PARIS - UNESCO is in its "worst ever financial situation" after its biggest contributor the United States froze funding last year, the director general of the United Nations' cultural agency said on Thursday.

The United Nations Educational Scientific and Cultural Organization was plunged into crisis in October 2011 when Washington, an ally of Israel, cancelled its grant in protest at the body's decision to grant the Palestinians full membership.

The UN body has been forced to slash spending, freeze job hires and cut programs after losing the US funding, which had made up 22 percent of its budget, UNESCO's Irina Bokova told reporters.

"We are coping in very difficult circumstances. We're fundraising this year, but it's not sustainable on a long-term basis. We're not closing UNESCO, but member states will have to rethink the way forward. UNESCO will be crippled," Bokova stated.

US legislation prohibits funding to any UN agency that grants full membership to any group that does not have "internationally recognized attributes" of statehood.

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