TEL AVIV – The Palestinian leadership has slammed the Trump administration over its suspension of $65 million of the first aid installment to the UN’s  Palestinian “refugee” agency, charging that the U.S. is doing Prime Minister Benjamin Netanyahu’s bidding and dissolving the body gradually. 

On Tuesday, the State Department informed the UN Relief and Works Agency (UNRWA) by letter that just under half of a planned $125 million installment would be withheld. The letter continued by stating that future aid installments would be contingent on a major overhaul of the agency, both in the way it receives funding and its operational methods.

“We would like to see some reforms be made,” said State Department spokeswoman Heather Nauert, adding that the move “is not aimed at punishing anyone.”

The rest of the money would be released later in the month to prevent the agency from shutting down suddenly.

The U.S. is UNRWA’s single largest donor, providing about $300 million annually.

The definition of a Palestinian “refugee” and their actual numbers have long been a subject of debate.

The Palestinian Liberation Organization lambasted the move, saying that it targeted Palestinian so-called refugees’ “right to a dignified life” and would destabilize the region.

“The U.S. Administration seems to be following Netanyahu’s instructions to gradually dismantle the one agency that was established by the international community to protect the rights of the Palestinian refugees and provide them with essential services,” said senior member of the PLO Executive Committee Hanan Ashrawi.

“This administration is thereby targeting the most vulnerable segment of the Palestinian people and depriving the refugees of the right to education, health, shelter and a dignified life,” she added.

“It is also creating conditions that will generate further instability throughout the region and will demonstrate that it has no compunction in targeting the innocent,” she said, adding, “Once again the U.S. Administration proves its complicity with the Israeli occupation.”

According to the Palestinian Authority’s official news station Wafa, Ashrawi met with German and Norwegian diplomats to urge them to increase their funding of UNRWA to make up the shortfall, in addition to lobbying them to recognize a Palestinian state.

On Monday, the United Nations said that in light of the U.S. move, it would have to “find other sources” of funding, since UNRWA’s work was “critical.”

Palestinian President Mahmoud Abbas on Sunday cursed Trump over his threat to cut aid to the Palestinians, using a popular Arabic epithet, “May your house come to ruin.”

UNRWA has also come under fire on many occasions for spreading anti-Semitic hate in its schools and employing members of terror organizations and supporters of terror. In February, UN Watch released an 130-page report exposing 40 UNRWA school employees in Gaza and elsewhere who engaged in incitement to terror against Israelis and expressed “anti-Semitism, including by posting Holocaust-denying videos and pictures celebrating Hitler.”

That month the agency announced the suspension of an UNRWA employee suspected of having been elected a Hamas leader.

The UN itself released a report in 2015 that found Palestinian terror groups used three empty UN-run schools in Gaza as a weapons cache. Moreover, it said that in at least two cases terrorists “probably” fired rockets at Israel from the schools during the 50-day summer conflict between Israel and Hamas in 2014.