Khaled Mesmar, a Palestinian Authority official of the Political Committee of the Palestinian National Council, reported on Tuesday that the United States has “threatened” to cut all financial aid to the Palestinian Liberation Office in Washington if the Palestinian leadership continue to pursue its application for recognition at the United Nations.

Mesmar stated that the threat was issued officially by an American envoy which visited Ramallah recently and met with the Palestinian president Mahmoud Abbas, according to Washington Post.

Mesmar said that the Palestinian Authority would withhold its UN bid for statehood if Israel stopped building settlements and released the Palestinian prisoners that were detained before the Oslo’s agreement of the 1993, imemec reported.

Illegal settlements have been the major obstacle to all negotiations as Israel refused Palestinians’ demands to stop construction of the Jewish settlements in the West Bank and east Jerusalem despite settlements being illegal under the fourth Geneva convention and being in defiance of UN resolutions.

The US is demanding that the Palestinian Authority resumes talks without pre-conditions.

The United States immediately cut all financial contribution to UNESCO after the UN body voted to admit Palestine as its full member last October, which the Obama Administration termed as regrettable and premature.