US to withhold $65 million from UN Palestinian refugee agency

The US paid $60 million to the UN's agency for Palestinian refugees but said it was withhholding $65 million more, telling other countries to make up the shortfall.

The US held back on half of the voluntary payment it was due to pay the UN Relief and Works Agency (UNRWA) in the latest flare-up between President Donald Trump's administration and the Palestinian Authority.

"There is a need to undertake a fundamental re-examination of UNRWA, both in the way it operates and the way it is funded," a State Department official told AFP.

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

It has been in operation since 1950 when millions of Palestinians fled their homes after the creation of Israel in 1948. Millions more fled when Israel invaded and occupied the West Bank.

Despite the US' close relationship with Israel, it has also been the UNRWA's biggest donor.

But with President Donald Trump now in the White House that looks about to change. 

His administration has been heaping pressure on the Palestinian leadership to hold talks with Israel.

The official told AFP the decision to withhold some funds was meant to encourage more "burden-sharing" by other members.

"The United States has been UNRWA's single largest donor for decades. In years past, we contributed some 30 percent of UNRWA's total income," he said.

"Without the funds we are providing today, UNRWA operations were at risk of running out of funds and closing down.

"The funds provided by the United States will prevent that from happening for the immediate future."

UN Secretary-General Antonio Guterres said he has not been informed of the decision by the US to withhold funds, but was "very concerned" by the reports.

"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.

Saudi Arabia is the biggest contributor of Arab states to the agency, giving around $22 million to the UNRWA each year.