US officials say only $60m of $125m for UN Relief and Works Agency likely as compromise between Mattis and Tillerson and hardline UN ambassador Haley

This article is more than 2 years old

This article is more than 2 years old

The Trump administration is preparing to withhold tens of millions of dollars from the United Nations agency for Palestinian refugees, cutting the year’s first contribution by more than half or perhaps entirely and making additional donations contingent on major changes to the organization, US officials said.

Donald Trump has not made a final decision but appears more likely to send only $60m of a planned $125m first installment to the UN Relief and Works Agency, said the officials, who were not authorized to publicly discuss the matter.

Future contributions would require the agency, which faces heavy criticism from Israel, to demonstrate significant changes in operations, the officials said, adding that one suggestion under consideration would require the Palestinians to re-enter peace talks with Israel.

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The state department said on Sunday that “the decision is under review. There are still deliberations taking place.”

The White House did not immediately respond to questions about the matter.

The administration could announce its decision as early as Tuesday, the officials said. The plan to withhold some money is backed by the secretary of state, Rex Tillerson, and defense secretary, James Mattis, who offered it as a compromise to demands for more drastic measures by the UN ambassador, Nikki Haley, the officials said.

Haley wants a complete cutoff in US money until the Palestinians resume peace talks that have been frozen for years. But Tillerson, Mattis and others say ending all assistance would exacerbate instability in the Middle East, notably in Jordan, a host to hundreds of thousands of Palestinian refugees and a crucial US strategic partner.

The US is the agency’s largest donor, supplying nearly 30% of its total budget. The agency focuses on providing healthcare, education and social services to Palestinians in the West Bank, Gaza Strip, Jordan, Syria and Lebanon.

Hundreds of thousands of Palestinians either fled or were forced from their homes during the war that led to the establishment of Israel in 1948. Today, there are an estimated 5 million refugees and their descendants, scattered across the region.

Eliminating or sharply reducing US aid could hamstring the UN agency, putting great pressure on Jordan and Lebanon as well as the Palestinian Authority. Gaza would be particularly hard hit. Some officials, including Israelis, warn that it might push people closer to the militant Hamas movement, which controls Gaza.

The US officials said any reduction in assistance could be accompanied by calls for European nations and others to help make up the shortfall.

The US donated $355m in 2016 and was set to make a similar contribution this year. But after a highly critical 2 January tweet from Trump on aid to the Palestinians, the state department opted to wait for a formal policy decision before sending any of the first $125m.

Facebook Twitter Pinterest In Istanbul, protests against the US recognition of Jerusalem as capital of Israel. Photograph: Erdem Sahin/EPA

Trump’s tweet expressed frustration over the lack of progress in his attempts to broker peace.

“We pay the Palestinians HUNDREDS OF MILLIONS OF DOLLARS a year and get no appreciation or respect,” he wrote. “But with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?”

Although Trump referred to all US assistance to the Palestinians, the contribution to the UN refugee agency would be the first to be affected.

Three days after the tweet, at a White House meeting on 5 January, senior national security officials try to find a way forward. Led by representatives from the state department and Pentagon, all but one of the members of the policy coordination committee agreed to continue the funding, officials said.

The lone holdout was Haley’s representative, who insisted Trump’s tweet had set the policy and the money must be cut off, the officials said. The meeting ended in a stalemate.

The Israeli prime minister, Benjamin Netanyahu, then weighed in, telling his cabinet he agreed with the critique of the agency, which he said perpetuates problems and should cease operating in the region.

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Netanyahu and other Israelis accuse it of allowing its facilities to be used by militants. They have also complained that some of its staff are biased against Israel.

Netanyahu suggested transferring the agency’s budget to the UN high commissioner for refugees, which aids refugee matters everywhere in the world. It was not immediately clear whether any withheld US assistance would be shifted.

Netanyahu’s position, coupled with Haley’s firm opposition, led Tillerson, with the support of Mattis, to propose the $60m compromise, the officials said.

Trump, who last year upset the Palestinians by recognizing Jerusalem as Israel’s capital and announcing plans to move the US embassy to the holy city, was said by one official to have expressed cautious backing of the compromise.