Gaza's main aid agency is on the brink. The European Union, a key donor, is wavering over what to do

The U.N. agency for Palestinian refugees in Gaza is teetering on the brink of financial collapse

With the embattled U.N. agency for Palestinian refugees in Gaza teetering on the brink of financial collapse, one of its biggest donors is wavering over whether to extend it a lifeline worth tens of millions of dollars within the next few weeks.

Israel's allegations that 12 employees of the aid agency known as UNRWA participated in the Oct. 7 Hamas attacks in southern Israel shook the organization last month. Several countries suspended funding worth some $440 million, almost half of the agency’s annual budget. Two U.N. investigations are underway.

UNRWA Commissioner-General Philippe Lazzarini said the agency might cease operations in late February without more money.

Its third-biggest donor – the European Union – is due to make an 82-million-euro ($88-million) payment at the end of the month. But the 27-nation bloc's executive branch has demanded an audit of the agency by EU-appointed independent experts.

The audit would focus “specifically on the control systems needed to prevent the possible involvement of (UNRWA) staff in terrorist activities,” the European Commission said. The commission also insists on “a review of all UNRWA staff" to confirm they had no role in the attacks.

Of the U.N. agency’s 13,000 Gaza staff members, more than 3,000 continue working. Screening them within weeks would be impossible, and time is of the essence. The agency has been the main supplier of food, water and shelter during the war in Gaza, where around 85% of the population has been displaced.

“Should UNRWA cease or limit services, which may be the case as early as the end of February, it would significantly aggravate the ongoing dramatic humanitarian crisis,” EU foreign policy chief Josep Borrell wrote in a blog on Sunday, a day after discussing the issue with the bloc’s foreign ministers.

“The lives of hundreds of thousands of Palestinians, not only in Gaza, are at stake,” Borrell warned.

Asked Monday which experts had been appointed, by whom, and what progress had been made on the audit, the commission could provide no clear answer. “We don’t have additional information to share on this,” spokeswoman Arianna Podesta said.

In a statement emailed to The Associated Press, UNRWA said it “is in regular contact with the European Commission on the way forward, including the audit.” It said it's “thankful for the EU’s essential support to the agency’s humanitarian action in Gaza.”

Among the 27 EU countries, several have suspended funding. Germany, the second biggest UNRWA donor after the United States, said it “will temporarily not approve any new funds” until investigations are concluded. France, Italy and The Netherlands have taken a similar position.

The combined weight of its member states and institutions makes the EU the world’s biggest provider of assistance to the Palestinians; almost 1.2 billion euros ($1.3 billion) was earmarked for 2021-2024. But the members are deeply divided over their support for Israel and the Palestinians.

The commission, which has senior staff drawn from across Europe, has at times been similarly split.

Days after the Hamas attack, Commissioner Oliver Varhelyi of Hungary, a staunch backer of Israeli Prime Minister Benjamin Netanyahu, announced that all EU development funds to the Palestinians would be “immediately suspended. All projects put under review."

Just hours later, the commission backtracked, saying there would be “no suspension of payments.” Indeed, no payments were even due. A subsequent commission investigation found no evidence that EU money was diverted to Hamas.

UNRWA currently is the focus of two investigations. One, ordered by U.N. Secretary-General Antonio Guterres, is a probe of the allegations made by Israel. The U.N.'s in-house watchdog, the Office of Internal Oversight Services, is to carry it out.

Israel has long accused UNRWA of tolerating or even collaborating with Hamas activities in or around U.N. facilities, but the government has stopped short of demanding the agency’s immediate closure. No one – in Israel or abroad – has offered an alternative for delivering aid to Gaza’s besieged population.

The second investigation is an independent review that UNRWA chief Lazzarini requested. Former French Foreign Minister Catherine Colonna will lead it, backed by three research organizations. Guterres said Monday that a final report will be completed by late April and made public.

The review is supposed to focus on the way the agency ensures that it remains neutral and responds to allegations that it failed to do so. Colonna’s team plans to look at whether the system works and how it might be improved.

Israel receives a list each year of the UNRWA staff members working in Gaza and the West Bank. No complaints were made when the last one was shared in May 2023, the agency said.

“UNRWA never received from the government of Israel a response to the content of these lists, let alone an objection,” the agency told AP.

Some EU countries intend to increase their funding of the agency even without the investigations completed, Borrell said. The EU’s top diplomat believes that freezing UNRWA out could amount to collective punishment.

“If some doctors in a European hospital were involved in criminal activities, there would be a thorough investigation and all appropriate actions would be taken,” he wrote Sunday. But, Borrell added, “no government would ever stop funding the health service, as this would primarily punish the people who receive these services.”

Lazzarani is scheduled to meet with Borrell and other EU ministers in Brussels on Monday.

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Josef Federman in Jerusalem contributed to this report.

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Follow AP’s coverage of the Israel-Hamas war at https://apnews.com/hub/israel-hamas-war