A Palestinian child looks at a horse in an impoverished neighborhood of the Khan Younis refugee camp in southern Gaza Strip on August 25, 2018 AFP

Analysis Mounting U.S. Economic Pressure on Palestinians Could Reignite Israel-Gaza Violence

The allegations against UNRWA aren't baseless, but the damage to the organization could have serious consequences, and intelligence officials don't paint an encouraging picture

Recent moves by the Trump administration – including cutting economic aid to the Palestinians, halting funding for UNRWA and perhaps also demanding a redefinition of the status of most Palestinian refugees – all target fundamental principles of the Palestinians’ battle against Israel.

First, President Donald Trump contradicted the Palestinian position on Jerusalem by moving the U.S. Embassy to the city and claiming (baselessly) that he thereby took the Jerusalem issue off the table. Now he’s taking a series of similar steps on the refugee issue, aimed at the Palestinians’ claim that all the refugees have a “right of return” to Israel.

The Israeli right has argued for years that the international community needs to fundamentally change its take on Palestinian refugeehood. Nor are its arguments on this issue baseless.

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Seventy years after Israel’s War of Independence, the United Nations and UNRWA, the UN aid agency for Palestinian refugees, are perpetuating a fourth generation of refugees on the international community’s dime. There’s a glaring disproportion between the aid heaped on these descendants of descendants of the refugees of 1948 and the limited aid given millions of other Arab refugees from the past decade’s wars in Syria, Yemen and Iraq.

Finally, UNRWA often acts as if it has an interest in perpetuating the refugee problem (and the ethos of refugeehood) to preserve its status.

The problem is that all these arguments, when translated into action, can have potentially disastrous effects. That’s exactly what Israeli defense officials have been telling the cabinet for a year since Trump and his staff started dropping hints about their intentions.

The West Bank, and even more so the Gaza Strip, are dependent on foreign aid, especially to the refugee camps. The planned American funding cuts could send the economy over a cliff in both territories, especially in Gaza. They could also reignite the violence along the Gaza border just as efforts are being made to restrain it and a Hamas-Israel cease-fire deal seems possible.

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This could explain Prime Minister Benjamin Netanyahu’s unusual silence about Trump’s moves on the refugee issue. Normally, one would expect Netanyahu to brag about his influence over the U.S. president’s decisions. That’s what he did over the embassy move, and also over Trump’s second dramatic Israel-related decision, his withdrawal from the nuclear deal with Iran.

But this time, Netanyahu is in a more difficult situation due to his fears of escalation in the territories and the unanimous warnings by the security agencies.

Nevertheless, sooner or later, this restraint will probably end, and the Israeli right will claim that Trump and his staff saw the light only thanks to the detailed explanations they received from Jerusalem.

Meanwhile, the picture painted by Israeli intelligence officials isn’t encouraging. Israel and the Palestinian Authority have been cooperating closely on security and there have been relatively few terrorist incidents. But UNRWA is now preparing to fire thousands of teachers in the West Bank, Gaza and Jordan due to the American funding cuts. And if the school year doesn’t open on time in the West Bank, this could affect the behavior of teens in the refugee camps and worsen the friction with Israeli soldiers.

In Gaza, Hamas is hoping for a boost in the form of an indirect agreement with Israel on a cease-fire, after which Egypt has promised to ease transit through its border and Qatar has promised a new financial-aid package. This deal hasn’t been implemented yet because the PA refuses to take part in it and no alternative has been found through which money from the Gulf can be sent to Gaza.

A cut in UN assistance at a time when the promise of Qatari aid exists only on paper would increase the pressure on Gaza. And if this situation continues for long, it will increase the chances of a new outbreak of violence.

Finally, there’s the issue of principle – Washington’s desire to revamp the definition of a Palestinian refugee. This might please Israel’s government, but defense officials fear that it will prove a bridge too far because for the Palestinians it’s one of the most sensitive issues in the peace process.

All this is happening while Trump’s “deal of the century” keeps being postponed. At this point, it’s hard to know when or even if his proposal for Israeli-Palestinian peace will ever be unveiled.

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