Trump administration withholds $125 million to UN agency that spends money on Palestinians

The Hill:
The Trump administration is freezing $125 million in funding to the United Nations (U.N.) agency charged with assisting Palestinian refugees amid frustrations over a lack of progress on a peace deal between the Palestinians and Israelis.

Axios reported Friday that the Trump administration did not transfer the funding to the U.N. Relief and Works Agency (UNRWA) on Jan. 1 as planned, and was conducting a broader review of U.S. assistance to the Palestinian Authority.

A State Department official did not confirm to The Hill whether the U.S. had frozen the funds, but said that the administration was continuing to work on a peace plan in the region.

“The President is a master dealmaker and is as committed to trying to achieve the ultimate peace deal as ever but he will not tolerate falsehoods being spread about America and our positions," the official said.

"In the meantime, we remain hard at work on our comprehensive peace plan which will benefit both Israelis and Palestinians and will be unveiled when it is ready and the time is right."

A State Department official told Axios that the funds were not necessarily frozen, and that the administration has until Jan. 15 to decide its next steps.
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This is what is known as leverage in making a deal with someone who in the past thought they had nothing to lose by being intransigent.  The move on the recognition of Jerusalem and this move is a blunt signal to the Palestinian Authority that they have something to lose by not engaging in meaningful negotiations.  Since this is only about a third of the annual contribution to the UN agency by the US there is room for exerting more pressure on the Palestinians to negotiate.

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