"My concern (is) that as we talk about region stability, withdrawing funding for UNRWA would be very negative both in terms of humanitarian needs of over 5 million people but also of course it would be destabilizing for the region", Olof Skoog said, referring to the U.N. Relief and Works Agency for Palestinian refugees.
The Axios news website, citing three unnamed Western diplomats, said on Friday that the sum - a third of the annual United States donation to the UNRWA which was expected to be delivered on Monday - was frozen until the White House finishes its review of aid to the PA.
Human Rights Watch director Kenneth Roth called the USA move "vindictive" and a "bullying tactic", as he urged other governments to step in and fill the gap if the United States decides to definitely cut funding.
In 2016, the United States gave more than $350 million to UNRWA to provide education, health, social welfare and other services to Palestinian refugees in the West Bank, the Gaza Strip and other refugee concentrations in the Middle East.
Israeli and global reports reported the United States' intention to freeze or delay its financial fund to UNRWA and stop aid to the Palestinians until they return to the negotiations table with Israel.
Last Tuesday, President Donald Trump said the United States may withhold future aid payments to Palestinians, accusing them of being unwilling to talk peace with Israel.
Meanwhile, UNRWA spokesman Chris Gunness said that his agency had not been "informed directly of a formal decision either way by the USA administration".
Haley and the administration were also angered by action at the UN General Assembly in December, in which member states voted 128-9 to condemn Trump's decision to recognize Jerusalem as the capital of Israel and move the U.S. embassy there from Tel Aviv.
Sweden, a big donor country that has recognized a Palestinian state, warned Tuesday that any U.S. decision to withdraw funds to the United Nations agency for Palestinians would be destabilizing for the Middle East. "On 7 December 2017, the United Nations General Assembly passed Resolution A/RES/72/82 in support of UNRWA".
Quds remains at the core of the Israeli-Palestinian conflict, with Palestinians hoping that the eastern part of the city would eventually serve as the capital of a future independent Palestinian state.
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