For the first time since its foundation in 1950, the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) has been forced to make major cuts in its services to the 3.4 million highly vulnerable Palestinians registered with the agency.
In Gaza, where three-quarters of the population of nearly a million are on UNRWA's books, 150,000 Palestinian schoolchildren have been striking at 167 agency schools since August 23rd because fees have been levied.
Daily sit-in demonstrations have been taking place outside UNRWA supply depots to protest against a freeze in hospital referrals and reimbursements for medical expenses imposed for the last two months of 1997.
The situation has become so desperate that UNRWA has handed dismissal notices, effective at the end of September, to 50 employees at the new European Union-built hospital in the southern Gaza Strip.
To Gazans the agency's cuts were the last straw, coming on top of estimated losses of $258 million (about £175 million) in August due to the month-long Israeli siege, a fall in the standard of living of 25 per cent since January, and 70 per cent unemployment.
In the other areas of UNRWA operations the situation is only marginally better. Of the 1.74 million Palestinians living in the West Bank, 35 per cent benefit from UNRWA's services, particularly education and health.
Palestinians in the UNRWA camps of south Lebanon protested against the cuts as soon as they were announced on August 19th. Refugees living in Jordan and Syria, where employment opportunities are greater, have expressed fears that the international community, which funds UNRWA, has decided to close down the agency, end their refugee status and compel the bankrupt Palestinian Authority to assume responsibility for them.
Mr Peter Hansen, the agency's commissioner-general, said that the reductions were necessary for UNRWA's survival beyond the end of the year due to a $20 million deficit (almost £14 million) in the agency's budget for the last quarter of this year.
By making strategic reductions in these services and by cutting some of its 20,000 staff members, most of them Palestinians, UNRWA will be able to maintain its 60 camps in Gaza, the West Bank and the three host countries where shelter and basic rations are provided to the most needy third of the refugees on its books.
UNRWA fell victim to the peace process in 1993, when donors began to channel funds into the "Peace Implementation Programme" which swallowed up $215 million.
But the collapse of the peace process has lessened the utility of these projects and increased insecurity among the refugees. Failure to meet UNRWA's financial requirements during a pledging conference in Amman, Jordan, next Tuesday - the day before the US Secretary of State, Ms Madeleine Albright, begins her first peace-saving mission to the region - could be yet another source of instability.
