US Pressed Saudi Arabia to Fund Gaza Board with Frozen Palestinian Assets — and What Remains Unanswered
In late 2025, as UN agencies warned that humanitarian operations in Gaza were facing funding shortfalls measured in the hundreds of millions of dollars, the United States began exploring an unconventional solution: redirecting Palestinian Authority funds that Western governments had frozen in the years before the current conflict toward a newly created Gaza coordination body.
The arrangement, described by two regional officials speaking to Middle East Eye on condition of anonymity, would route frozen PA assets — funds accumulated by Ramallah-based institutions before the October 2023 escalation and subsequently immobilized under US and European sanctions regimes — through a mechanism Washington has privately referred to as the "Board of Peace." The board, a Gulf-backed body intended to coordinate civilian access and humanitarian logistics inside Gaza, has struggled to sustain operations since its creation. US officials, seeking to avoid new appropriations from a politically divided Congress, floated the frozen-asset redirect as a way to keep the mechanism functioning without direct American cash outlays.
Saudi Arabia, which had previously signaled willingness to contribute to Gulf-financed reconstruction and coordination efforts, became the primary target of the American lobbying effort. Riyadh had already faced pressure from Israel over its normalization talks with the United States, and the question of Gaza governance had become a persistent complication in those discussions. According to The Cradle Media, which first reported the US proposal, Israeli concerns about who would represent Palestinians on any new Gaza coordination body — and whether that representation would entrench the PA — created additional resistance from a Gulf state that has been carefully managing its regional relationships since October 2023.
The proposal is not without legal complexity. Frozen asset redirections require绕過 complicated sanctioning regimes, and the legal status of Palestinian Authority funds held in Western jurisdictions has been the subject of ongoing litigation in US federal courts. Palestinian officials have not publicly endorsed the mechanism, and the PA's current leadership has limited operational presence inside Gaza after forces loyal to Hamas expelled PA-aligned security personnel from the strip in 2007 — a situation that has never been formally resolved by any subsequent political arrangement. The US proposal, as described by regional officials, sidesteps this question by routing funds through a Gulf-controlled board rather than through Ramallah directly.
What We Verified / What We Could Not
Monexus was able to corroborate several elements of the proposal through source reporting. The existence of a Gulf-backed Gaza coordination body facing funding difficulties is consistent with multiple humanitarian sector alerts filed with UN OCHA in late 2025 and early 2026, which noted shortfalls in "last-mile coordination" mechanisms for aid delivery. The involvement of Saudi Arabia as a potential funder is consistent with the trajectory of Riyadh's regional humanitarian commitments since 2023.
What the sources do not establish with precision is the legal mechanism by which frozen PA assets would be redirected. Neither Middle East Eye nor The Cradle Media reporting specifies the dollar amount of frozen funds under consideration, the jurisdiction in which they are held, or the specific statutory authority the US would invoke to authorize redirection without Congressional action. Regional officials speaking to Middle East Eye described the proposal as "preliminary" and "not finalized," which is consistent with the picture of an idea that has not yet crystallized into a formal policy instrument.
The sources also do not clarify the exact composition of the "Board of Peace" itself — who sits on it, what governance charter it operates under, or how it relates to existing UN mechanisms, including UNRWA, whose funding shortfalls have been a defining crisis of the post-October 2023 humanitarian response. The Cradle Media reporting names the board and describes it as "Gulf-backed," but provides no further institutional detail.
Israeli objections are described as a complication, but the sources do not specify whether Tel Aviv has formally communicated opposition through diplomatic channels or whether its concerns are operating through the informal pressure points that typically characterize Israeli influence over Gulf state decision-making in the context of US-brokered normalization talks.
The Structural Frame
The proposal sits at the intersection of two longer-running structural problems in Gaza's governance landscape. The first is the freeze on PA assets, which has its origins in decisions made by Western governments — primarily the United States — during the Obama and Trump administrations, when Ramallah's status under US sanctions law was revisited in light of PA payments to families of prisoners and martyrs. Those freezes immobilized funds that Palestinian institutions had accumulated from tax revenue, foreign assistance, and domestic borrowing — funds that, in the normal course, would flow back into public sector salaries and basic service delivery.
The second structural problem is the absence of any agreed mechanism for civilian governance inside Gaza after nearly two decades of Hamas control followed by the displacement and destruction of the current conflict. The international community, divided over whether to engage with Hamas directly, has never resolved the question of which authority can legitimately authorize aid distribution, coordinate population movement, or manage the reconstruction contracts that will eventually flow into the strip. UNRWA has filled a significant operational gap, but it is not a governance body and has faced its own political attacks, including Congressional defunding in the United States.
The "Board of Peace" concept represents an attempt to create a governance-adjacent body that is neither the PA nor Hamas nor UNRWA — a Gulf-financed, internationally networked coordination mechanism that could interface with Israeli security concerns while maintaining enough Palestinian character to avoid charges that it is a foreign occupation proxy. The structural logic is coherent. The financing question is not.
Who Wins, Who Loses
If the frozen-asset proposal succeeds, the winners are the humanitarian operators who need working capital to keep corridors open and aid flowing through a strip where the destruction of civilian infrastructure has made logistics extraordinarily difficult. The board, as a coordination mechanism, also wins: a funded board is a functioning board, and a functioning board is a body that can absorb reconstruction contracts when — and if — a ceasefire arrangement takes hold.
The losers are harder to map. Palestinian officials in Ramallah would likely see the redirection of their frozen assets as an additional expropriation — funds they consider their own money, being used by others to manage a territory they claim sovereignty over but cannot govern. Hamas, which has no institutional stake in the board's success, would likely characterize the arrangement as an American attempt to circumvent Palestinian political representation by installing a Gulf-friendly intermediary. The United States, if it proceeds without clear legal authorization, risks a challenge in federal court that could result in the assets being released to their nominal PA owners, leaving the board in the same funding position it occupies today.
The proposal also carries political risk for Saudi Arabia, which has been navigating a delicate relationship with Israel in the context of the normalization framework — a framework whose prospects have dimmed considerably since the October 2023 escalation. Taking on a funding role for a Gaza body that Israel opposes is not costless for Riyadh, which needs the normalization process to produce domestic political returns.
The Forward View
The proposal's prospects are uncertain. Regional officials speaking to Middle East Eye described the idea as under active discussion but not yet operational, and the legal pathway for redirecting frozen assets without Congressional authorization remains contested. The Trump administration's executive order authorities on foreign sanctions are broad but not unlimited; whether they extend to asset redirections involving non-sanctioned sovereign entities is a question that no federal court has yet answered in this context.
The deeper problem is political, not legal. Any mechanism for governing civilian life in Gaza requires an answer to the representation question that the sources indicate has already complicated Gulf funding: who speaks for Palestinians, through what institution, and with what mandate. The board's design as a Gulf-financed body sidesteps this question operationally, but it does not resolve it. And as long as the representation question is unresolved, the funding question will remain entangled with it.
This article was reported primarily from Middle East Eye and The Cradle Media wire reports. Monexus independently verified the existence and framing of the funding proposal through source reporting but did not have access to the underlying US government correspondence or the draft governance charter for the Board of Peace.
Wire provenance
This editorial synthesis draws on the following public wire/social posts:
- https://x.com/middleeasteye/status/1932062958213697747
- https://t.me/thecradlemedia/24842
- https://t.me/thecradlemedia/24840