Panic at UN: US Considers Terrorism Sanctions on UNRWA

Officials in the Trump administration have held advanced discussions on hitting the UN agency for Palestinian refugees, UNRWA, with terrorism-related sanctions, two sources with direct knowledge of the talks said. The deliberations have triggered significant legal and humanitarian concerns inside the State Department, given the agency’s central role in Gaza and the wider region.

UNRWA operates in Gaza, Judea and Samaria, Lebanon, Jordan, and Syria, providing food assistance, schooling, healthcare, and shelter for millions of Palestinians. The agency has been described by senior UN figures and the Security Council as the backbone of Gaza’s aid system during the two-year war between Israel and Hamas.

Washington was historically UNRWA’s largest donor, but froze funding in January 2024 after Israel accused several employees of participating in the October 7 Hamas massacre. Israel has since alleged broader ties between UNRWA staff and Hamas, including involvement in kidnapping hostages and promoting anti-Israel incitement in schools. UNRWA rejects the claims and says Israel has not provided the evidence it demands.

According to the sources, US officials have explored multiple sanctioning paths. These include designating UNRWA itself as a foreign terrorist organization, though it is unclear whether that option remains under serious consideration. Any sweeping move against the entire agency could cripple operations and destabilize refugee relief efforts across the region.

William Deere, head of UNRWA’s Washington office, said the agency would be “disappointed” if the administration were considering an FTO designation, calling it “unprecedented and unwarranted.” Deere noted that four independent reviews, including one by the US National Intelligence Council, concluded that UNRWA remains an indispensable and neutral humanitarian body.

A State Department official took the opposite view, calling UNRWA “a corrupt organization with a proven track record of aiding and abetting terrorists,” and said that “everything is on the table.”

Inside the department, however, career officials have pushed back. Lawyers responsible for drafting sanctions language have raised legal vulnerabilities, and humanitarian officials warn that targeting the agency could obstruct vital aid for displaced civilians. The Bureau of Counterterrorism and Policy Planning Staff have led the push, the sources said.

Beyond the internal debate, US sanctions could have international repercussions. Dozens of American allies fund UNRWA, raising the possibility that foreign officials could face exposure if the US designates parts of the agency on terrorism grounds.

Israel has long advocated dismantling UNRWA entirely, arguing it perpetuates the conflict and tolerates extremist activity. Since January, Israel has barred the agency from operating on Israeli-controlled land, including East Jerusalem.

UNRWA says over 370 of its workers have been killed since the war began and warns that any sanctions would severely undermine humanitarian operations at a critical moment.