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Nir Barkat said schools, clinics and sports centres, among other services operated by UNRWA in east Jerusalem, will be transferred to Israeli authorities. The municipality did not provide an exact timeline but it said schools serving 1,800 students would be closed by the end of the current school year.

Barkat, who is set to step down following municipal elections at the end of the month, said the US decision to cut $300 million in aid to the agency earlier this year empowered him to adopt the move.

"The US decision has created a rare opportunity to replace UNRWA's services with services of the Jerusalem Municipality. We are putting an end to the lie of the 'Palestinian refugee problem' and the attempts at creating a false sovereignty within a sovereignty," Barkat said in a statement, claiming the schools and clinics were illegal and operate without an Israeli licence.

Jerusalem's municipality said the move was coordinated with the Israeli government.

UNRWA did not immediately respond to a request for comment.

UNRWA was established in the wake of the creation of the state of Israel in 1948. An estimated 700,000 Palestinians fled or were forced from their homes at the time, an event Palestinians call the Nakba, or "Catastrophe".

In the absence of a solution, the UN General Assembly has repeatedly renewed UNRWA's mandate. The agency now provides education, health care and social services to more than 5 million refugees and their descendants. It serves populations in Gaza and the West Bank, as well as Jordan, Lebanon and Syria.

Palestinians and most of the international community sees UNRWA as providing essential services. But Israeli Prime Minister Binyamin Netanyahu has said the agency should be abolished and its responsibilities taken over by the main UN refugee agency.

Most experts - including the head of UNRWA Pierre Kraehenbuehl - have suggested that the US slashed the UN agency's budget to punish Palestinians for their criticism of President Donald Trump's decision to recognise Jerusalem as Israel's capital.

That move broke with decades of US policy that the final status of the city would be decided in future negotiations between Israel and the Palestinians, and Palestinians severed nearly all ties with Washington following the move. 

Kraehenbuehl's comments also came amid signs that the US, with Israeli support, is aiming to abolish UNRWA altogether.

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