Trump Pulled USAID, Abbas Pulled the Plug on Terror Pay

In most parts of the world, young people seeking a way out of poverty turn to education and hard work—becoming doctors, lawyers, or entrepreneurs. In the West Bank, thanks to the Palestinian Authority’s so-called ‘Martyrs’ Fund’, some see a more lucrative path: Terrorism.

Take the 742 Palestinian prisoners released in the recent hostage deal. They aren’t returning home empty-handed—many are receiving six-figure payouts, far exceeding the average salary in the Palestinian territories. The top recipient, convicted terrorist and murderer Muhammed al-Tous, is walking away with 2.2 million shekels (over $600,000)—a fortune in the West Bank.

For years, the Palestinian Authority (PA) has continued its controversial policy of paying salaries of Palestinian terrorists and their families — a program widely condemned as “pay-for-slay”. Most Western governments have long criticized these payments, arguing they incentivize terrorism against Israel. While some of them have temporarily delayed some aid payments, the PA refused to change course. Now, suddenly, on February 10th, 2025, Mahmoud Abbas has announced the end of the program.

What changed?

While the PA’s bid for international support to govern post-war Gaza is a factor, it is not the primary reason. The real cause isn’t moral reckoning or diplomatic negotiation—it’s money. With the new U.S. administration cutting USAID to the PA, Abbas faced a clear financial reality: Keep funding terrorism or keep the government running.

The Consequence-Free Era: How Unconditional Aid Disincentivized Palestinian Responsibility

For decades, the PA has operated with little to no financial accountability. As long as foreign aid kept flowing, it had no incentive to make tough political or economic decisions. The U.S., EU, and international organizations poured billions into the PA, supposedly to help develop infrastructure and support governance. In reality, much of this money helped sustain a deeply flawed system, riddled with corruption.

Instead of using funds to build a stable economy, the PA maintained a vast sponsorship network. “Martyr payments” were an untouchable part of this budget, providing financial support for convicted terrorists and their families. The logic was simple: Why take responsibility and make uncomfortable decisions to change Palestinian political culture, when international donors would cover the bill?

Trump’s 2018 Aid Cut: An Ignored Warning

In 2018, former President Donald Trump took a radical step: He cut $200 million in direct aid to the PA and defunded UNRWA, the controversial UN agency supporting Palestinian refugees. Trump argued that endless aid without conditions only exacerbates the conflict. Palestinian leaders, instead of adapting, doubled down—seeking alternative funding from Europe and Gulf states.

The result? Temporary financial gaps, but no major reforms. When Biden took office in early 2021, aid was restored, and the PA returned to business as usual. The lesson they learned: Western pressure was fleeting, and funding would eventually return.

Trump Strikes Back

Fast forward to January 2025. A new U.S. administration takes office and swiftly reinstates aid cuts, at a much earlier phase of the term, leaving little hope for near-term reversal. The PA is now in a full-blown financial crisis. European donors, also fatigued by endless funding with little progress, are considering cutting back. The fact that UNRWA employees participated in the October 7th attack and held hostages also prompted some European countries to stop funding the agency. The upcoming election of a conservative leader in Germany may result in another setback, if the second largest donor decides to cut its funding.

Abbas is cornered. Without aid, the PA is facing an economic collapse. In Gaza, Trump’s plan for American ownership also sidelines Abbas for post-war leadership. A right-wing Israeli government is withholding parts of the taxes collected by the PA, conditioning them on an end of the ‘Martyrs’ Fund’. This time, there are no easy alternatives. For the first time in its history, the PA has to make a real budgetary decision. It chooses to cut “pay-for-slay.”

The Irony: How Financial Pressure Forced Reform

Ironically, many critics of Trump’s aid cuts predicted they would destabilize the PA and make violence worse. Instead, the opposite happened. The financial squeeze forced Palestinian leadership to take responsibility and to reform.

This moment proves a crucial point—when aid comes with no strings attached, bad policies persist. But when financial support is conditional, some change can happen. If the PA had faced these conditions earlier, reforms could have come sooner.

What Israel and the West Should Learn

1. Aid must come with conditions: Western nations must ensure that future financial assistance is tied to meaningful reforms, rather than serving as a blank check for failed policies. This also applies to the Palestinians in the Gaza Strip, where aid is hijacked by Hamas to stay in power and recruit new fighters.

2. Dependency creates irresponsibility: The PA functioned as a de-facto government without accountability for too long, relying on foreign cash instead of economic sustainability. Preparing Palestinians for statehood also means holding them accountable for irresponsible actions, instead of providing them with limitless aid.

3. Cutting aid doesn’t destabilize—if anything, it forces governance. The PA only acted when it had no other choice. This should serve as a case study in leverage-based diplomacy.

A Turning Point or a Temporary Concession?

The key question now is: Will this change last? Western leaders must remain firm and ensure that this reform is permanent, not just a temporary adjustment to financial hardship.

Ultimately, this moment is a reminder that money talks. When the West enables irresponsibility, bad policies continue. But if consequences are enforced, even the most stubborn regimes are forced to adapt. If Israel, the U.S., and Europe want lasting change in Palestinian governance, they must ensure that aid is a tool for reform, not a reward for inaction.