WASHINGTON: The Trump administration is preparing to withhold tens of millions of dollars from the UN agency for Palestinian refugees, cutting the year’s first contribution by more than half or perhaps entirely, and making additional donations contingent on major changes to the organization, according to US officials.
President Donald Trump hasn’t made a final decision, but appears more likely to send only $60 million of the planned $125 million first installment to the UN Relief and Works Agency, said the officials, who weren’t authorized to publicly discuss the matter and spoke on condition of anonymity.
Future contributions would require the agency, facing heavy Israeli criticism, to demonstrate significant changes in operations, they said, adding that one suggestion under consideration would require the Palestinians to first re-enter peace talks with Israel.
The State Department said Sunday that “the decision is under review. There are still deliberations taking place.” The White House did not immediately respond to questions about the matter.
The administration could announce its decision as early as Tuesday, the officials said. The plan to withhold some of the money is backed by Secretary of State Rex Tillerson and Defense Secretary James Mattis, who offered it as a compromise to demands for more drastic measures by UN Ambassador Nikki Haley, the officials said.
Haley wants a complete cutoff in US money until the Palestinians resume peace talks with Israel that have been frozen for years. But Tillerson, Mattis and others say ending all assistance would exacerbate instability in the Mideast, notably in Jordan, a host to hundreds of thousands of Palestinian refugees and a crucial US strategic partner.
In another sign of the growing tensions, Palestinian President Mahmoud Abbas railed at Trump in a fiery, two-hour-long speech on Sunday, saying “shame on you” for his treatment of the Palestinians and warning that he would have no problem rejecting what he suggested would be an unacceptable peace plan. The speech by Abbas ratcheted up what has been more than a month of harsh rhetoric toward Trump since the president’s recognition of Jerusalem as Israel’s capital
The US is the UN agency’s largest donor, supplying nearly 30 percent of its total budget. The agency focuses on providing health care, education and social services to Palestinians in the West Bank, Gaza Strip, Jordan, Syria and Lebanon.
Hundreds of thousands of Palestinians either fled or were forced from their homes during the war that led to Israel’s establishment in 1948. Today, there are an estimated 5 million refugees and their descendants, mostly scattered across the region.
Eliminating or sharply reducing the US contribution could hamstring the agency and severely curtail its work, putting great pressure on Jordan and Lebanon as well as the Palestinian Authority. Gaza would be particularly hard hit. Some officials, including Israelis, warn that it might push people closer to the militant Hamas movement, which controls Gaza.
The US officials said any reduction in American assistance could be accompanied by calls for European nations and others to help make up the shortfall.
The US donated $355 million in 2016 and was set to make a similar contribution this year; the first installment was to have sent this month.
But after a highly critical Jan. 2 tweet from Trump on aid to the Palestinians, the State Department opted to wait for a formal policy decision before sending any of the $125 million.
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?“
Although Trump referred to all US assistance to the Palestinians, the contribution to refugee agency would be the first to be affected.
Three days after the tweet, at a Jan. 5 White House meeting, senior national security officials try to find a way forward. Led by representatives from the State Department and Pentagon, all but one of the members of the “Policy Coordination Committee” agreed to continue the funding, officials said.
The lone holdout was Haley’s representative, who insisted that Trump’s tweet had set the policy and the money must be cut off, the officials said.
The meeting ended in a stalemate.
Israeli Prime Minister Benjamin Netanyahu then weighed in, telling his Cabinet that he agreed with the critique of the agency. He said the agency only perpetuates problems and should cease operating in the region. Netanyahu and other Israelis accuse it of contributing to Palestinian militancy and allowing its facilities to be used by militants. They have also complained that some of its staff are biased against Israel.
Netanyahu suggested transferring the agency’s budget to the UN High Commissioner for Refugees, which aids refugee matters everywhere in the world. It was not immediately clear whether any withheld US assistance would be shifted.
Netanyahu’s position, coupled with Haley’s firm opposition to the funding, led Tillerson, with the support of Mattis, to propose the $60 million compromise, the officials said.
Trump, whose recognition last year of Jerusalem as Israel’s capital and announcement of plans to move the US Embassy to the holy city had upset the Palestinians, was said by one official to have expressed cautious backing of the compromise.
US set to cut UN money for Palestinian refugees
US set to cut UN money for Palestinian refugees
Israel’s settler movement takes victory lap as a sparse outpost becomes a settlement within a month
- Smotrich, who has been in charge of Israeli settlement policy for the past three years, has overseen an aggressive construction and expansion binge aimed at dismantling any remaining hopes of establishing a Palestinian state in the occupied West Bank
YATZIV SETTLEMENT, West Bank: Celebratory music blasting from loudspeakers mixed with the sounds of construction, almost drowning out calls to prayer from a mosque in the Palestinian town across this West Bank valley.
