US officials said Conflict Management and Mitigation Program would not receive further funding in addition to the aid which was already approved and is expected to end in September.
The program allows the Palestinians—many of them children—to benefit from US funding to strengthen Israeli-Palestinian ties.
However, it was reported funding would still be given to programs in which only Israeli Jews and Arab Israelis participate.
officials from the United States Agency for International Development (USAID) told congressional aides that programs that benefit Palestinians as well as Israelis would not receive any new money.
Tim Rieser, foreign policy aide to Senator Patrick Leahy who established the program, told the New York Times he had been notified last week by officials from the USAID that the Conflict Management and Mitigation Program would not receive further funding from the administration.
The program provided aid for soccer matches held between Israeli and Palestinians girls, joints meetings of Palestinian and Israeli farmers and a project enabling gatherings of youths from east and west Jerusalem.
According to Rieser, the USAID's officials did not wanted to cut the funding for the program, but had to line up with the White House.
Nevertheless, aid programs to Palestinians, which have already been approved and are planned to continue next year will not be affected.
“Essentially, USAID was faced with the choice of shutting down the program and losing the funds, or keeping something going,” Mr. Rieser said. “They decided to support programs that involve Israeli Jews and Israeli Arabs.”
The USAID issued Friday a statement saying it is “currently unable to engage Palestinians in the West Bank and Gaza as a result of the administration’s recent decision on Palestinian assistance.” The agency added it was “continuing its support for civil society working on these issues within Israel.”
Leahy described Trump's decision "to cut off funding for the West Bank and Gaza as a sign that this White House has failed at diplomacy."
Rieser added, “This is not a partisan view. It’s the view of those who recognize that you don’t advance the cause of peace by cutting off programs that are designed to promote tolerance, understanding and address shared problems,” citing Leahy as saying.
David Harden, a former American aid agency official who managed projects in the West Bank and Gaza, said, "The bottom line is if you’re a Palestinian, you don’t have access to American money.
“Once you cut out east Jerusalem hospitals and cut out girls playing soccer with each other, it’s the end of hope,” he lamented.
Nicholas Burns, a Harvard Kennedy School professor and former senior American diplomat who worked on Palestinian issues, said that “cutting off all American economic and humanitarian assistance to the Palestinian people is meanspirited and beneath a great nations like ours.
“Republican and Democratic presidents have tried for decades to position the US as an honest broker between Israel and the Palestinians,” he said. “President Trump has abdicated that critical role and squandered our influence and credibility with the Arab world on this critical issue. This is diplomatic malpractice of the highest order,” the professor opined.
US President Donald Trump's special Mideast envoy Jason Greenblatt tweeted, "I continue to believe in the importance of building relationships between Israelis and Palestinians, particularly kids.
"But, both Palestinian and Israeli kids will lose, and these programs will be meaningless, if the PA continues to condemn a plan they haven’t seen & refuses to engage on it. Hopefully the PA will lead. Let’s see," Greenblatt added.
Joel Braunold, executive director of the Alliance for Middle East Peace, a coalition of NGOs promoting the reconciliation between Israel and the Palestinians expressed his disappointment from the White House's decision, "(halting funding that benefit Palestinians-ed) would deeply damage the integrity of the program. If they don’t change their track, I can’t perceive a situation where Congress would support this.”
Trump's special envoy to the Middle East and son-in-law Jared Kushner told Thursday the New York Times, “Nobody is entitled to America’s foreign aid."
Kushner added, “there were too many false realities that were created — that people worship — that I think needed to be changed,” he said in an interview. “All we’re doing is dealing with things as we see them and not being scared out of doing the right thing. I think, as a result, you have a much higher chance of actually achieving a real peace.”
Greenblatt who is one of the initiators of the Middle east peace plan dubbed as the "deal of the century," said in an interview with Reuters that the US negotiators had entered the “pre-launch phase” of the plan, despite a boycott by Palestinian leaders since Trump acknowledged Jerusalem as Israel's capital.
But he declined to specify a time frame, except to say it would not be announced at the UN General Assembly gathering in New York later this month, or offer any details of a proposal that has drawn deep skepticism even before its unveiling.
“We’re going to have to defend the plan to Israelis and Palestinians. We are ready for criticism from all sides, but we believe this is the best path forward for everyone,” he said as the administration moved to finalize the peace plan initiative.
This move is the latest among the strings of action taken by President Trump against the Palestinians.
The White House ordered Monday the closure of the Palestinian diplomatic mission in Washington, citing the refusal of Palestinian leaders to enter into peace talks with Israel.
The State Department said the US step—the latest in a series targeting the Palestinians—came after a review of the office of the Palestine Liberation Organization centered on the fact that no "direct and meaningful negotiations with Israel" are underway despite previous warnings.
State Department spokeswoman Heather Nauert officially announced the move in a press briefing.
"To the contrary, PLO leadership has condemned a US peace plan they have not yet seen and refused to engage with the US government with respect to peace efforts and otherwise," Nauert said in a statement.
Furthermore, two weeks ago, the United States halted all funding to a UN agency that helps Palestinian refugees in a decision further heightening tensions between the Palestinian leadership and the Trump administration.
"The administration has carefully reviewed the issue and determined that the United States will not make additional contributions to UNRWA," the State Department spokeswoman said.
The announcement came a week after US administration had announced it would redirect $200 million in Palestinian economic support funds for programs in the West Bank and Gaza.
Reuters contributed to this article.