From the New York Times, June 13, 1966:
This became a particularly touchy issue for the US when the PLA announced that it would fight alongside the Vietcong.
UNRWA, however, didn't understand the problem with providing free aid to people who wanted to destroy Israel. At this time UNRWA was already thoroughly biased as it wholeheartedly identified with the Palestinian Arab cause against Israel. Its response to the US demand is remarkable in how clueless UNRWA was even then.
From JTA, October 17, 1966:
The United Nations Relief and Works Agency for Palestine Refugees admitted to the General Assembly here today that it is providing rations to refugees who are members of the Palestine Liberation Organization, the group sworn to make war against Israel and receiving military training for that sole purpose.A couple of weeks later, the US condemned UNRWA for its tone-deaf response:
Strong objections to such UNRWA activity was voiced here by many governments at the Assembly last year. Among the opponents to UNRWA aid for the PLO were not only Israel but also the United States, which contributes 70 percent of the UNRWA budget. However, Laurence Michelmore, Commissioner-General of UNRWA, which provides relief, housing and education for the Arab refugees, reported to the Assembly today:
"A special aspect of the question of ration rolls deserves mention. Doubts have been expressed by some Governments about the propriety of the Agency's issuing rations which may be consumed by young men in military training under the auspices of the Palestine Liberation Organization. The host governments (Egypt, Jordan, Syria, and Lebanon) do not consider that these doubts are well-founded. In the light of these differences, arrangements have been made for special added donations to the amount of $150,000 which meets the total cost of any rations consumed by the young men in question.
"The Commissioner-General is satisfied that these arrangements provide a practical means of disposing of the problem insofar as the Agency is concerned. Contributors to UNRWA, who may have been concerned about this matter, may thus be assured by the Agency that their contributions will not be used to furnish assistance to refugees receiving military training under the auspices of the Palestine Liberation Organization."
It was noted here immediately that Mr. Michelmore did not disclose the source of the $150,000 worth of "added donations," which, it is believed, come from the Arab countries. However, it was observed that he has made it clear that, whatever the source of the extra funds, the monies are being channeled through the United Nations agency in the form of rations.
A highly placed spokesman for the Israeli delegation, asked about Mr. Michelmore's statement regarding the furnishing of UNRWA rations to military trainees in the PLO, stated: "It is outrageous that the United Nations lends itself as an instrument in this sort of operation."
The United States Government strongly condemned today the provision of United Nations relief to Arab refugees serving in the Palestine Liberation Organization and the failure of the United Nations organization in charge of refugee relief to remove from its ration rolls the large number of refugees who are not entitled to U. N. aid.In the end, nothing happened. The US continued to fund UNRWA and UNRWA continued to provide aid to terrorists. In fact, in response to an incident after the 1967 war where Israel forced some 4000 PLA members to leave Gaza, UNRWA went out of its way to say that they were still refugees under its rule and as such should continue to get aid. I don't know all the details from the episode, but the UNRWA report for 1966-67 says:
These statements were made by U.S. Ambassador Harding F. Bancroft, the American representative in the General Assembly's 101-member Special Political Committee.
Referring then to the problem of aiding members of the PLO, Mr. Bancroft told the Committee: "Since the Palestine Liberation Army came into existence, many young men on the agency's ration rolls have been recruited into it -- and yet have remained on the ration rolls. The United States delegation made clear last year that we consider it inadmissible for a U. N. agency to supply rations to men serving in an army dedicated to the solution of the repatriation question by armed force and, indeed, to the overthrow of the government of a member of the United Nations."
He recalled that the United States objected last year to the provision of UNRWA aid to members of the PLO and told the Assembly: "My government's position as stated last year is one of principle. We believe the Assembly should not give the impression that it condones or regards with indifference the involvement of any United Nations agency with an organization which avows such purposes."
[B]etween three and four thousand young men among the registered refugees in Gaza were forced to leave the Gaza Strip because the Israel authorities believed them to be members of the Palestine Liberation Army. They are now housed in a government-run camp in the Tahrir Province. UNRWA regards this group as falling under paragraph 6 of General Assembly resolution 2252 (ES-V) and has at the request of, and in agreement with, the Government of the United Arab Republic, undertaken to give assistance to the group.
UNRWA: part of the problem in the 1960s and still part of the problem today.