By Suleiman Al-Khalidi
AMMAN (Reuters) - Jordan's already struggling economy will face even tougher times if several donors continue to suspend funding for the U.N. agency for Palestinian refugees and its services have to be shut or reduced as a result, UNRWA's country head said on Tuesday.
"The current funding suspension is putting the continuation of these services at risk after the end of February. It will have severe consequences (on UNRWA's operations)," said Olaf Becker, Jordan director of the U.N. Relief and Works Agency.
UNRWA, which provides healthcare, education and other services, has been pitched into crisis since Israel alleged that 12 of its 13,000 staff in Gaza were involved in the Oct. 7 Hamas-led attack on Israel that precipitated the Israel-Hamas war. The allegations prompted major donors to suspend funding.
Jordan, which lies at the heart of the Arab-Israeli conflict, hosts 2.4 million Palestinian refugees, the largest number of such refugees among Israel's neighbours. Many of its citizens are of Palestinian origin.
Jordan already provides $1 billion in infrastructure and other services to 10 Palestinian camps across the country, where the agency runs schools and health services for nearly 400,000 inhabitants, Becker said.
UNRWA was already helping the economy with 7,000 employees on its payroll, making it one of the largest employers in the kingdom, injecting over $120 million in salaries into the economy annually, Becker said.
Its services support over one million Palestinian refugees in the kingdom with, on average, 20% lower cost than the state in providing comparable services, Becker added.
"Our first option would be scale down our services and it might take different modalities but it's very difficult -- what do you choose, health care versus education or sanitation?" he said.
"School children might not have anywhere to go... It will be very detrimental to social cohesion in Jordan," Becker said.
Jordan, a staunch U.S. ally, says it is crucial to continue to empower UNRWA, established in 1949 under a U.N. mandate in the wake of the first Arab-Israeli war.
Jordan's King Abdullah, speaking on Monday on a visit to the White House, said UNRWA's work in Jordan was "vital" and it was imperative it receive support to continue its mandate.
Sheri Ritsema-Anderson, U.N. Resident Coordinator in Jordan, said no other U.N. agency could step into UNRWA's role at short notice and within its cost structure.
Jordanian officials say any attempt to dismantle UNRWA would undermine the Palestinian right under international law to return to homes abandoned in Israel or be compensated.
(Reporting by Suleiman Al-Khalidi, Additional reporting by Trevor Hunnicutt in Washington, Editing by William Maclean)