US cuts $25m in aid for Palestinian hospitals in occupied East Jerusalem

The move follows the State Department's late August announcement the administration is slashing more than $200 million in bilateral aid to the Palestinians following a review that President Donald Trump ordered to ensure the spending was aligned with US national interests.

The Palestinians had held out hope the hospital money would be spared because it was not included in the previously announced cut. On Saturday, the Palestinian Authority denounced the administration's move as "an act of political blackmail".

The State Department said the review was intended to make sure the American aid was "being spent in accordance with US national interests and were providing value to the US taxpayer".

The administration "will be redirecting approximately $25 million originally planned for the East Jerusalem Hospital Network. Those funds will go to high-priority projects elsewhere," the department added. It did not identify the projects.

In response, Palestine Liberation Organization executive committee member Hanan Ashrawi accused the administration of threatening to cause "serious instability and grave harm" to thousands of patients and their families across the West Bank and Gaza Strip, and jeopardise the livelihood of thousands of workers in the Palestinian health care sector.

"Such an act of political blackmail goes against the norms of human decency and morality," Ashrawi said in a statement. "Politics should not trump humanity or harm a vulnerable people in need of support and protection."

The administration announced the original cut in US aid to Palestinians as Trump and his Middle East advisers prepare to release the US peace plan for Israel and the Palestinians.

But Trump angered the Palestinians earlier this year by moving the US Embassy from Jerusalem to Tel Aviv, which led the Palestinians to break off contact with the US.