Orthodox Jewish women in colorful head coverings, with babies on their hips, shared platters of fresh vegetables as soldiers encircled the hilltop, keeping guard.
The scene Monday reflected the culmination of Israeli settlers’ long campaign to turn this site, overlooking the Palestinian town of Beit Sahour, into a settlement. Over the years, they fended off plans to build a hospital for Palestinian children on the land, always holding tight to the hope the land would one day become theirs.
That moment is now, they say.
Smotrich goes on settlement spree
After two decades of efforts, it took just a month for their new settlement, called “Yatziv,” to go from an unauthorized outpost of a few mobile homes to a fully recognized settlement. Fittingly, the new settlement’s name means “stable” in Hebrew.
“We are standing stable here in Israel,” Finance Minister and settler leader Bezalel Smotrich told The Associated Press at Monday’s inauguration ceremony. “We’re going to be here forever. We will never establish a Palestinian state here.”
With leaders like Smotrich holding key positions in Israel’s government and establishing close ties with the Trump administration, settlers are feeling the wind at their backs.
Smotrich, who has been in charge of Israeli settlement policy for the past three years, has overseen an aggressive construction and expansion binge aimed at dismantling any remaining hopes of establishing a Palestinian state in the occupied West Bank.
While most of the world considers the settlements illegal, their impact on the ground is clear, with Palestinians saying the ever-expanding construction hems them in and makes it nearly impossible to establish a viable independent state. The Palestinians seek the West Bank, captured by Israel in 1967, as part of a future state.
With Netanyahu and Trump, settlers feel emboldened
Settlers had long set their sights on the hilltop, thanks to its position in a line of settlements surrounding Jerusalem and because they said it was significant to Jewish history. But they put up the boxy prefab homes in November because days earlier, Palestinian attackers had stabbed an Israeli to death at a nearby junction.
The attack created an impetus to justify the settlement, the local settlement council chair, Yaron Rosenthal, told AP. With the election of Israel’s far-right government in late 2022, Trump’s return to office last year and the November attack, conditions were ripe for settlers to make their move, Rosenthal said.
“We understood that there was an opportunity,” he said. “But we didn’t know it would happen so quickly.”
“Now there is the right political constellation for this to happen.”
Smotrich announced approval of the outpost, along with 18 others, on Dec. 21. That capped 20 years of effort, said Nadia Matar, a settler activist.
“Shdema was nearly lost to us,” said Matar, using the name of an Israeli military base at the site. “What prevented that outcome was perseverance.”
Back in 2006, settlers were infuriated upon hearing that Israel’s government was in talks with the US to build a Palestinian children’s hospital on the land, said Hagit Ofran, a director at Peace Now, an anti-settlement watchdog group, especially as the US Agency for International Development was funding a “peace park” at the base of the hill.
The mayor of Beit Sahour urged the US Consulate to pressure Israel to begin hospital construction, while settlers began weekly demonstrations at the site calling on Israel to quash the project, according to consulate files obtained through WikiLeaks.
It was “interesting” that settlers had “no religious, legal, or ... security claim to that land,” wrote consulate staffer Matt Fuller at the time, in an email he shared with the AP. “They just don’t want the Palestinians to have it — and for a hospital no less — a hospital that would mean fewer permits for entry to Jerusalem for treatment.”
The hospital was never built. The site was converted into a military base after the Netanyahu government came to power in 2009. From there, settlers quickly established a foothold by creating makeshift cultural center at the site, putting on lectures, readings and exhibits
Speaking to the AP, Ehud Olmert, the Israeli prime minister at the time the hospital was under discussion, said that was the tipping point.
“Once it is military installation, it is easier than to change its status into a new outpost, a new settlement and so on,” he said.
Olmert said Netanyahu — who has served as prime minister nearly uninterrupted since then — was “committed to entirely different political directions from the ones that I had,” he said. “They didn’t think about cooperation with the Palestinians.”
Palestinians say the land is theirs
The continued legalization of settlements and spiking settler violence — which rose by 27 percent in 2025, according to Israel’s military — have cemented a fearful status quo for West Bank Palestinians.
The land now home to Yatziv was originally owned by Palestinians from Beit Sahour, said the town’s mayor, Elias Isseid.
“These lands have been owned by families from Beit Sahour since ancient times,” he said.
Isseid worries more land loss is to come. Yatziv is the latest in a line of Israeli settlements to pop up around Beit Sahour, all of which are connected by a main highway that runs to Jerusalem without entering Palestinian villages. The new settlement “poses a great danger to our children, our families,” he said.
A bypass road, complete with a new yellow gate, climbs up to Yatziv. The peace park stands empty.
