UNRWA funding shortfall puts Palestinian refugees in jeopardy

A recent funding appeal by the head of the UN agency for Palestinian refugees (UNRWA), Philippe Lazzarini, put a spotlight on how vulnerable the agency may be to geopolitics and competing global crises.

Humanitarian crises in nearby Syria and Lebanon, as well as the war in Ukraine and new regional alliances, have contributed to an increasingly precarious financial situation at an agency that supports millions of Palestinians.

Addressing journalists in Geneva in January, Lazzarini warned the organisation was nearing a “tipping point”.

For the fourth consecutive year, UNRWA ended 2022 with a “large deficit” of roughly $70 million, he said. Lazzarini admitted he was “very concerned” about increased violence and political instability in the region as needs among Palestinian refugees were skyrocketing. “The agency is struggling to keep afloat,” he said.

He appealed to donors to urgently contribute to UNRWA’s $1.6 billion budget for 2023, warning that the agency might be forced to suspend its activities if it does not receive adequate funding. “In such a volatile region, where people are so desperate and are losing hope for a better future, (that) is certainly not the best recipe,” he said.

Founded in 1949, UNRWA has been providing public-like services including education, healthcare and employment to Palestinian refugees for nearly 75 years. There are now 5.9 million Palestinian refugees, many of whom live in areas UNRWA serves: Gaza, the West Bank, Jordan, Syria and Lebanon. It is the only UN agency to run a fully-fledged school system, providing education to half a million children.

Last year was the most violent in more than a decade in the West Bank, while a record 90 per cent of Palestinian refugees in the region fell below the poverty line. At a time when both humanitarian needs and tensions in the region are at a high, insiders warn the crisis has reached breaking point.

“UNRWA has been in a very, very difficult situation to say the least,” Juliette Touma, the organisation’s head of communications, told Geneva Solutions. She said the funding shortfalls were leaving the agency operating “hand to mouth”.

“There’s a constant concern that if we're not able to secure the funding that we need our services will be impacted, and what this means in real terms is that the lives of millions of Palestinian refugees who rely on UNRWA will also be heavily disrupted.”

What’s behind the funding shortfall?

In recent years, UNRWA has faced successive million-dollar deficits while funding to the agency has plateaued or decreased. Touma said a multitude of crises in the region had squeezed the agency’s funding and diverted attention away from the plight of Palestinian refugees.

But UNRWA is far from the only organisation feeling the crunch this year. Last week, the International Committee of the Red Cross (ICRC) warned it was facing an unprecedented funding shortfall.

In recent years, many traditional donors to UNRWA have significantly scaled back their funding, or stopped it altogether. The United Kingdom and Sweden are among a number of countries to have decreased their overseas aid budgets recently, which Lazzarini said “has severely impacted the organisation”.

But his biggest appeal was to Arab states, who once made up some of the agency’s most reliable financial supporters but whose donations have recently slumped. Lazzarini said the total contribution from Arab states had fallen from a quarter of UNRWA’s funding in 2018 to just 4 per cent last year, but he couldn’t explain why.

Saudi Arabia, for instance, gave the agency roughly $167 million in 2018, but just $27 million by the end of 2022. Meanwhile, the United Arab Emirates’ contribution dropped to zero last year. Geneva Solutions contacted both country’s UN missions for comment but did not receive a response at the time of publication.

Khaled Elgindy, a senior fellow at the Middle East Institute in Washington DC, said the drop in funding could be down to “general donor fatigue” among Arab states with regard to the Palestinian issue.

“They feel that they're kind of pouring money into initiatives that don't seem to go anywhere and never get resolved,” he told Geneva Solutions. “In a way it's part of a broader dynamic that we're seeing in Arab states to divest from the Palestinian issue in general.”

He added there was a “new generation of leaders in the region who are maybe less attached to the Palestinian issue” and focused on other priorities, such as conflict and domestic instability.

Shifting politics in the region were also partly to blame, said Elgindy, with the drop in contributions to UNRWA coinciding with many Gulf states normalising relations with Israel. The Israeli government has struck a series of diplomatic agreements with Arab countries, including the 2020 Abraham Accords between Israel and Gulf nations Bahrain and the UAE, along with Sudan and Morocco.

“I think it's impossible to separate attitudes toward the Palestinians or toward institutions like UNRWA from those government's relations with Israel or desire for deeper relations with Israel,” he said. “They go hand in hand.”

UNRWA’s Lazzarini asked Arab countries not to allow the “new political dynamic” in the region to impact their support for the agency’s work. “There should be absolutely no contradiction by being part of the Abraham Accords, having a rapprochement, and to continue to support the agency and Palestinian refugees,” he told the Geneva press corps.

Lazzarini reiterated his appeal when he addressed the League of Arab States in Cairo earlier this month, where he called upon countries in the region to renew their commitments to the agency and Palestinian refugees.

