The US is cutting $65 million in funding for the UN agency for Palestinian refugees, slashing this year's first contribution by more than half, a State Department official announced Tuesday.

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While saying the decision would sustain schools and health services, State Department spokeswoman Heather Nauert echoed President Donald Trump in calling on other nations to provide more funds because he believes the US pays more than its share.

The decision to keep back some money is likely to compound the difficulty of reviving Israeli-Palestinian peace talks and to further undermine Arab faith that the US can act as an impartial arbitrator, particularly following Trump's December 6 announcement reversing decades of US policy and recognising Jerusalem as Israel's capital.

UNRWA has provided healthcare, emergency aid and schooling to Palestinians in the Israeli-occupied West Bank, as well as Gaza and neighbouring Arab countries, since 1950.

The United States has long been its biggest donor, with large voluntary payments topping up the budget that UN member states provide for the frontline agency.

UN chief ‘very concerned’

United Nations Secretary-General Antonio Guterres said he was unaware of any cut in aid but he was "very concerned" about the possibility.

"I strongly hope that in the end, it will be possible for the United States to maintain the funding of UNRWA," he said.

"UNRWA is not a Palestinian institution but a UN institution," he said, dubbing the agency "an important factor of stability" in the Middle East.

Guterres told reporters that the services provided by UNRWA were "of extreme importance, not only for the well-being of these populations ... but also in my opinion and an opinion that is shared by most international observers, including some Israeli ones, it is an important factor of stability”.

"So if UNRWA will not be in a position to provide the vital services and the emergency forms of support that UNRWA has been providing, this will create a very, very serious problem and we will do everything we can to avoid this situation," he said.

Palestinian officials were quick to condemn the move. "This decision confirms the US administration is continuing in wiping out the rights of the Palestinian people. First was declaring Jerusalem as the capital of Israel and today, the refugee issue," Palestine Liberation Organisation official Wasel Abu Youssef told Reuters.

Israel's ambassador to the UN, Danny Danon, praised the move, arguing that UNRWA misuses humanitarian aid to support propaganda against the Jewish state and perpetuate the Palestinians' plight.

Trump demands burden sharing

The US donated $355 million to UNWRA in 2016 and was set to make a similar contribution this year; the first installment was to have been sent this month. But after a highly critical January 2 tweet from Trump on aid to the Palestinians, the State Department opted to wait for a formal policy decision before sending its first installment.

Trump's tweet expressed frustration over the lack of progress in his attempts to broker peace between Israel and the Palestinians, and he pointed the finger at the Palestinians. "We pay the Palestinians HUNDREDS OF MILLIONS OF DOLLARS a year and get no appreciation or respect," he said. "But with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?"

While US officials did not link the State Department decision to Trump's tweet, they made a point often advanced by the president by saying the US had been UNRWA’s single largest donor for decades and demanded other nations do more.

"The United States government and the Trump administration believes there should be more burden sharing going around," spokeswoman Nauert said.

Trump’s aides initially debated whether to cut off all UNRWA aid after the tweet, a second US official said. But those opposed to the idea argued that it could further destabilise the region, the official added.

(FRANCE 24 with AFP, AP and REUTERS)

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