The decision was linked to a January 31 deadline set by new U.S. legislation under which foreign aid recipients would be more exposed to anti-terrorism lawsuits.
The deadline also sees the end of some $60 million in U.S. aid for the Palestinian security forces, whose cooperation with Israeli forces helps maintain relative quiet in the West Bank.
Congress' Anti-Terrorism Clarification Act (ATCA) empowers Americans to sue foreign aid recipients in U.S. courts over alleged complicity in "acts of war." The Palestinians have declined further U.S. funding, worried about legal jeopardy.
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"At the request of the Palestinian Authority, we have wound down certain projects and programs funded with assistance under the authorities specified in ATCA in the West Bank and Gaza, a U.S. official told Reuters on Friday.
"All USAID assistance in the West Bank and Gaza has ceased," the official said, adding that no steps were being taken to close the USAID mission in the Palestinina territories, and no decision had been made about future staffing at the USAID mission in the U.S. Embassy in Jerusalem.
During 2018, the Trump administration cut all forms of U.S. civil assistance to the Palestinians, but it did not touch the security assistance, stating that the security coordination between the PA and Israel serves American foreign policy interests. Now, however, the end of U.S. support for the PA security forces puts the continuation of efficient security coordination at risk.
In his last appearance before the Israeli government in mid January, outgoing IDF Chief of Staff Gadi Eisenkot said that the security coordination between Israel and the PA’s forces helps save lives and maintain stability in the region. The PA's forces work regularly with the Israeli military to thwart terror attacks.
The ATCA bill, which the PA blamed for its decision, was promoted last year in Congress in response to rulings by U.S. courts that rejected multi-million dollar lawsuits against the PA. These lawsuits were filed by American citizens who were injured or lost loved ones in terror attacks committed by Palestinians, mostly during the second intifada. The Supreme Court in Washington affirmed a ruling by a lower court that the American legal system does not have jurisdiction to deal with such lawsuits.
This led members of Congress to promote the ATCA bill, which states that U.S. courts will have jurisdiction to hear terrorism-related lawsuits against any foreign entity reviving U.S. government assistance. This means that if the PA will receive even one dollar of U.S. funding, it could face lawsuits asking for hundreds of millions of dollars in compensation. The law has also created concern in other countries in the Middle East that rely on U.S. assistance. It would not apply to Israel, however, because of the specific sources of funding through which Israel receives U.S. security assistance.
Only after the bill passed Congress and was signed into law by President Trump, senior administration officials became aware of its possible impact on security coordination. In recent months, the administration tried to negotiate a “fix” to the law together with lawmakers on Capitol Hill. As reported in Haaretz, these efforts stalled because of the government shutdown.
Amir Tibon contributed to this report.