"The decision to withhold more than half of a tranche of funding for an agency supporting Palestinian refugees is deplorable".
The Trump administration gave over $60m to a United Nations agency but held back a further $65m.
It is important to note that the USA contribution to UNRWA represents neither support nor assistance to the Palestinian National Authority, to the Palestinian people in general or the development of the Palestinian economy. The State Department and the U.S. Mission to the United Nations did not respond to a request for comment.
More than 600,000 Palestinians were pushed out or forced to flee their homes before and during 1948 when the state of Israel was established.
Washington is the largest single contributor to UNRWA's finances and previous year donated more than $364m to fund humanitarian projects to approximately 5.2 million registered Palestinian refugees in the West Bank, Gaza, Lebanon, Syria, and Jordan.
Last year, Haley assured UNRWA that the United States would maintain current levels of funding for its operations.
In a Twitter post, Kenneth Roth, executive director of Human Rights Watch, said the U.S. was "holding Palestinian kids' humanitarian needs hostage to political agendas".At the United Nations, Guterres told reporters that the services provided by UNRWA were "of extreme importance, not only for the well-being of these populations. but also in my opinion and an opinion that is shared by most worldwide observers, including some Israeli ones, it is an important factor of stability".
The fate of Palestinian refugees have always been considered a final status issue to be determined in a negotiations process.
The decision to keep back some money is likely to compound the difficulty of reviving Israeli-Palestinian peace talks and to further undermine Arabs' faith that the USA can act as an impartial arbitrator. The money, which is primarily earmarked for salaries for teachers and health workers, can not be used to cover the $45 million food bill.
"Living conditions in Gaza, Syria, the West Bank and elsewhere in the region are particularly tough", he added. None of the money can be used to pay for programs in Lebanon and Syria.
When asked if the decision to cut the UNRWA funding was related to Trump's January 2 threat to end the aid, which he broadcasted via Twitter, Nauert refused to comment.
The US State Department justified this measure saying that the agency needed to make reforms.
"This is not aimed at punishing anyone", spokeswoman Heather Nauert told reporters. De Croo said the allocation was made in response to the USA funding cut which left UNRWA with a payment of just $60 million for the first of two annual contributions to its budget.
Nauert said other countries should shoulder more of the costs for UNRWA. Jan Egeland, the head of the Norwegian Refugee Council, called the move "politically motivated" and warned it would have "devastating consequences for vulnerable Palestinian refugees", including hundreds of thousands of children.
Israeli Ambassador to the U.N. Danny Danon lauded the decision. "It is time for this absurdity to end". The US government decided yesterday to suspend half of its support to UNRWA.
"Given the long, trusted, and historic relationship between the United States and UNRWA, this reduced contribution threatens one of the most successful and innovative human development endeavors in the Middle-East", said UNRWA Commissioner-General Pierre Krähenbühl.
Last week UNRWA warned that U.S. cuts will hurt half a million children; the United Nations agency runs 700 schools, where 525,000 boys and girls study, and operates 143 health clinics.