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In the wake of the $65 million cut to aid, announced by the United States on Tuesday, UNRWA is facing possibly its most severe funding crisis ever.

The U.S. pledge was made just days before Nikki Haley, the U.S. ambassador to the United Nations, vetoed a U.N. Security Council resolution denouncing President Donald Trump's decision to recognize Jerusalem as the capital of Israel.

Washnigton-The United States said on Tuesday that it would withhold at least $65m in pledged aid to the UN agency that provides services for Palestinian refugees and threatened to also make further payments conditional on other countries "stepping up to the plate" and contributing more.

Following Trump's outburst, it was reported that his ambassador to the UN Nikki Haley had been pushing for a complete end to USA aid to UNRWA.

Similarly, the Palestinian leadership in Ramallah also laid blame beyond Trump on Israel.

The Trump administration gave over $60m to a United Nations agency but held back a further $65m. UNRWA defends also the rights of Palestinian refugees, in line with global law.

Neither Palestinian President Mahmoud Abbas or Israel's Prime Minister Benjamin Netanyahu have made comments since the funding cut was announced.

UN Secretary-General Antonio Guterres said he had not been informed of Washington's decision, but was "very concerned" by reports that it was in the works.

During the now-defunct negotiations between Israel and the Palestinian Authority, the PA demanded a return to the pre-1967 armistice lines, dubbed "Auschwitz borders" because they're indefensible, putting Jewish and Christian holy sites under Palestinian control and flooding the truncated Jewish state with thousands of "refugees", effectively eliminating it. In 2017, the U.S. The latest controversy could easily peak into a formal cutting of ties between Palestinian leaders and the US, when it comes to the peace process. Making these technical changes puts it in line with all other refugee agencies and reduces the number of Palestine refugees from 5.3 million to around 20,000. "If it is reduced more, it is the women, children and young people who will suffer, not the politicians".

"I live on food aid", said Bassam Inshasi, a father of seven.

A December 7 framework document raises questions about financial stability and internal governance and oversight but also seeks assurance the agency is operating with "principles of neutrality, humanity, independence and impartiality". In the West Bank, there are more than 800,000 registered Palestinian refugees.

But that money has now been frozen as part of USA demands for changes in UNRWA.

- We hope that this USA decision is not the beginning of complicit actions with the radical Israeli attempts to undermine the existence and hinder the work of UNRWA with its incessant attempts to camouflage the iniquity rather than find just solutions.