US withholds $65M aid to Palestine: State Dept

The U.S. will suspend $65 million in aid to Palestine, the State Department announced Tuesday, two weeks after President Donald Trump's criticism about the funding.

“It's not being canceled. It's just being held for future consideration,” State Department spokesperson Heather Nauert told reporters at a press briefing.

The U.S. will still transfer $60 million of what was originally a $125 million tranche of funding to the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) while withholding the remaining $65 million, Nauert said, adding that without the $60 million tranche, the refugee agency was at risk of shuttering.

She said additional U.S. funding will depend on "some revisions" being made at the agency, which provides healthcare and social services to Palestinian refugees in the West Bank, Gaza, Syria, Lebanon and Jordan.

U.S. President Donald Trump previously threatened to cut aid to the Palestinians, including to UNRWA, in response to Palestinian fury over his decision last month to recognize Jerusalem as Israel’s capital.

Claiming the decision was not politically motivated or related to Trump's Jerusalem declaration, Nauert added that it was rooted in concern over how UNRWA is managed and spends the funds.

She also said the U.S. expected other countries to “step up to the plate” and provide more funding for the agency.

UNRWA, which has been helping over 5 million Palestinian refugees displaced by the Arab-Israeli conflict since 1948, is being accused of backing Palestinian militants and being biased against Israel by some Israeli officials.

Trump in December announced his decision to recognize Jerusalem as Israel's capital and move the U.S. Embassy from Tel Aviv to the holy city. The dramatic shift in U.S. policy drew a storm of condemnation and criticism across the Arab and Muslim world.

Jerusalem remains at the heart of the Israel-Palestine conflict, with Palestinians hoping that East Jerusalem -- now occupied by Israel -- might eventually serve as the capital of a Palestinian state.