The United States Agency for International Development (USAID) has ceased all assistance to Palestinians in the occupied West Bank and Gaza, Al Jazeera reported citing a U.S. official.
The decision announced on Friday, February 1 was linked to a January 31 deadline set by new U.S. legislation under which foreign aid recipients would be more exposed to anti-terrorism lawsuits.
The deadline also sees the end of about $60m in U.S. aid for the Palestinian security forces, whose cooperation with Israeli forces helps maintain relative quiet in the West Bank.
Congress's Anti-Terrorism Clarification Act (ATCA) empowers Americans to sue foreign aid recipients in U.S. courts over alleged complicity in "acts of war".
The Palestinian Authority declined further U.S. funding over worries about its potential legal exposure, although it denies Israeli accusations that it encourages armed attacks.
"At the request of the Palestinian Authority, we have wound down certain projects and programmes funded with assistance under the authorities specified in ATCA in the West Bank and Gaza," a U.S. official told Reuters on Friday.
"All USAID assistance in the West Bank and Gaza has ceased."
It was unclear how long the cessation would be in effect.
The official said no steps were currently being taken to close the USAID mission in the Palestinian territories, and no decision had been made about future staffing at the USAID mission in the U.S. Embassy in Jerusalem.