The U.N.’s beleaguered agency for Palestinian refugees said on Wednesday that a severe financial shortfall has forced it to dismiss hundreds of Gazan employees who are currently outside the territory, underscoring what it described as an unprecedented funding crisis.
"On Tuesday, 571 local UNRWA staff, outside Gaza, were informed that they were being separated from the agency with immediate effect," a spokesperson told AFP in an email.
For more than seven decades, the United Nations Relief and Works Agency for Palestine Refugees has provided aid and assistance to Palestinian refugees across Gaza, the West Bank, Lebanon, Jordan and Syria.
But the agency has seen the voluntary contributions it relies on dwindle as it has become the focus of increasingly harsh Israeli attacks, causing what the spokesperson called an "unprecedented financial crisis".
While the work UNRWA was mandated to do cost around $880 million in 2025, the agency received only around $570 million in contributions, the spokesperson said.
"As things stand, we expect a substantial shortfall in 2026," they added.
All of the staff affected by this week's announcement had originally worked in the Gaza Strip, but had managed to leave early in Israel’s war that broke out on October 7, 2023, with Hamas’ attack.
Hamas on Wednesday slammed the decision as "unjust and a violation of the fundamental rights of these employees".
"We call on UNRWA... to assume its role and responsibilities towards the Palestinian people and its employees," it added.
Most had been unable to carry out their duties remotely since leaving Gaza, but had remained on UNRWA's payroll until last March, when they were placed on exceptional unpaid leave, the spokesperson said.
"The affected staff have been without pay for over 10 months, and it is impossible to foresee when or if they could resume their duties due to circumstances entirely beyond UNRWA's control," the spokesperson said.
"Recognizing that UNRWA's financial situation remains dire, the agency took a decision which at least allows them to access financial resources rapidly, including separation indemnities."
The spokesperson stressed that UNRWA, which has seen more than 300 of its employees killed by Israel in Gaza since the start of the war, still had around 12,000 staff working inside the Palestinian territory.
Israel has barred UNRWA from operating on its soil, accusing the agency of providing cover for Hamas, and claiming that some of the agency's employees took part in the October 7 attack.
A series of investigations found some "neutrality-related issues" at UNRWA, but stressed that Israel had not provided conclusive evidence for its headline allegation.
Tuesday's decision was "extremely difficult and (came) as a result of an extremely challenging financial outlook, as well as intense defamation campaigns to undermine UNRWA and deter its donors", the spokesperson said.
Israel said that as of Jan. 1 it would terminate the activities of 37 international aid organizations working in Gaza, citing their refusal to submit staff lists and comply with new security registration procedures. The groups have been told to leave by March 1.
Under the new regulation, the operations of major humanitarian organizations - including Doctors Without Borders (MSF), Oxfam, the Norwegian Refugee Council (NRC), Caritas, CARE, and the International Rescue Committee (IRC) - are expected to be suspended.
The Israeli army has killed more than 71,400 people, mostly women and children, and injured over 171,000 others in a brutal offensive since October 2023 that has left the enclave in ruins.
Despite the ceasefire that took effect on Oct. 10, 2025, the Israeli army continued its attacks, killing 424 Palestinians and wounding 1,189 others, according to the Health Ministry.
