BEIRUT - Losing significant funding from its largest donor, the United States, could be "catastrophic" for Palestinians, said a UN agency that provides aid to Palestinian refugees.
Last week, President Donald Trump said the United States may withhold future aid payments to the UN Relief and Works Agency (UNRWA) over what he called the Palestinians' unwillingness to talk peace with Israel.
A State Department official later said that no decision had been made on payment.
The United States is the largest donor to the agency, with a pledge of nearly $370 million as of 2016, according to UNRWA's website.
The UN agency, founded in 1949 to aid Palestinian refugees, provides educational and health services in the Gaza Strip and the West Bank.
"The human impact of losing significant funding could be catastrophic in the real lives of real people whom the UN is mandated to protect," UNRWA spokesman Chris Gunness told the Thomson Reuters Foundation in a statement.
"Palestine refugees are among some of the most vulnerable people in the Middle East. Our health services offer a life line, quite literally, to vulnerable women and children, the sick and the elderly," he said.
On Tuesday the Swedish ambassador to the United Nations, Olof Skoog, said he was concerned that a withdrawal of funding for UNRWA "would be very negative both in terms of humanitarian needs of over 5 million people but also of course it would be destabilizing for the region." Gunness said there was much at stake for the Palestinians.
"Even the most modest shock in a fragile society can have an inordinate impact and the consequences could be profound, widespread, dramatic and unpredictable," he said.
Relations between the Palestinians and Washington soured last month after Trump announced the US would recognize Jerusalem as Israel's capital, generating outrage across the Arab world and concern among Washington's Western allies.
Palestinians want East Jerusalem as the capital of a state they seek to establish in the West Bank and Gaza Strip.
US State Department spokesman Steve Goldstein told in a briefing in Washington on Thursday that US funding for UNRWA was still under consideration and that no decision had yet been made.