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The Trump administration and Israel have threatened to close down a United Nations agency dedicated to helping Palestinian refugees amid rumors that funding to the agency had already been cut.

Speaking with Sputnik Radio's Loud & Clear about Trump's threat to axe funding to the Palestinians, cofounder of The Electronic Intifada, Ali Abumimah, said it would be important to determine whether the funding cuts would hit UNRWA or the Palestinian Authority. "This absurdity must be stopped", he said.

The report was based on audio recordings obtained by the Times, in which Ashraf al-Kholi, the Intelligence officer, can be heard telling the hosts that Egypt, like its "Arab brothers, are denouncing this matter", but that "after that, this thing will become a reality".

In a short speech delivered at the White House, Trump directed the state department to start making arrangements to move the US embassy from Tel Aviv to Jerusalem - a process that officials say will take at least three years.

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"This of course creates a situation where great-grandchildren of refugees who are not refugees are treated as such by UNRWA".

Earlier, Israel's Prime Minister Benjamin Netanyahu said in the weekly cabinet meeting that UNRWA agency should gradually shut down. Now, 70-years-later, there are an estimated 5 million refugees and their descendants, many scattered across the region in countries like Jordan, Lebanon, the West Bank and Gaza Strip.

"There is a political decision to recognize Jerusalem as the capital of Israel and we will strive to reach an worldwide political decision to recognize a Palestinian state ... with (eastern) Jerusalem as its capital", Safadi said.

The US has long provided the Palestinian Authority with much-needed budgetary support and security assistance, as well as an additional $304 million for United Nations programs in the West Bank and Gaza. After occupying the city's eastern part in the 1967 War, Israel annexed the territory and proclaimed it as its "eternal, undivided capital".

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The U.S. donated $355 million to UNRWA in 2016, almost 30 percent of its total funding.

Last week, according to several USA media sources, the State Department suspended between $100 and $125 million in funding to UNRWA, which was scheduled to be paid on the first business day in January.

"I completely agree with (US President) Trump's sharp criticism of UNRWA", Netanyahu said ahead of a government meeting on Sunday.

"What perpetuates the refugee crisis is the failure of the parties to deal with the issue", he wrote in a statement.

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