The Palestinian leadership on Wednesday flatly rejected US president Donald Trump's threat to halt financial assistance to the Palestinian Authority over its refusal to accept the United States as a mediator of peace negotiations.
It came as a Palestinian teenager was shot dead in clashes with the Israeli army near the West Bank city of Ramallah. Musab Firas Al Tamimi, 17, became the fourteenth Palestinian to be killed by Israeli forces in the unrest sparked by Mr Trump's recognition of Jerusalem as Israel's capital in December.
"Jerusalem and its holy places are not for sale, not for gold and not for silver," Nabil Abu Rudeineh, the spokesman for Palestinian president Mahmoud Abbas, said in response to Mr Trump's threat on Twitter to halt the more than US$300 million of annual aid that the US gives to the PA.
The Palestinian leadership, which wants East Jerusalem to be the capital of a future independent Palestinian state, has refused to meet American envoys since Mr Trump's announcement in December, saying the US is now unqualified to be a mediator in the peace process. Israel occupied East Jerusalem during the 1967 war and then annexed it in contravention of international law.
In two tweets on Tuesday, Mr Trump confirmed prior Palestinian assessments that his decision to recognise Jerusalem as Israel's capital had removed the holy city from any negotiating agenda, saying "We have taken Jerusalem … off the table". He dismissed Palestinian anger over this, asking why the US should give the Palestinians money when they were "no longer willing to talk peace".
In response, Hanan Ashrawi, a member of the Palestinian Liberation Organisation (PLO)'s executive committee, issued a statement saying it was Mr Trump who had demolished peace prospects: "By recognising occupied Jerusalem as Israel's capital, Donald Trump has not only violated international law, but he has also single-handedly destroyed the very foundations of peace and condoned Israel's illegal annexation of the city."
"We will not be blackmailed," she added. "President Trump has sabotaged our search for peace, freedom and justice. Now he dares to blame the Palestinians for the consequences of his own irresponsible actions."
Earlier, the US ambassador to the United Nations, Nikki Haley, threatened to cut off funding to the UN agency for Palestinian refugees (UNRWA) if the Palestinian leadership continued its refusal to negotiate under US auspices. The US is the largest donor to UNRWA and Palestinians voiced concern that such a move would heighten economic and social instability in the West Bank and Gaza. It would also impact Palestinian refugees in Lebanon, Syria and Jordan with whom the UN agency also works.
Meanwhile, Hamas spokesman Fawzi Barhoum said "the threats of the US are part of its barbaric and inhuman behaviour concerning the justice of the Palestinian issue and the rights of the Palestinian people. Such behaviour necessitates Palestinian unity and a strong position on the part of the international community, and the Arab and Islamic countries".
Palestinian and Israeli analysts predicted that Mr Abbas would not give in to Mr Trump's threat and that the Palestinian president would begin seeking alternative sources of funding.
"Jerusalem for the Palestinian public is the essence of the conflict so the leadership cannot compromise," said Mkhaimar Abusada, a political scientist at Al Azhar University in Gaza City. "Abu Mazen (Mr Abbas's kunya) wants to end his political life as a national leader, not the person who caved in to American and Israeli pressure regarding Jerusalem."
"The Palestinians were ready to reach compromises, but not to exclude Jerusalem from the final status negotiations," Mr Abusada added. "If you take Jerusalem out, what is left to talk about? Even if you give the Palestinians an empire, without Jerusalem it won't be accepted."
Hasan Khreisheh, deputy speaker of the Palestinian Legislative Council, said: "No one can give any concessions on Jerusalem, not Abbas, not anyone. It's Jerusalem, it belongs to all Arabs and Muslims across the world and to Christians so it is impossible to make concessions on Jerusalem."
Ms Haley's threat against UNRWA was taken seriously by Palestinian leaders who viewed it as an effort to liquidate the refugee issue — the core Palestinian grievance that dates back to the displacement of seven hundred thousand Palestinians by expulsion or flight during the 1948 nakba (catastrophe) that accompanied the establishment of the Israeli state.
Ashraf Ajrami, the former PA minister for prisoner affairs, said that if UNRWA does not get its required funds there will be "social, economic and security" problems, while Palestinian Legislative Council member Mustafa Barghouthi said he believed that Ms Haley had "co-ordinated" her stance with Israel and was aiming to "eliminate the refugee issue and exclude it from any future arrangement".
According to the 1993 Oslo Agreement on self-rule, a solution to the refugee issue is supposed to be negotiated in final status talks.
Israeli ministers, meanwhile, praised Mr Trump's threat on Tuesday, with the far-right education minister, Naftali Bennett, stating that "president Trump does not fear to tell the truth, even if it is not popular. The truth is Jerusalem has always been and will be Israel's capital and that no peace deal could ever be based on the division of Jerusalem."
But Tzipi Livni, an Israeli MP from the opposition Zionist Union party argued that Mr Trump's posture was harming Israel's interests. "A serious and responsible government would stop mixing up politics with national security and would quietly sit down with the president of the United States and explain Israel's real interests, including preventing a humanitarian crisis in Gaza and continuing the security co-operation with the Palestinian Authority," she tweeted.