UNRWA faces possible dismantling under plan to transfer operations to the Board of Peace.By World Israel News StaffThe United Nations Relief and Works Agency for Palestine Refugees (UNRWA) could face a gradual shutdown under a proposal to transfer its responsibilities in Gaza to the US-backed Board of Peace and its operations in Judea and Samaria to the Palestinian Authority, according to a report published Sunday by Israel Hayom.Arab and Western diplomatic sources told the newspaper that UNRWA Acting Commissioner-General Christian Saunders has been advancing the initiative in response to the agency’s worsening financial crisis and Israeli legislation restricting its activities.The proposal would mark a significant restructuring of international assistance to Palestinians, potentially ending UNRWA’s decades-long role as the principal provider of education, healthcare and social services to millions of Palestinians.According to the report, Saunders presented the proposal to UNRWA’s Advisory Commission, arguing that much of the agency’s work could be transferred to other organizations.The discussions have reportedly focused on establishing mechanisms to transfer responsibility for education and healthcare in the Gaza Strip to the Board of Peace, the international body established under US President Donald Trump’s Gaza peace initiative.In Judea and Samaria, responsibility for services currently administered by UNRWA would be transferred to the Palestinian Authority.Initial measures toward implementing the proposal have reportedly received approval, although the plan has encountered strong opposition from Palestinian officials and several governments.Neither UNRWA nor the Board of Peace has publicly confirmed an agreement to dismantle the agency, and the reported transfer arrangements have not been independently verified.The reported initiative comes as UNRWA struggles with a deficit estimated at between $70 million and $100 million in 2026, equivalent to approximately one-tenth of its annual operating budget.In an October 20 interview with Anadolu Agency, Saunders confirmed the seriousness of the agency’s financial difficulties.“The deficit at the moment is about $70 million,” he said, warning that additional reductions in staffing and services could become unavoidable without emergency funding.UNRWA had already reduced service delivery hours by 20% in January, accompanied by salary reductions for most Palestinian employees.The agency has also maintained a 15.5% vacancy rate among its international staff and implemented extensive austerity measures to control spending.Speaking at an earlier UN meeting, Saunders warned that UNRWA’s financial situation was “untenable” and that further restructuring would be necessary to maintain essential services.However, his public remarks have emphasized reform and the preservation of the agency’s operations rather than its dissolution.The possibility of dismantling UNRWA has drawn strong opposition from the Palestine Liberation Organization, which regards the agency as essential to retaining refugee status for Palestinians.The PLO Executive Committee recently convened in Ramallah with representatives of UNRWA’s employees union to discuss the agency’s financial difficulties and proposed staffing reductions.In an October 25 statement carried by the Palestinian WAFA news agency, the committee rejected plans for large-scale layoffs and called for immediate international intervention to secure approximately $70 million in additional funding.It warned that mass dismissals would threaten essential services and undermine the agency’s mandate.The PLO also called on Saunders to suspend the proposed measures, engage with employee representatives and seek alternative financial arrangements.According to Israel Hayom, Palestinian officials have additionally challenged the reported transfer proposal, arguing that UNRWA cannot be dissolved without authorization from the UN General Assembly.The agency’s existing mandate was extended by the General Assembly in December 2025 and currently runs through June 30, 2029.The renewal passed by 151 votes to 10, with 14 abstentions, demonstrating the substantial international support UNRWA continues to receive despite Israeli and American opposition.The diplomatic sources cited by Israel Hayom said the proposal also faced resistance during a recent meeting of UNRWA’s international advisory body in Amman, Jordan.Representatives from Ireland, Switzerland and Egypt reportedly objected to the planned restructuring, while other Gulf countries did not join their opposition.The Irish representative reportedly pledged to seek additional funding to preserve UNRWA’s operations and prevent the dismissal of thousands of Palestinian employees.In Israel, the prospect of dismantling UNRWA was welcomed by Yisrael Beytenu lawmaker Yulia Malinovsky, one of the sponsors of legislation aimed at ending the agency’s operations in Israel.“UNRWA is a terrorist organization that no longer has a right to exist,” Malinovsky told Israel Hayom.She credited the Israeli legislation with helping bring about the reported development and argued that humanitarian organizations operating in Gaza should conduct their activities through Egypt rather than Israel.Former Knesset member Einat Wilf, a longstanding critic of UNRWA’s role in perpetuating Palestinian refugee status, also welcomed the possibility of restructuring the organization.However, Wilf cautioned that transferring healthcare and education services would accomplish little if the new arrangements continued recognizing descendants of Palestinian refugees as refugees possessing a right to return to Israel.She argued that the fundamental issue was not simply which organization administered humanitarian services, but whether the institutional framework continued to preserve claims that she believes undermine Israel’s existence.UNRWA has also faced sustained Israeli criticism over allegations that Hamas terrorists infiltrated its workforce and used agency facilities in Gaza for military purposes.Israel accused numerous UNRWA employees of participating in the October 7, 2023, Hamas massacre, which killed approximately 1,200 people and resulted in the abduction of 251 hostages.In August 2024, the UN Office of Internal Oversight Services completed an investigation involving 19 UNRWA employees accused of involvement in the attacks.UN investigators concluded that nine employees may have participated, leading to their dismissal. The evidence was deemed insufficient in nine other cases, while investigators found no supporting evidence against one employee.Israel has additionally accused Hamas of using UNRWA buildings to conceal weapons, shelter terrorists and hold hostages. UNRWA has rejected accusations that it knowingly facilitates terrorist operations and says it is committed to maintaining neutrality.The post UNRWA may be permanently shut down amid growing deficit – report appeared first on World Israel News.