Congress Seeks to Bar Funding for U.N. Agency for Palestinians

The United States would cut off funding for the main U.N. agency that provides aid to Palestinians in Gaza under a spending agreement on track to soon become law, according to two people familiar with the plan.

The ban, part of a massive spending bill negotiated by lawmakers and the White House that is expected to clear Congress by this weekend, would create a shortfall of hundreds of millions of dollars for the agency, known as UNRWA. That could have disastrous consequences for Gazans, who are facing an acute hunger crisis and displacement in crowded shelters and tent encampments.

The move would also put Washington at odds with its Western allies over how to respond to the humanitarian crisis in Gaza amid accusations that Hamas fighters have infiltrated the agency.

The U.S. has unilaterally taken other steps to ameliorate the deprivation in Gaza, including pressuring the Israelis to allow more aid into the enclave, conducting airdrops of food and constructing a pier to deliver aid by sea.

Though before the war UNRWA employees filled a broad array of civil functions in the territory, operating schools and collecting garbage, they have since become the main resource on the ground for delivering aid to the territory’s besieged residents. As Congress bans funding for the agency, U.S. officials are seeking alternative organizations to tackle the distribution of food in particular.

But as the U.S. courts other agencies to help fill the void in Gaza, some of America’s closest allies are scrambling to ensure funding for the agency continues.

The suspension of funding is planned through March 2025 and extends a pause that the White House and lawmakers from both major U.S. parties supported after Israel accused at least 12 UNRWA employees in January of participating in the Oct. 7 attack on southern Israel led by Hamas. Efforts are underway to impose a longer-lasting funding ban, according to people familiar with the negotiations.

“Not a single taxpayer dollar should go to UNRWA after the serious allegations of its members participating in the October 7th attacks,” Senator James Risch of Idaho, the top Republican on the Foreign Affairs Committee, said in a statement to The New York Times.

The loss of American support would hamper the agency’s ability to deliver food and health services in Gaza. The United States has paid the plurality of the agency’s overall budget, including $370 million in 2023. As of earlier this month, UNRWA had enough funds to continue its operations until the end of May, according to Scott Anderson, the agency’s deputy director for Gaza.

Philppe Lazzarini, UNRWA’s commissioner general, said he feared that U.S. efforts to suspend funding would have drastic effects on agency services in Gaza, particularly schooling. “I really hope that the U.S. will continue to show their solidarity,” he said.

The agreement, which is the product of long and painstaking negotiations, is expected to easily pass Congress.

Senator Chris Van Hollen, Democrat of Maryland, said he opposed the ban on funding.

“To punish over two million innocent people in Gaza and UNRWA beneficiaries throughout the region for these actions is not just misguided — it’s unconscionable,” he said on Wednesday.

The White House appeared to be holding out hope for the possibility of eventually restoring funding to UNRWA, which supports Palestinian refugees across the Middle East, once the agency concludes its investigation and takes steps toward reform.

“There is no other organization that has the reach, the tentacles and the distribution capabilities that UNRWA has in Gaza. That’s just a fact,” said John F. Kirby, the White House National Security Council spokesman.

“Obviously UNRWA is going to have to reform itself, clearly, because that’s just unacceptable behavior by anybody,” he added.

U.N. officials said they had fired at least nine of the original 12 employees accused of participating in the Oct. 7 attack or its aftermath and that two others were dead. António Guterres, the U.N. secretary-general who described himself as “horrified by these accusations,” ordered an investigation into the agency and has implored those nations that suspended their aid payments to reconsider.

Over the past two weeks, Canada, Sweden, Denmark, Iceland and Australia, which suspended funding for UNRWA after Israel’s accusations were made public in January, have said that they would renew it. A host of other countries, including Germany, UNRWA’s second-biggest backer, are expected to make similar announcements in the coming months, according to five European diplomats, who spoke on condition of anonymity because they were not authorized to communicate with the news media.

On Wednesday, a Saudi-funded humanitarian agency pledged to increase its funding for the agency by $40 million, according to a statement.

“We welcome the decisions of donor countries to restore funding, but we are not out of the woods,” said Juliette Touma, the communications director for UNRWA.

But while America’s allies look for ways to fund and potentially reform the agency — like stepping up enforcement of its rules that require employees to maintain neutrality — Washington is seeking other alternatives.

