By Matt Spetalnick and Stephen Farrell
WASHINGTON/JERUSALEM (Reuters) -The Biden administration announced on Wednesday it would provide $235 million in U.S. aid to the Palestinians, restarting funding for the United Nations agency supporting refugees and restoring other assistance cut off by then-President Donald Trump.
The package, including humanitarian, economic and development assistance, was detailed by U.S. Secretary of State Antony Blinken as part of an effort to repair American ties with the Palestinians that all but collapsed during Trump’s tenure.
It marked Democratic President Joe Biden's most significant move since taking office on Jan. 20 to make good on his promise to roll back some parts of his Republican predecessor's approach that Palestinians denounced as heavily biased in favor of Israel.
The plan calls for $150 million through the United Nations relief agency UNRWA, $75 million in U.S. economic and development assistance and $10 million for peace-building programs, Blinken said in a statement.
Biden’s aides have also signaled that they want to re-establish the goal of a negotiated two-state solution as a priority in U.S. policy on the Israeli-Palestinian conflict.
But any further major steps are likely to wait for the dust to clear after Israel's inconclusive March election, which will be followed by Palestinian elections scheduled in coming months.
The Trump administration blocked nearly all aid after it severed ties with the Palestinian Authority in 2018. The move was widely seen as an attempt to force the Palestinians to negotiate with Israel on terms the Palestinian leadership branded as an effort to deny them a viable state.
The cuts came after Palestinian leaders decided to boycott the Trump administration's peace efforts over its decision to recognize Jerusalem as the capital of Israel and move the U.S. embassy there from Tel Aviv, upending decades of American policy.
This included rescinding funding for the United Nations Relief and Works Agency (UNRWA), which provides aid and relief services to around 5.7 million registered Palestinian refugees in the occupied West Bank, Gaza Strip and across the Middle East.
"The United States is pleased to announce that, working with Congress, we plan to restart U.S. economic, development, and humanitarian assistance for the Palestinian people," Blinken said.
Palestinian President Mahmoud Abbas's office welcomed Biden's commitment to a two-state solution as well as the renewed aid. And Prime Minister Mohammed Shtayyeh wrote on Twitter: "We call upon the American administration to create a new political path that meets the rights and aspirations of the Palestinian people."But Gilad Erdan, Israel's ambassador to the United States and the United Nations, criticized the renewal of funding to UNRWA, saying that it allowed anti-Israel incitement and anti-Semitic activity in its facilities.
"We believe that this U.N. agency for so-called refugees should not exist in its current format," he said in a video posted on Twitter.
He said that in conversations with the State Department he had "expressed my disappointment and objection to the decision to renew UNRWA’s funding" without first ensuring that reforms were carried out.
Israel's prime minister, Benjamin Netanyahu, a close ally of Trump, has previously called for the dismantling of UNRWA.
UNRWA Commissioner-General Philippe Lazzarini told Reuters the new funding was “extremely welcome” but said the agency was “not yet out of the woods” at a time of increased refugee needs exacerbated by COVID-19 and the crisis in Lebanon.
He said UNRWA was an "easy scapegoat" and that while the renewed funding was important, it was also important to have the United States back as "strategic partners."
"We have been under vicious attack with a clear political objective behind it,” he said. "We are a human development and humanitarian organization operating in a highly politicized environment."
The United Nations welcomed the restart of UNRWA funding. "There were a number of countries that had greatly reduced to halted contributions to UNRWA. We hope that the American decision will lead others to rejoin ... as UNRWA donors," U.N. spokesman Stephane Dujarric told reporters.
Blinken suggested that the Biden administration would seek reforms in UNRWA, which the Trump administration accused of inefficiencies, overcounting of Palestinian refugees and perpetuating the decades-old conflict with Israel.
State Department spokesman Ned Price insisted that aid would be allocated "absolutely consistent" with U.S. law. He pushed back against critics who have expressed concern that funds could fall into the hands of militants, especially in Gaza, where Hamas governs, saying there were safeguards in place.
U.S. law also prohibits aid that benefits the Palestinian Authority as long as it continues to pay stipends to Palestinian prisoners held by Israel for anti-Israel attacks or to their families.
Blinken said the United States was also "resuming vital security assistance programs" with the Palestinians.
The administration is likely to hold back for now on resuming direct economic aid to the Palestinian Authority while Biden's aides consult with Congress on potential legal obstacles, according to one person familiar with the matter.
The money that will go to UNRWA does not immediately restore contributions to the $365 million level that the United States gave to the agency in 2017.
Most of the refugees assisted by UNRWA are descendants of some 700,000 Palestinians who were driven out of their homes or fled fighting in the 1948 war that led to Israel’s creation.
The growing refugee count was cited by the Trump administration in its 2018 defunding, with then-State Department spokeswoman Heather Nauert criticizing UNRWA over what she called an “endlessly and exponentially expanding community of entitled beneficiaries.”
(Reporting by Matt Spetalnick, Patricia Zengerle, Jonathan Landay, Doina Chiacu, Daphne Psaledakis, Humeyra Pamuk and Simon Lewis in Washington and by Stephen Farrell in Jerusalem; additional reporting by Dan Williams and Maayan Lubell in Jerusalem, Ali Sawafta in Ramallah and Nidal al-Mughrabi in Gaza; editing by Jonathan Oatis)