U.S. Moves Toward Sanctioning UNRWA: A Legal and Humanitarian Crossroads 

The Trump administration is considering imposing terrorism-related sanctions on UNRWA, potentially designating it as a Foreign Terrorist Organization (FTO), following allegations that agency staff participated in the October 7 Hamas attacks and that the organization maintains deep institutional ties to the militant group. This unprecedented move, enabled by a critical U.S. Department of Justice ruling that UNRWA does not enjoy full UN legal immunity, threatens to cripple the primary aid agency for millions of Palestinians.

While proponents argue sanctions are necessary to sever what they call a terrorist-financing conduit, UN officials and aid experts warn of catastrophic humanitarian consequences, as UNRWA provides food to 1.9 million people in Gaza and essential healthcare and education, with its collapse risking regional destabilization and creating a vacuum that could fuel further radicalization.

U.S. Moves Toward Sanctioning UNRWA: A Legal and Humanitarian Crossroads 

The Trump administration is considering an unprecedented step: imposing terrorism-related sanctions on the United Nations Relief and Works Agency (UNRWA). This move, which could fundamentally reshape humanitarian aid for Palestinians, follows a series of escalating accusations and legal shifts that have brought the agency to a breaking point. The potential consequences are vast, threatening not only an aid organization serving millions but also the stability of an already volatile region. 

Summary of Key Developments 

The Path to Sanctions: Accusations and Legal Groundwork 

The drive toward sanctions is rooted in specific and grave allegations from Israel, backed by a recent, critical shift in U.S. legal interpretation. 

• Allegations of Direct Involvement: The trigger was Israel’s claim in January 2024 that approximately a dozen UNRWA employees participated in the Hamas-led October 7, 2023, attacks. Evidence presented included the case of an Israeli, Yonatan Samrano, allegedly kidnapped by a UNRWA employee. U.S. intelligence reportedly corroborated that several employees were involved. 

• Broader Institutional Ties: Beyond individual acts, critics argue the problem is systemic. A foundational report suggests that UNRWA’s schools have for decades spread antisemitic incitement and glorified terror, creating an environment where violence is nurtured. It is further alleged that UNRWA facilities in Gaza have been used to store weapons and harbor hostages. Congressional investigators cite intelligence indicating roughly 10% of UNRWA’s 12,000 staff in Gaza may have ties to Hamas or other militant groups. 

• The Critical Legal Shift: For sanctions to be viable, the U.S. needed to establish jurisdiction. This hurdle was cleared in April 2025 when the Department of Justice (DOJ) reversed a prior administration’s stance. In a court filing, the DOJ asserted that UNRWA is a “mere ‘affiliate or instrumentality’ of the UN,” not a formal UN organ itself, and thus is not entitled to the legal immunities that protect international organizations from lawsuits and prosecution in U.S. courts. This landmark decision opened the door not only to civil suits from victims of October 7 but also to potential criminal penalties and sanctions from the Treasury Department. 

A Crisis of Oversight and Transparency 

Parallel to the legal developments, a clash over transparency between the U.S. Congress and the United Nations has fueled the push for stronger action. The House Committee on Oversight and Government Reform, led by Chairman James Comer, has launched an investigation accusing UNRWA and the UN’s internal watchdog of obstructing U.S. oversight. 

The committee’s core complaint is that the UN’s Office of Internal Oversight Services (OIOS), at UNRWA’s request, has redacted crucial information from documents related to its investigation into staff misconduct. These documents were requested by the U.S. Agency for International Development’s Inspector General to understand the scope of the problem and what disciplinary actions were taken. This lack of cooperation has led U.S. officials to conclude they cannot verify whether implicated individuals have been properly removed or if effective vetting systems are now in place. This failure to provide accountability, despite the U.S. historically funding 22% of the UN’s general budget, has strengthened the political argument for imposing direct consequences. 

The Stakes: Humanitarian Catastrophe vs. Counter-Terrorism 

The debate over sanctions is a tense standoff between two compelling priorities: isolating alleged terror links and preventing a humanitarian disaster. 

• The Case for Sanctions: Proponents argue that UNRWA has become a “subsidiary of Hamas” and a conduit for terrorism financing. They contend that continuing to treat it as a neutral humanitarian body is both morally wrong and a security risk. The goal of sanctions would be to financially isolate and cripple the agency, forcing a complete overhaul of how aid is delivered to Palestinians. Advocates suggest other UN agencies and NGOs, which they claim are already delivering the majority of aid into Gaza, could take over UNRWA’s functions without the alleged extremist ties. 

• The Warnings of Catastrophe: UN officials and aid experts offer a starkly different prognosis. UNRWA Commissioner-General Philippe Lazzarini warns that curtailing the agency’s work would have “grave consequences for the region” and would “undermine stabilisation and recovery, jeopardising a political path forward” in Gaza. The agency is not a minor player; in 2024, it provided emergency food assistance to 1.9 million people in Gaza (nearly the entire population), delivers 40% of all primary healthcare, and educates over 50,000 children in person. Lazzarini argues that destroying the last pillars of a functional society—education, healthcare, food security—creates a vacuum where traumatized children are at high risk of radicalization and recruitment by armed groups. The State of Palestine’s UN mission calls the agency “indispensable and irreplaceable”. 

Navigating an Uncertain Future 

The discussions within the U.S. administration are advanced but not final. Officials are weighing whether to sanction the entire agency or specific officials and what type of sanctions—perhaps short of the severe FTO designation—might be applied. The State Department itself is reportedly grappling with serious legal and humanitarian concerns about the fallout. 

The path ahead is fraught with complexity. If the U.S. proceeds with broad sanctions, it will test the international community’s willingness to defy Washington to fund UNRWA. It will also force a frantic scramble to create alternative aid mechanisms in one of the world’s most challenging environments. Conversely, backing down could be seen as acquiescing to what Lazzarini calls a “virulent disinformation campaign” and failing to address what sanctions proponents view as a deeply compromised organization. 

This decision is more than a diplomatic or counter-terrorism policy shift. It represents a fundamental choice about how to balance hard-nosed security imperatives with the imperative to prevent a massive human tragedy. The outcome will reverberate through the lives of millions of Palestinian refugees and the future of the Middle East.