Humanitarian officials, however, have questioned whether other U.N. agencies or smaller relief organizations are capable of distributing large amounts of aid while the war between Israel and Hamas is raging.

Israeli officials recently met in Washington with members of Congress and the Biden administration and shared new evidence that they said showed UNRWA employees had connections with militant groups in Gaza, according to an Israeli official with knowledge of the matter, who spoke on the condition of anonymity to discuss an ongoing investigation. The New York Times has not seen the material Israeli officials presented to members of Congress.

Earlier, he said, Israeli officials shared materials with visiting investigators from the U.N. Office of Internal Oversight who are conducting an inquiry into whether UNRWA employees have ties to Hamas. He said Israel was committed to ensuring the continued flow of aid to Gaza, but not through UNRWA.

Earlier in the war, the distribution of food aid was primarily overseen by UNRWA. But more recently, a patchwork of aid agencies, convoys operated by local businessmen and airdrops by foreign governments have become involved in the delivery of desperately needed food.

Distribution, particularly in northern Gaza, has been slowed by lawlessness, violence and Israel denying convoys entry.

At least twice in recent weeks, attempts to distribute food ended in bloodshed as hungry Palestinians seeking aid were killed. In the deadliest such event, more than 100 people were killed in Gaza City on Feb. 29, according to local health authorities, who attributed the deaths to Israeli troops firing on the crowd. The Israeli military acknowledged opening fire, but said most of the deaths had occurred when people stampeded or were run over by trucks.

On Monday, the U.N.-backed organization that monitors food insecurity warned that “famine is imminent” in Gaza.

Both Republicans and Democrats have proposed the World Food Program as an alternative, according to UNRWA supporters who recently visited Congress and spoke on the condition of anonymity to discuss their private meetings.

But the World Food Program, or W.F.P., has fewer than 100 staff members in Gaza compared to the 13,000 on UNRWA’s payroll, 3,000 of whom have kept working during the war.

“The World Food Program’s mandate is to deliver food assistance to hungry and vulnerable people,” the agency said in a statement. “We are ready to further step up our food assistance in Gaza, with the necessary funding. We cannot replace the critical functions of UNRWA in Gaza, including the running of shelters and health clinics.”

Israel has also engaged with the W.F.P., along with other organizations, about playing a larger role in Gaza, according to the Israeli official who discussed the recent Washington meetings, and who spoke on the condition of anonymity to discuss the deliberations.

But moving employees from one organization to another would be complicated, said Jamie McGoldrick, a top U.N. relief official in Jerusalem. For example, W.F.P.’s employees in Gaza are generally paid about three times as much as their UNRWA counterparts, he said.

As Washington looks for alternatives to UNRWA, other countries have decided to restore their funding, based on reassurances the agency has given about improving its employee vetting process and its enforcement of ethics rules.

Those donor nations, according to UNRWA officials and the European diplomats, are seeking additional information from the U.N. office overseeing the inquiry into Israel’s allegations, as well as the results of an independent review being conducted by Catherine Colonna, a former French foreign minister. Ms. Colonna is expected to release an interim update on Wednesday and her final report on April 20.

Many European countries are looking to see that UNRWA is taking the investigation seriously, one of the European diplomats said, adding that evidence of “credible efforts” to reform was important. “The overall sense is things are going quite well,” the diplomat said.

Hugh Lovatt, a senior fellow at the European Council on Foreign Relations, said the push in European capitals to restore funding was a recognition that Europe had “overreacted” when faced with the allegations.

Nevertheless, the European Union has said future funding for UNRWA is contingent on the agency allowing E.U.-appointed experts to audit the organization; increasing the staff of its internal investigations and ethics departments; and making employees sign conflict-of-interest declarations, according to written correspondence between the UNRWA commissioner-general, Mr. Lazzarini, and Oliver Varhelyi, a senior E.U. official.

UNRWA, according to the correspondence between Mr. Lazzarini and Mr. Varhelyi, also agreed to hand over a list of its employees to Israeli authorities every three months, including their Palestinian ID numbers; to confirm that financial institutions had vetted its staff against a list of people under E.U. sanctions; and to allow a third party to monitor employees’ compliance with training on humanitarian principles and neutrality.

Israeli officials had previously complained that UNRWA had handed over its employee lists only once a year, without their national ID numbers. Access to the ID numbers, diplomats said, would likely make it easier for Israel to check its databases for specific UNRWA employees with criminal histories.

Johnatan Reiss contributed reporting.