Washington: The United States is seeking to withhold $200 million (Dh734 million) in direct aid to Palestinian civilians in Gaza and the West, after it slashed American contribution to UN agency that support the Palestinian refugees, a Foreign Policy report said on Friday.

Quoting unnamed diplomatic sources, the online news portal said that the decision on the cuts was taken in a high-level meeting earlier this week, attended by US Secretary of State Mike Pompeo and Jared Kushner, President Donald Trump’s son-in-law and top Middle East adviser.

Suspension of direct US aid is a vital humanitarian lifeline for refugees and comes amid rising political and security tension in the region. The United States has already slashed its aid to the United Nations Relief and Works agency for the Palestinian refugees known as UNRWA for its annual $360 million contribution by more than 80 per cent to $60 million.

The decision to withhold $200 million in direct aid coincides with the wave of pay cuts and layoffs for hundreds of UN and other international agencies which are working in the West Bank and Gaza. Last month, Palestinian employees took control of the UNRWA in the Near East’s headquarters in Gaza, after it announced the layoffs. According to the Foreign Policy report, Congress has already approved $230 million private aid to Palestinian refugees, but the White House has decided it would ask the lawmakers to suspend most of that approved aid.

The German news agency Deutsche Welle said in a report that the aid-cut has already started to take its toll on UNRWA, which depends on continued funding to support five million Palestinian refugees across the Middle East.

A separate Foreign Policy report last week said it had obtained internal White House emails that suggested that Kushner and other White House officials were exploring ways to dismantle UNRWA which, he believes, will strengthen his hands at the negotiations for peace. President Trump in January this announced to drastically slash aid support to the refugee agency after he recognised occupied Jerusalem as the capital of the Israeli regime in December, which drew criticism from the leading world capitals. The move also angered Palestinians to move away from the Trump administration.

According to the report, a State Department spokesperson said on Thursday, when asked, that there was nothing to announce at this time, while a National Security Council spokesperson said that no decision had been made. Many NGOs working in the West Bank and Gaza will be affected by the US aid cut. These include CARE, Catholic Relief Services, International Medical Corps, and Mercy Corps, which provide food, medical equipment and services to Palestinian refugees. “It’s like a perfect storm of developments building towards the worst situation we have seen in decades in Gaza,” the Foreign Policy report said quoting Andy Dwonch, the mission director for Mercy Corps in Palestine.