President Donald Trump has ordered that $25 million earmarked for the care of Palestinians in East Jerusalem hospitals be directed elsewhere as part of a review of American aid, a U.S. State Department official said on Saturday.
Trump called for a review of U.S. assistance to the Palestinians earlier this year to ensure the funds were being spent in accordance with American national interests and were providing value to taxpayers.
"As a result of that review, at the direction of the President, we will be redirecting approximately $25 million originally planned for the East Jerusalem Hospital Network," the State Department official said. "Those funds will go to high-priority projects elsewhere."
The aid cut is the latest in a number of actions by the Trump administration that have alienated the Palestinians, including the recognition of Jerusalem as Israel's capital and moving the U.S. embassy from Tel Aviv to Jerusalem.
That move was a reversal of longtime U.S. policy and led Palestinian leadership to boycott the Washington peace efforts led by Jared Kushner, Trump's senior adviser and son-in-law.
Last month, the Trump administration said it would redirect $200 million in Palestinian economic support funds for programs in the West Bank and Gaza amid a deteriorating relationship with the Palestinian leadership.
And at the end of August, the Trump administration halted all funding to the United Nations Relief and Works Agency for Palestine Refugees (UNRWA), a decision that further heightened tensions with the Palestinian leadership.
Palestinian refugees have reacted with dismay to the funding halts, warning that it would lead to more poverty, anger and instability in the Middle East.
A statement from the Palestinian Foreign Ministry said the latest aid cut was part of a U.S. attempt "to liquidate the Palestinian cause" and said it would threaten the lives of thousands of Palestinians and the livelihoods of thousands of hospital employees.
"This dangerous and unjustified American escalation has crossed all red lines and is considered a direct aggression against the Palestinian people," it said.
Washington said UNRWA needed to make unspecified reforms and called on the Palestinians to renew peace talks with Israel.
The last round of U.S.-brokered Palestinian-Israeli peace talks collapsed in 2014 and a bid by the Trump administration to restart them has shown little sign of progress.