NEW YORK/BEIRUT/GENEVA – Any halt to operations by the UN Palestinian agency over Israeli accusations that some of its staff took part in the Oct 7 Hamas attack could hamstring the entire humanitarian effort in devastated Gaza, aid agencies say.

Donors are demanding a swift investigation before resuming funding, though they have praised the work of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA) in Gaza and its response so far to the allegations.

UNRWA believes it has responded rapidly and transparently to Israel's allegations, which came as Israel faced a genocide case at the International Court of Justice over the Gaza war, and after years of it calling for the agency to be disbanded.

Israel's offensive in the Palestinian enclave has caused the world's most acute humanitarian crisis, with 85 per cent of Gaza's 2.3 million inhabitants homeless, large numbers starving and others falling sick.

UNRWA is at the heart of all aid work in Gaza through its 13,000 employees in the enclave, its clinics and schools – many now acting as packed shelters – and its logistics hubs.

"The entire aid system in Gaza will be closer to the point of collapse," said Ms Shaina Low, a spokeswoman for the Norwegian Refugee Council, calling UNRWA "vital in coordinating aid and providing shelter".

UN spokesman Stephane Dujarric said: "No other organisation than UNRWA has the infrastructure to do the work that they do."

Some 15 of the agency's most important donors, including the top two, the United States and Germany, have suspended funding over Israel's allegations.

About US$440 million (S$589.6 milllion) is at risk, said UNRWA spokeswoman Juliette Touma.

"The decision to suspend funding from these countries is tantamount to a death sentence for Palestinians," charity Action Aid said.

The agency and the wider UN now face a race to persuade donors that they have responded appropriately to Israel's accusations before money runs out at the end of February.

It is not clear how long the investigation by the UN's oversight office may take. It was important for it to be thorough and "unimpeachable", but also swift, said Mr Dujarric, the UN spokesman.

Israeli government spokesman Eylon Levy accused UNRWA of acting "as a front for Hamas" and said it was "not bad apples" that were the problem, but a systemic failure to address accusations of support for extremism in its ranks.

Responding to those comments, Ms Touma said UNRWA had on Jan 17 ordered an independent review to establish the truth of longstanding claims about UNRWA and its staff.

Inside the organisation, the accusation that 12 staff took part in the Hamas attack that killed 1,200 people in Israel had come as a deep shock.

"If these allegations are true, they are a betrayal of UN values and a betrayal of the people we serve," Ms Touma said.

The organisation believes it has acted quickly despite Israel making direct accusations to it only about 12 staff, while allegations were leaked to media that a larger number of employees have Hamas links.

"UNRWA took a very proactive approach," said Ms Touma.

Its head Philippe Lazzarini went to UN Secretary-General Antonio Guterres and to the US and other top donors after Israel verbally told him on Jan 18 that it had evidence against 12 UNRWA staff, Ms Touma said.

Mr Lazzarini fired those allegedly involved, an unusual step he is allowed to take "in the best interests of the agency", she said.

"UNRWA then went public with the information before anyone else," she added.

Neither Israel nor any other official source has shared with UNRWA a dossier alleging that 190 of the agency's staff in Gaza are Hamas or Islamic Jihad militants, and it learnt about this only when it was reported in the press, Ms Touma said.

Reuters viewed and reported on the Israel intelligence dossier on Jan 29.

UNRWA regularly shares lists of its employees with Israel and with the governments of countries hosting Palestinian refugees. It last did so in May 2023, Ms Touma said.

Israel has never provided a response to those lists, "let alone an objection", she said.

A spokesperson for Israel’s government did not respond to Reuters’ questions on what information it had shared with UNRWA and the UN and major donors or about how long it had known about Hamas links to UNRWA employees.

Long-term role

Israel has long criticised UNRWA and says its mandate should be given to other UN agencies.

UNRWA’s 30,000 staff provide schooling and primary health clinics for Palestinian refugees in several Middle East countries.

The first ever UN agency, UNRWA was established by a resolution of the body's General Assembly in 1949 to look after refugees who fled or were pushed from their homes when Israel was created.

Israel has long criticised the curriculum taught in schools UNRWA runs and disputes the agency's count of refugees – an important political issue in any eventual peace talks, with Palestinians demanding a right of return.

"Israel would like there to be an existential threat to UNRWA because they mistakenly think if you get rid of UNRWA, then you suddenly get rid of the refugees and their right to return," said former UNRWA spokesperson Chris Gunness.

Mr Levy, the Israeli government spokesman, said: "Palestinians have been told across UN facilities that they are still refugees from a war that took place decades ago, that they possess a right that does not exist."

However, UNRWA's mandate was renewed by the UN General Assembly in 2023 until mid 2026 and the agency can be disbanded only by a new General Assembly resolution. REUTERS