The United States is by far the largest donor of financial aid to the Palestinians, with this assistance touching nearly every aspect of life in the Palestinian Authority. But US President Donald Trump threatened on Tuesday to end this aid to the Palestinians, angered by Ramallah’s refusal to cooperate with the US’s efforts to jump-start Israeli-Palestinian peace talks after he declared Jerusalem the capital of Israel in December.

The Palestinians want East Jerusalem to be the capital of their future state.

Trump tweeted on Tuesday that Washington was paying the PA hundreds of millions of dollars a year “for nothing,” and complained that the US received “no appreciation or respect” in return.

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Earlier on Tuesday, US Ambassador to the UN Nikki Haley threatened to cut off funding to the UN’s Palestinian refugee agency, UNRWA, if the Palestinians refused to engage in peace negotiations.

Should the threats of the president and Haley come to fruition, what kind of impact could this have on the Palestinians?

Three types of US assistance to the Palestinians

According to the US Consulate in Jerusalem’s website, the United States has been the largest donor of aid to the Palestinians since the signing of the Oslo Accords in 1994. This aid has totaled around $600 million annually in recent years, and can be roughly divided into three categories.

The first is USAID, the conduit by which the State Department provides aid to countries across the world. The second is the economic support for law and order in the Palestinian Authority. These two categories were perhaps the aid that Trump had in mind in his tweet, though the president did not specify. The third is the US support for the United Nations Relief and Works Agency, or UNRWA, as addressed by Haley.

Over 5 billion in USAID since 1994

Since 1994, Washington has provided the Palestinians with more than $5.2 billion through USAID. This money is used for developing and sustaining the Palestinian Authority, including support for debt relief (such as helping to pay the medical debts of Palestinians in Israeli or other foreign hospitals), sanitation, economic development in the public and private sectors, infrastructure development, education, governance, health and essential humanitarian assistance to the Gaza Strip.

The USAID money is also a lifeline for dozens of NGOs that work in the Palestinian territories on the grassroots level to support conflict mitigation and instill values of non-violence and peace-seeking.

Separate from this USAID money, which in 2016 equaled $290 million, the US also gives a large sum every year to support law and order.

This support, for which almost $55 million was budgeted in 2016, includes training and supplying equipment to the PA security forces and the police force, firefighter training, rehabilitating courtrooms and training judges as well as lawyers.

Israel sometimes works together with Palestinian security forces in order to foil terror plots against Israeli or Palestinian citizens.

US aid already threatened by Congress

Long before Trump thought about cutting aid to the Palestinians over their refusal to work with his administration in the peace process, Congress was already working to freeze assistance to the Palestinians until the PA discontinues its practice of paying monthly stipends to the families of terrorists who kill Israelis.

This legislation, known as the Taylor Force Act, after a former US army officer who was stabbed to death by a Palestinian assailant while visiting Tel Aviv in March 2016, was passed in early December by the US House of Representatives after the legislation went through a number of rounds of revision.

The legislation now needs to be passed by the Senate.

In its 2017 budget, Ramallah allocated nearly $345 million for the contentious stipends. In total, it expected $693 million in foreign assistance for the 2017 fiscal year.

While US aid, which is largely not transferred into the coffers of the PA directly but rather paid out to third parties, cannot be used for paying the families of terrorists, many argue the assistance simply frees up other funds in the Palestinian leadership’s budget to pay the stipends.

Back in July, a White House official told The Times of Israel the Trump administration “agrees with the high-level goals of the Taylor Force Act.”

UNRWA ‘indispensable’ to Palestinians

US assistance to UNRWA in recent years has been far greater than that contributed by any other country, and surpasses the hundreds of millions given to the Palestinians through USAID.

UNRWA often operates in the poorest Palestinian neighborhoods and refugee camps, providing education to hundreds of thousands of students.

The organization also provides essential humanitarian services, including running health clinics and women’s centers.

