Amid its deepening standoff with the Palestinians, the Trump administration is considering halting all of its financial aid to the UN’s Palestinian refugee agency UNRWA, and declaring that it rejects the UN criteria under which refugee status is extended to millions of descendants of the original Palestinian refugees, a TV news report said Tuesday.

Hadashot TV news said this “new ultimatum” under consideration by the Trump administration is one of the avenues being explored as the US seeks to press the Palestinian Authority into returning to peace talks with Israel.

The TV report said that State Department sources, asked for confirmation of the report, noted only that President Donald Trump said in Davos last week that all US aid to the Palestinians was under review and that no formal statements were yet being issued.

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Hadashot reported that the State Department, having already frozen some $100 million in UNRWA funding, was considering stopping all of its $360-million annual funding for the organization, and instead allocating it to other UN bodies that work with the Palestinians.

At the same time, it further reported that some in the administration and the State Department want to accompany that move with a formal declaration that the US rejects the mandate under which UNRWA operates — according to which Palestinian refugee status is transferred from generation to generation.

Of the hundreds of thousands of refugees who left or were forced out of Israel when the country was established, a figure estimated in the low tens of thousands are still believed to be alive. But their descendants, considered refugees under the unique designation afforded by the UN to Palestinians, number in the millions.

Israel has for years demanded that the UN change its designation of Palestinian refugees, and that it use the same criteria it applies for other refugee populations worldwide. Humanitarian assistance to other refugee groups is overseen by the UN High Commissioner for Refugees, which does not extend refugee status to descendants of original refugees.

The TV report quoted Israeli diplomatic sources who are aware of the new US thinking on the issue as saying that a Trump declaration rejecting the UN criteria for Palestinian refugees would represent “a tremendous victory” for Israeli diplomacy and a direct continuation of Trump’s December 6 declaration recognizing Jerusalem as the capital of Israel.

In previous rounds of negotiations, Palestinian leaders have sought a “right of return” to Israel for these millions. No Israeli government would ever be likely to accept this demand, since it would spell the end of Israel as a Jewish-majority state. Israel’s position is that Palestinian refugees and their descendants would become citizens of a Palestinian state at the culmination of the peace process, just as Jews who fled or were forced out of Middle Eastern countries by hostile governments became citizens of Israel.

Earlier Tuesday, the head of UNRWA indicated that he was aware of the US thinking. Pierre Krahenbuhl said the US decision to reduce funding for UNRWA “has a political dimension that I think should be avoided,” and claimed Washington would ultimately slash payments by $300 million, contributing just $60 million to the agency’s 2018 budget.

Krahenbuhl made the comments while issuing an emergency appeal for more than $800 million in funds to provide additional assistance to Palestinian refugees in Syria, Gaza and the West Bank.

Last Friday, Hadashot said Israel was hoping to see the US make plain that it rejects Palestinian demands for a “right of return” of millions of Palestinians to Israel.

Quoting what it said were diplomats who are following the process, Hadashot reported that now that Trump has declared Jerusalem to be Israel’s capital, and the Jerusalem issue to be “off the table,” the next step being sought is to remove the “right of return” from the list of final status issues to be resolved.

After that is done, the Friday TV report said, Trump will present the “proposal for peace” that he spoke of on Thursday — a proposal, the Hadashot TV reporter remarked, that might better be described “perhaps as the Netanyahu plan” since it is expected to meet many of the Israeli prime minister’s demands.

The Palestinian Authority has been boycotting the Trump administration since December 6, when Trump formally recognized Jerusalem as Israel’s capital and said he would move the US embassy to the holy city from Tel Aviv. In that address, the president said the boundaries of Israeli sovereignty in Jerusalem would still have to be negotiated by the two sides, and thereby did not negate Palestinian claims to East Jerusalem.

Sitting with Benjamin Netanyahu in Davos last Thursday, however, Trump said: “We took Jerusalem off the table, so we don’t have to talk about it anymore.” He added, turning to Netanyahu, “You won one point, and you’ll give up some other points later on in the negotiation.”

In his unscripted remarks to the press on Thursday, Trump said the US would no longer transfer monetary aid to the Palestinians unless they entered peace negotiations with Israel, and excoriated the Palestinian leadership’s reaction to his decision to recognize Jerusalem as Israel’s capital.

“That money is not going to them unless they sit down and negotiate peace, because I can tell you that Israel does want to make peace, and they’re going to have to want to make peace, too, or we’re going to have nothing to do with it any longer,” he said.

The US is also considering shutting down the offices of the Palestine Liberation Organization in Washington, the de facto embassy of the Palestinian Authority in the US, if Ramallah continues to refuse to take part in peace talks, Hadashot TV news reported Thursday.