When Israel accused twelve UNRWA employees of participating in Hamas’s military operation on 7 October 2023, more than twenty states announced the suspension of aid to the agency. UNRWA responded by dismissing 9 of the accused employees and opening an investigation, despite this measure violating its internal policy. The funding cuts to UNRWA affect about 6 million refugees, among them 1.7 million Palestinian refugees in the Gaza Strip and an additional 500,000 Palestinians without refugee status who benefit from UNRWA infrastructure and services. This paper elucidates the reasons for Israeli incitement against UNRWA and provides possible scenarios for the agency’s future operations and the implications for Palestinian refugees. It calls for framing the Palestinian refugee issue and UNRWA in explicitly political terms, rather than solely humanitarian ones.