Trump administration officials have held advanced discussions on hitting U.N. Palestinian refugee agency UNRWA with terrorism-related sanctions, said two sources with direct knowledge of the matter, prompting serious legal and humanitarian concerns inside the State Department.

The United Nations agency operates in Gaza, the West Bank, Lebanon, Jordan and Syria, providing aid, schooling, healthcare, social services and shelter to millions of Palestinians. Top U.N. officials and the U.N. Security Council have described UNRWA as the backbone of the aid response in Gaza, where the two-year war between Israel and Palestinian militant group Hamas unleashed a humanitarian catastrophe.

The Trump administration, however, has accused the agency of links with Hamas, allegations UNRWA has vigorously

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