Having survived the recent cabinet reshuffle the international development secretary, Penny Mordaunt, is confronted with the biggest headache of her short ministerial career: the fallout of the US intention to cut funding to UNRWA, which constitutes one of the most serious challenges to UK policies in the Middle East.

Donald Trump’s threat to cut financial assistance to the UN agency specifically responsible for Palestinian refugees will be a disaster not only for the refugees but also for Israel and neighbouring countries. It does not advance US interests either. Provoked by the Palestinian rejection of Trump’s decision to recognise Jerusalem as the capital of the state of Israel, it takes the notion cutting off one’s nose to spite one’s face to a completely new diplomatic level. Although a final decision by the US is still pending, the loss of the regular subvention of $350m for UNRWA would be catastrophic for the region, with immense military and strategic implications for the US and its allies, including the UK.

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If UNRWA were defunded by the US in this dramatic, sudden, and unplanned way, it would be forced to suspend within a few months most of its services to nearly 5 million Palestinian refugees. Half a million children in the Gaza Strip, West Bank, Jordan, Syria and Lebanon would be without schools, consigning them to the already volatile streets at a time when extremists are in full recruitment mode.

While cuts in education may be the most immediate and dramatic, the losses would not stop there. Nine million health consultations which UNRWA doctors provide each year would cease, 1.7 million refugees who lack basic needs would be without food and cash assistance and 40,000 refugees with disabilities would be without support. Further, UNRWA recreational activities for 200,000 children would cease and the 38,000 microfinance clients working to provide an independent livelihood for their families would be without loans. On top of this, 30,000 teaching staff, doctors, nurses, social workers, sanitation labourers and engineers employed by UNRWA would be out of a job.

Has the US, and Israel for that matter, thought this through? Do they really want 270,000 children in Gaza attending Hamas-run schools? Does Washington really know what it is doing?

The impact of all these cuts on the political stability in the Middle East is incalculable. Such a move would produce instability affecting some of the key strategic allies of the US, the EU and the UK in the Middle East. Jordan, for instance, has been touted as a beacon of stability in a region that is still reeling from the convulsions of the Arab spring, the Syrian civil war and the Saudi Arabian-Iranian proxy wars.

Yet Jordan is host to 2 million Palestinian refugees registered with UNRWA. It would be unable to cope with replacing the services provided by UNRWA, with the result that its already high unemployment rate would rocket, poverty – already widespread – would accelerate and, with school-age children on the streets, protests would inevitably ensue, threatening the viability of the government. In 2015, when UNRWA suffered a budget shortfall, King Abdullah of Jordan made it clear to the US what the impact on the future of the Jordanian regime would be if the shortfall was not met. Compared with what is envisaged by the proposed US action today, that shortfall was minor. The costs of the major cuts envisaged by the US, if enacted, are likely to be terminal for the Jordanian state, with serious knock-on effects in the region.

Similar scenarios play out in other countries where UNRWA has responsibilities. In the occupied Palestinian territories of the West Bank, East Jerusalem and the Gaza Strip, which are controlled by Israel to differing degrees, there are nearly 3 million Palestinian refugees.

In Syria, UNRWA serves about half a million Palestinian refugees, despite the civil war and under dangerous conditions. Without UNRWA assistance, they will be easy prey for Isis, al-Qaida and other extremist groups. It is clear from the muted reaction from Israel and the high-level representations from Jordan and Egypt that they are very concerned about these scenarios and are signalling for a pause. The US should not dismiss their views. At a time of growing radicalisms and anti-American sentiment, it needs these allies as never before.

The UK’s long-term investment in the human capital of UNRWA are seriously under threat by these actions

There are also long-term costs. Apart from such a decision further sidelining the US from resolution of the Palestinian-Israeli conflict and thus lessening its ability to influence the shape of the outcome, one lesson learned from the Middle East since 9/11 is that tearing down institutions is easy. Rebuilding them is exponentially more costly in terms of lives and money.

Once the human capital of teachers, doctors, accountants, administrators, social workers and lawyers accumulated over decades is dispersed or degraded, it will take years to marshal the skills and expertise again to run societies and communities. The Department for International Development (DfID) knows this well and has heavily invested in capacity-building programmes across the region. In this context, the cost of US investment in human development and stability through UNRWA pales into insignificance compared with the cost of the alternatives: political collapse, failed states, mass migration and the opening of battlefronts.

The UK has had a long relationship with UNRWA through DfID. Over the years it has subjected the programmes of the agency to rigorous scrutiny and criticism, spearheading greater transparency, accountability and internal management reforms. Yet at the same time, the UK is still one of its strongest supporters, providing the third largest amount of financial assistance to UNRWA’s core programmes after the EU and the US. And for all its faults, UNRWA has received plaudits for good governance in a region where that is sorely lacking.

The UK’s own interests in the region and its long-term investment in the human capital of UNRWA are seriously under threat by these actions by President Trump, and it needs to use its special relationship to prevent the defunding of UNRWA going ahead.

• Mick Dumper is professor of Middle East politics at Exeter University