza Strip, the majority of who are registered as refugees.