Jerusalem: A senior member of the Palestinian Liberation Organisation on Wednesday called threats made by US President Donald Trump to cut millions of dollars in financial aid to the country a "form of extortion".

Hanan Ashrawi was responding to Trump's suggestion that the US may withhold aid to Palestinians because they refused to take part in peace negotiations following Washington's recognition of Jerusalem as Israel's capital last month, Efe news reported.

"We will not be blackmailed. President Trump has sabotaged our search for peace, freedom and justice. Now he dares to blame the Palestinians for the consequences of his own irresponsible actions!" Ashrawi said in a statement.

Trump had said on Twitter that "with the Palestinians no longer willing to talk peace, why should we make any of these massive future payments to them?" and complained that they had disrespected his country.

Trump's statements came a day after the US ambassador to the UN, Nikki Haley, told a press conference that the President wanted to cut aid to the UN's Relief and Works Agency for Palestine refugees unless Palestinian leaders agreed to negotiate.

The US gave UNRWA over $350 million in 2016, according to the agency's website, which was used to fund educational, medical and social programmes. On December 6, Trump announced that the US would recognize Jerusalem as Israel's capital and move its embassy there, a change in policy that was welcomed by the Israeli government.

However, Palestinians see East Jerusalem, which was seized by Israel during the 1967 Six-Day War, as the capital of their future state. No nation has moved its embassy from Tel Aviv to Jerusalem, and the 1993 Oslo Accords between Israel and the Palestinians mandate that the city's final status be settled by negotiations. (IANS)