The U.S. more than halved funding to the U.N. agency for Palestinian refugees on Tuesday, sparking outcry from Palestinian aid organizations and global human rights activists.

After threatening to pull all of its funding, the Trump administration announced it would deliver only $60 million of the scheduled $125 million aid installment to the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA), withholding the remaining $65 million for “future consideration.”

The cuts come at a time of deteriorating diplomatic relations between Washington and Palestinian leadership, and is viewed as a bid to rein in Palestinian Authority President Mahmoud Abbas, who has been a vocal critic of Trump’s peace efforts in recent weeks.

Abbas ratcheted up his criticism of the U.S. and Israel after Trump’s decision to upend decades of foreign policy precedent by officially recognizing Jerusalem as Israel’s capital. On Sunday, Abbas called Trump’s involvement in Middle East peace efforts the “slap of the century,” and said he would reject any peace plan from the U.S.

The Palestinian Liberation Organization released a statement on Twitter Tuesday saying the Trump administration’s decision to cut funds was “targeting the most vulnerable segment of the Palestinian people and depriving the refugees of the right to education, health, shelter and a dignified life.”

The decision will “generate further instability throughout the region,” the statement added.

Leading human rights groups also weighed in.

“It is vindictive for the US government to deprive the UN of money to feed and educate Palestinian children in order to blackmail the Palestinian Authority into rejoining Trump administration-led peace negotiations,” said Kenneth Roth, the executive director of Human Rights Watch.

The U.S. funds about a third of the UNRWA’s total budget, which provides critical services in war-torn Gaza where two million people rely on the agency’s services and the poverty rate is 38.8 percent, according to the Palestine Central Bureau of Statistics.