The department notified Congress of the decision in a brief, three-paragraph notice sent first to lawmakers and then to reporters. It said the administration will redirect the money to "high priority projects elsewhere."
The move comes as President Donald Trump and his Middle East pointmen, Jared Kushner and Jason Greenblatt, staff up their office to prepare for the rollout of a much-vaunted but as yet unclear peace plan for Israel and the Palestinians.
"At the direction of President Trump, we have undertaken a review of U.S. assistance to the Palestinian Authority and in the West Bank and Gaza to ensure these funds are spent in accordance with U.S. national interests and provide value to the U.S. taxpayer," the department said. "As a result of that review, at the direction of the president, we will redirect more than $200 million ... originally planned for programs in the West Bank and Gaza."