Analysis | UNRWA funding pauses comes amid uncertainty over Gaza aid future

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The United States and its allies are suspending funding to a U.N. agency at a critical moment for Gaza. Before the war, roughly 80 percent of the population of the strip was reliant on international aid. Following months of conflict, the needs are only more dire, with almost 9 out of 10 people displaced and at least half of the buildings in the strip damaged or destroyed.

The U.N. Relief and Works Agency, or UNRWA, played a vital role in distributing international aid to Gaza during the war. But after Israel alleged that more than a dozen UNRWA staff members were involved in the Hamas-led attacks on Israeli towns on Oct. 7, the United States and at least nine other donor countries have paused their funding pending further investigation.

Critics of the move say it will only add to the humanitarian disaster in Gaza, with U.N. officials warning that the impact would be felt within weeks. Speaking to the Security Council on Wednesday, U.N. humanitarian aid chief Martin Griffiths said efforts in Gaza were “completely dependent on UNRWA being adequately funded and operational” and called for funding to be immediately resumed.

The dispute about UNRWA funding comes amid a growing debate about who should pay for Gaza as the cost of the conflict soars. In a report released Wednesday, U.N. experts on economic development wrote that there is “no doubt” that returning Gaza to its pre-war state would require “several tens of billions of dollars by any conservative estimation.” Current pledges from donor states would be many times below that.

The Biden administration has pinned its hopes on Arab states to help rebuild Gaza, with the condition that Israel agrees to recognize a Palestinian state. But during a joint news conference with his Saudi counterpart Sunday, Egyptian Foreign Minister Sameh Shoukry criticized the decision to pull funding from UNRWA, warning against the “unjustified scapegoating” of the agency’s entire staff, which numbers around 30,000 total with around 12,000 in Gaza.

Israeli intelligence prompted U.S. to quickly cut Gaza aid funding

For UNRWA, funding issues are not new. The year after a previous round of warfare in Gaza in 2014, officials from the U.N. agency announced that they had to suspend reconstruction efforts in the strip as they had run out of money: While nations had pledged $5.4 billion in aid, “virtually none of it has reached Gaza,” the agency said in a statement.

In 2018, the Trump administration announced it would cut its funding to UNRWA, a move that the agency said would leave it with a hole in funding that added up to $446 million. While other countries stepped in to help plug the gap, there was still a $200 million shortfall, UNRWA officials told The Washington Post at the time. U.S. funding was restored during the Biden administration.

At the start of 2023, UNRWA commissioner Phillipe Lazzarini told reporters that the country had a deficit of $70 million the previous year — the fourth in a row that it had lost money. Some major donors in the past, including Britain, had slashed their contributions to foreign aid across the board, he noted, but took particular aim at Arab states who had let their contributions to UNRWA collapse over recent years.

“I have observed a few trends in the region,” he told reporters when asked about these countries’ funding last year. “The first one? Indeed, the Arab contribution in 2018 represented about 25 percent of the overall contribution to the agency. In 2021, it was less than 3 percent, and last year it was 4 percent.”

The aid suspensions this week could mark a far bigger problem if not resolved. So far, 11 separate donors have suspended their funding. The United States provided $344 million in funding in 2022, according to UNRWA’s statistics, making it the largest donor to the agency. The second largest donor, Germany, also suspended funding this week.

UNRWA has pledged to conduct an internal investigation of the Israeli allegations and immediately fired nine employees, while the United Nations’ highest investigative body, the New York-based Office of Internal Oversight Services, is working on a separate probe. The United States and other countries have indicated they could restore funding if UNRWA makes changes.

As famine looms in Gaza, aid delivery remains difficult and dangerous

But for many supporters of Israel, the solution is to do away with UNRWA for good. Critics of the agency had long argued that the work of the agency should be subsumed under the U.N. High Commissioner for Refugees (UNHCR), a separate U.N. body that focuses on resettling refugees who cannot return home.

Speaking to reporters Tuesday, a spokesman for Prime Minister Benjamin Netanyahu’s office said UNRWA had been “fundamentally compromised” by Hamas, alleging without evidence that roughly 10 percent of the agency’s employees in the Gaza Strip were members of it or another militant group. “It’s more than a dozen bad apples. Add two zeros. And make it 1,200” the spokesman, Eylon Levy, said.

In a statement Wednesday, the heads of multiple U.N. organizations — including UNHCR — warned that there was no replacement for UNRWA and that suspending funds for the agency would “have catastrophic consequences” for those in Gaza. “No other entity has the capacity to deliver the scale and breadth of assistance that 2.2 million people in Gaza urgently need,” they wrote.

In the short term at least, even Israeli officials may agree. “If UNRWA ceases operating on the ground, this could cause a humanitarian catastrophe that would force Israel to halt its fighting against Hamas,” an official, speaking on the condition of anonymity, was quoted as saying by the Times of Israel. “This would not be in Israel’s interest and it would not be in the interest of Israel’s allies either.”

But it isn’t just Israel, nor the West, who are willing to let UNRWA wither. “My message to the Arab world, particularly to the Gulf, is where are you?” Chris Gunness, a former UNRWA spokesman, told Al Jazeera this weekend. “Because they’re making billions each day on oil revenues. A tiny fraction of those oil revenues would see UNRWA’s financial problems disappear overnight.”

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