United Nations spokesman Stephane Dujarric said Monday that the work of the U.N. Relief and Works Agency, which helps Palestinian refugees, "is critical" and that if the United States or any other donor cuts its contributions "we will have to find other sources."
Last week, U.S. President Donald Trump said the United States may withhold future aid payments to UNRWA over what he called the Palestinians' unwillingness to talk peace with Israel. The U.S. is the largest donor to the agency, with a pledge of nearly $370 million in 2016, according to UNRWA's website.
Dujarric said UNRWA has a mandate from the U.N. General Assembly to foster the "human development" of Palestinian refugees and serves "some of the most marginalized population in the Middle East."
He said the agency's health, education and humanitarian help "is a force for stabilization in a very volatile area."
Across the Middle East, millions of people who depend on UNRWA are bracing for the worst of the cuts go through, as they could also add instability to struggling host countries already coping with spillover from other regional crises.
UNRWA was established in 1949 and covers registered Palestinian refugees in the Gaza Strip, Jordan, Lebanon, Syria and the West Bank.
The U.N. General Assembly has repeatedly renewed UNRWA's mandate, as more than 5 million people now rely on it for services including education, health care and food.
Seen by the Palestinians and most of the international community as providing a valuable safety net, UNRWA is viewed far differently by Israel.
Prime Minister Benjamin Netanyahu accuses the agency of perpetuating the conflict by helping promote the unrealistic dream that these people have the "right of return" to long-lost properties in what is now Israel.
"UNRWA is part of the problem, not part of the solution," he told foreign journalists last week.
Netanyahu said the Palestinians are the only group served by a specific refugee agency, and said UNRWA should be abolished and its responsibilitiestaken over by the U.N. High Commissioner for Refugees, the main U.N. refugee agency.
Some in Israel have even harsher criticism, accusing UNRWA of teaching hatred of Israel in its classrooms and tolerating or assisting Hamas militants in Gaza.
U.S. officials said this week the administration is preparing to withhold tens of millions of dollars from the year's first contribution, cutting a planned $125 million installment by half or perhaps entirely. The decision could come as early as Tuesday.
Matthias Schmale, UNRWA's director in Gaza, said Washington has not informed the agency of any changes.
However, "we are worried because of the statements ... in the media and the fact that the money hasn't arrived yet," he said.
Schmale dismissed the Israeli criticisms, saying that individuals who spread incitement or aid militants are isolated cases and promptly punished. He said Netanyahu's criticism should be directed at the U.N. General Assembly, which sets UNRWA's mandate, not the agency itself.
Any cut in U.S. aid could ripple across the region with potentially unintended consequences.
Gaza may be the most challenging of all of UNRWA's operating areas. Two-thirds of Gaza's 2 million people qualify for services, and its role is amplified given the poor state of the economy, which has been hit hard by three wars with Israel and the Israeli-Egyptian maritime blockade that has been in effect since Hamas seized power of the coastal enclave in a miliarty coup a decade ago.
Unemployment in Gaza is at 43% and the poverty rate is 38%, according to the official Palestinian statistics office.
"Nowhere else are we the biggest service provider for the population of the entire territory," Schmale said. He said UNRWA provides food assistance to 1 million Gazans, calling it "an expression of collective shame for the international community."
With more than 12,500 teachers, nurses and other staff, UNRWA is Gaza's largest non-governmental employer. It is also involved in postwar reconstruction projects.
Jordan, a crucial ally in the U.S.-led battle against Islamic militants, is home to the largest number of Palestinian refugees and their descendants, with nearly 2.2 million people eligible for UNRWA services. This has turned the U.N. agency into a major contributor to social welfare services in the country, which also hosts hundreds of thousands of Syrians displaced by the civil war in their country.
U.S. aid cuts could heighten the threat of instability in Jordan, which is grappling with a worsening economy hurt by the spillover from conflicts in neighboring Syria and Iraq. More than one-third of Jordan's young people are without jobs, turning them into potential targets for recruitment by extremists.
Most of the Palestinians eligible for UNRWA services in Jordan hold Jordanian citizenship, and some argue that this has ended their refugee status. But most maintain that UNRWA services are vital to propping up an important ally.
UNRWA's services are also vital in Lebanon, where Palestinians are prohibited from working in skilled professions and owning property.
Lebanon is the least-welcoming Arab country to Palestinian refugees, because it does not want Palestinians to settle and because it does not want the refugees to upset the country's delicate sectarian balance. Camps in several cities are ringed by concrete barriers and Lebanese security forces use checkpoints to control who enters and leaves.
A recent census found 175,000 Palestinian refugees or their descendants living in the country.
The civil war in Syria has made many Palestinians refugees twice over. Some 32,000 Palestinians who were living in Syria fled to Lebanon, according to UNRWA. In Syria, Palestinians had the right to own property and to work in all professions. They are not entitled to the same in Lebanon.
While more than 5 million Syrian refugees worldwide are entitled to UNHCR assistance, Palestinians are barred from it under the logic that UNRWA serves them. But UNRWA in Lebanon is chronically underfunded, and the wave of Palestinians arriving from Syria has strained its finances even further.