In 2016, the US pledged $355 million toward UNRWA’s operations. The second highest donor was the EU, pledging $160 million.

A large bulk of UNWRA’s work takes place in Palestinian refugee camps outside of the Palestinian territories, including in Jordan, Lebanon and Syria.

US donations to UNRWA have been declining in recent years. In 2015, the US gave $380.5 million to UNRWA and in 2014 gave $408 million to the UN refugee organization.

According to UNRWA, the agency educates half a million children in over 700 schools across the Middle East (270,00 of them in Gaza). The agency’s doctors see 11 million patients in nearly 150 primary health clinics annually. UNRWA also conducts vocational training, preparing 9,000 young people for job markets every year, according to the agency.

UNRWA, according to the agency, also assists more than 40,000 refugees with disabilities and runs recreational centers for 200,000 refugee youth and children. The agency employs over 30,000 teaching staff, doctors, nurses, social workers, sanitation laborers and engineers.

Chris Gunness, the spokesperson for UNRWA, told The Times of Israel on Wednesday, “We have no indication from the US administration of any intention to change funding for UNRWA.”

“UNRWA’s contribution to human development — notably through education and healthcare services — is described as indispensable to the dignity of Palestinian refugees and the stability of the region,” he added.

Peter Lerner, a recently retired spokesperson for the Israel Defense Forces, argued that cutting funding to UNRWA would only hurt the weakest in Palestinian society, leading to more terror and extremism.

“There are many problems with UNRWA, but cutting financial support to the organization hurts the weakest members of Palestinian society and is unlikely to bring the Palestinian Authority to the table,” Lerner wrote on his Twitter account.

“The refugee camps have historically been hotbeds for terrorist activities, weakening this population will only lead to more extremism and violence. This will not contribute to security or stability in the region,” he concluded.

‘Time has come to dismantle UNRWA’

Haley mentioned the possibility of cutting funding to UNRWA in an impromptu response Tuesday to a question from a Canadian journalist, who asked whether the US would retain its current level of funding for the UN agency in light of a non-binding UN General Assembly resolution last month condemning the US recognition of Jerusalem as Israel’s capital.

“[Trump] doesn’t want to give any additional funding until the Palestinians agree to come back to the negotiation table, and what we saw with the resolution was not helpful to the situation,” Haley said.

Haley seemed to be arguing that cutting UNRWA funding was aimed at dissuading the UN from foiling the US’s strategy for an Israeli-Palestinian peace plan.

Prime Minister Benjamin Netanyahu said that in his first meeting with Haley in June 2016, he asked her to “re-examine UNRWA’s continued existence.”

UNRWA was created in 1949 in the wake of Israel’s War of Independence.

Netanyahu, in statements last year to his cabinet, accused the organization of inciting against Israel while doing nothing to help the plight of Palestinian refugees. He asked why they needed a specific body, when the UN High Commission for Refugees has helped tens of millions of displaced persons since World War II.

“The time has come to dismantle UNRWA and have its parts be integrated into the UN High Commission for Refugees,” he said.

UNRWA has long been the target of heavy criticism for alleged anti-Israel rhetoric promoted at its schools and for turning a blind eye to terrorist activities taken place at its premises, including the storing of rockets and hosting of tunnels belonging to the Hamas terror group.

UNRWA has condemned the use of its premises by Hamas for military purposes.

Additionally, Israel has long claimed that some of UNRWA’s Palestinian employees support terrorist activities and use hate-speech online.

An official told The Times of Israel on Tuesday that the White House was indeed reconsidering the effectiveness of the UN agency.

“We continue to review the impact and effectiveness of UNRWA’s aid programs. This is prudent, and indeed, it is our duty to the American taxpayer,” the official said.

However, the official also praised UNRWA.

The US has “long supported UNRWA for its important and life-saving humanitarian work, and recognizes its role as a stabilizing force and a counterweight to violent extremism, which is essential for stability in the Middle East region,” the official said.

Times of Israel staff contributed to this report.