“This is a cornerstone of regional stability, and a reiteration of the generosity and solidarity that the Arab region is known for,” the UNRWA chief said. “Never have Palestine refugees felt as vulnerable as they do today, in the face of diminished global attention, changed regional dynamics and the rise of explicit calls to undermine their rights and refugee status.”

US flip-flopping

UNRWA’s other traditional donors have also proved unreliable. The United States, which was historically the agency’s largest single donor, withdrew its support altogether during former President Donald Trump’s administration.

Although the agency was largely able to make up some of the shortfall due to increased donations from other countries, UNRWA’s Touma said the US pulling out had “terrible repercussions on Palestinian refugees”. President Joe Biden reversed the decision when he took office in 2021 and restored US funding to its historical levels, pledging $330 million last year.

However, Elgindy said not only is the agency likely still suffering from the compounding effects of the shortfall during the Trump administration, but the US remained an unreliable donor due to the Palestinian issue being so politically divisive in the Capitol.

“The fact that this administration has restored funding is very important and necessary, but it's entirely dependent on the political dynamics in the US,” he said.

“In Washington, UNRWA is a target in two ways. Firstly, there's general antipathy toward the UN and its institutions among Republicans, and secondly there is also antipathy and hostility towards institutions that are providing services for Palestinians. UNRWA has both of those – it’s a UN institution that helps Palestinians, and so that makes Republicans especially doubly hostile toward it.

“If we have a new Republican administration in the near future, then I think UNRWA will go back to facing an existential threat because there is kind of ideological determination on the part of Republicans in particular to kill UNRWA once and for all,” he continued.

Professor Riccardo Bocco, a Middle East specialist from the Graduate Institute in Geneva, told Geneva Solutions that donors may have also been affected by a recent crisis within the Swiss-led agency.

In 2019 Pierre Krähenbühl, the former UNRWA chief, resigned after an internal investigation found “management issues” within the agency. The investigation followed allegations of nepotism and abuses of authority. A number of other senior figures at the agency also resigned, including the former deputy commissioner general, the deputy advisor to the commissioner general and the chief of staff.

Bocco said that the incident was “very bad” for donor confidence and could still be impacting donations four years on.

Impact on the ground

Meanwhile, the situation facing millions of Palestinian refugees in the region has become increasingly dire. Unemployment has skyrocketed and most now live below the poverty line, leaving millions dependent on humanitarian assistance, including cash and food, from the agency.

Last year was the most violent in the West Bank in decades, making daily life increasingly difficult for Palestinian refugees. Overlapping disasters such as economic collapse in Lebanon and the recent devastating earthquake in northern Syria, which impacted around 46,000 Palestinian refugees, have heaped yet more pressure on the agency and the people it supports.

Funding shortfalls have forced the agency to make cuts in their education and healthcare services. Reduced funding for teachers and infrastructure has meant class sizes have ballooned to as many as 50 children in some cases. Medical services are similarly stretched, with a lack of medical personnel and huge demand leaving doctors only able to see patients for a couple of minutes at a time.

“The situation here is so desperate, if there's a break in the food pipeline we will start seeing people starve, and I think we'll also see significant social unrest,” Thomas White, UNRWA’s director in Gaza told Geneva Solutions. “We have a population of two million people here who have got nowhere else to go.”

After 16 years of economic blockade on Gaza, 80 per cent of people depend on some form of humanitarian aid from UNRWA, with three out of four people reliant on food assistance from the agency, White said. Some 40 per cent of the population is now severely food insecure.

Other social services, including education to half a million children, may also be affected by budgetary shortfalls, said Touma. “We're always very worried that we will be forced to suddenly decrease our services, or in extreme cases stop our services,” she said. “It would also impact the health of refugees, it would mean that garbage and sewage will start piling up in our camps, which has its own health hazards, and so on.”

Touma reiterated that the funding shortfalls were leaving the agency “on its toes” and “often unsure whether we are able to pay the salaries to our staff at the end of the month.”

The agency employs roughly 30,000 staff, the vast majority of whom are Palestinian refugees. In 2021, funding shortfalls forced it to put thousands of workers on unpaid leave, while around 37,000 staff in the West Bank took part in a strike in January this year demanding a pay increase.

An uncertain future

UNRWA’s plea to donors is simple: to continue operating, it needs predictable and sustainable funding. “We should not take the ability of the agency to muddle through this financial crisis as a given,” Lazzarini said at the appeal launch in January.

Elgindy from the Middle East Peace Institute pointed out that donor countries defunding UNRWA due to the lack of progress towards a political solution was “not a reasonable position”.

“You can’t say we’re going to do nothing to resolve the refugee problem at a political level but also nothing to help the refugees in a material sense,” he added. “It doesn’t solve anything.”

For Touma, the impact of insufficient funding is clear. “Without UNRWA many people will go hungry, many children will not be able to go to school, you will have a health crisis in the camps where UNRWA operates, and the situation that is already very, very bad could get worse.”