Palestinian Authority President Mahmoud Abbas and President of Malta Marie-Louise Coleiro Preca (partly obscured) attend a welcoming ceremony in the West Bank City of Ramallah on Jan. 31. (Alaa Badarneh/EPA-EFE/Shutterstock)

U.S. security funding to the Palestinian Authority is set to dry up by midnight Thursday unless administration officials find a workaround to circumvent a law that was intended to help American victims of terrorist attacks secure damages, but which has also sparked concerns that it may hurt Israel’s security.

The Anti-Terrorism Clarification Act, passed unanimously by the House and Senate last year, goes into force Friday, leaving the Palestinian Authority open to huge lawsuits if it accepts U.S. funds. The Palestinian Authority has said it will therefore forgo receiving U.S. financing, including the $60 million that Washington provides in security assistance, ending more than a decade of direct aid to its security forces. 

However, an Israeli official, who spoke on the condition of anonymity because of the sensitivity of the topic, said Israel is supporting efforts now underway by U.S. State Department and other Trump administration officials to find a legal fix that will “maintain security cooperation on one hand and also justice to the families of the victims of terror.” 

The central concern is that the end of U.S. funding to the Palestinian security forces, including to a training program in Jordan, would erode the security capabilities of the Palestinian Authority and threaten its security coordination with Israel. Although cooperation has broken down in times of conflict, Israel and the Palestinian Authority still share intelligence and coordinate on arrests to prevent attacks. 

The Trump administration had already cut other assistance to the Palestinians, slashing aid it provided through the U.N. Relief and Works Agency, which deals with Palestinian refugees, but security assistance was considered too important to ax.  

The U.S. security funding is “the glue that has helped ensure the security coordination continues and that has successfully thwarted terrorist attacks,” said Dan Shapiro, a former U.S. ambassador to Israel. The implications of the act “have alarmed the Israelis sufficiently enough that a week ago they went to the administration and Congress to try to find a fix.” 

He said that with most of the money targeted toward training, a cutoff of funds may not have an immediate effect but would degrade the ability of Palestinian forces over time.

“It is also a political signal which shows the Palestinian security forces and Palestinian people that the U.S. is no longer a partner,” Shapiro said. 

The Israeli Foreign Ministry declined to comment on whether it has asked the U.S. administration to find a workaround. The U.S. Embassy also declined to comment. 

The legislation was pushed by Shurat HaDin, a right-wing Israeli legal organization that has sought damages for the families of victims killed in Palestinian attacks. Nitsana Darshan-Leitner, president of the organization, described the efforts to find a way to continue funding as “outrageous.” 

“The State Department is now standing against the victims,” she said. She said she does not think the cut would impact security coordination, which the Palestinian Authority has an interest in continuing to keep Hamas, the militant organization that runs the Gaza Strip, from extending its control in the West Bank. 

The law’s principle author, Sen. Charles E. Grassley (R-Iowa), also expressed “astonishment” that State Department officials were attempting to find a fix. 

“You have made protecting the United States and its citizens from terrorism a top priority. I applaud and fully support this effort,” he wrote in a letter to President Trump last week. “Which is why I am surprised that individuals in your administration are deliberately working to undermine core protections that you recently signed into law for U.S. victims of terrorism.” 

The legislation was born of a more than decade-long legal battle by Shurat HaDin to obtain compensation from the Palestinian Authority and Palestine Liberation Organization for the families of victims killed in Palestinian attacks. In 2015, a U.S. court ordered the organizations to pay $655.5 million in damages to families, but the judgment was later dismissed by an appeals court and the U.S. Supreme Court on grounds of a lack of jurisdiction.

The new law gives U.S. courts jurisdiction to seize assets from any entity that receives certain foreign assistance from the United States. 

Darshan-Leitner said the Palestinian Authority has enough resources to make up the funding. The Palestinian National Council has already voted to stop security coordination with Israel but has not carried through with the threat. 

“With the Palestinians, you have to look at actions, not words,” Danny Danon, Israel’s ambassador to the U.N., said at a news conference in Jerusalem, adding that when they speak privately, they understand the importance of security cooperation. 

“The U.S. is a democracy and within that democracy people come with all different ideas without coordinating with us, but if you look at the end result it usually works out,” he said.  

The act will also bring a swifter-than-planned end to some U.S. Agency for International Development projects in Gaza and the West Bank, which had already begun to wind down because of funding cuts. Sean Carroll, president of Anera, a subcontractor for USAID infrastructure projects, said a U.S.-funded school in the West Bank will now be left half-built, and two water projects also risk being left unfinished. 

“We continue to work through the potential impact of the Anti-Terrorism Clarification Act,” said a State Department official who spoke on the condition of anonymity because of the sensitivity of the matter. “In consultation with partners, we have taken steps to wind down certain projects and programs in the West Bank and Gaza.”

Mohammad Shtayyeh, a member of the central committee of the Palestinian Authority’s ruling Fatah Party, described the U.S. funding is “small but significant.”

“I’m sure of one thing, that this will affect the performance of the security forces,” he said.  

Eitan Dangot, Israel’s military governor of the Palestinian territories from 2009 to 2014, said that coordination between the Palestinian security forces and Israel is “better than ever before” and that “any damage to their budget will cause problems.”

If the Palestinian Authority declines the funding, he said, “We will all pay a price.”

“It will hurt the coordination, the loyalty, the trust between all the forces,” Dangot said. “It will ultimately destroy all the work that has been done since Oslo.”

But Palestinian officials think they have no choice, saying that the Palestinian Authority would otherwise face bankruptcy from legal cases.

Opinions, however, were mixed on how significant the impact would be.

Alon Eviatar, a former head of the advisory branch on Palestinian affairs in COGAT, the branch of the Israeli military that deals with the civil administration of the West Bank, said he did not think the $60 million was a significant part of the security forces’ budget and that the Palestinian Authority would manage without the money in the same way it has managed without U.S. contributions to UNRWA.

“They will look to other donors to cover the deficit,” Eviatar said. He cited Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, “or one of the states they usually turn to to cover the money gap, like they did in the case of UNRWA.”

“The other option for them is to just cut back on training or a little on the salary,” he added. 

Brig. Gen. Tawfiq al-Tirawi, former head of intelligence for the Palestinian Authority, said that increasing incursions by Israeli security forces into areas that are supposed to be administered by the Palestinian Authority mean that security coordination is breaking down anyway.

“It used to serve the benefit of the Palestinian people, but now it does not,” he said. “This will affect us negatively, but it will not kill us.”

Ruth Eglash in Jerusalem and Carol Morello in Washington contributed to this report.