US politicians have warned the Palestinian leadership in the West Bank that they could lose hundreds of millions of dollars in aid if they continue to seek recognition of statehood at the United Nations.
Experts, however, told the House Foreign Affairs Committee that cutting off US funding, particularly to Palestinian Authority security programs, would benefit extremists and hurt Israel.
"Should the Palestinians pursue their unilateralist course, the hundreds of millions of dollars in annual assistance that we have given them in recent years, will likely be terminated," representative Howard Berman said.
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"And that could well result in the collapse of the Palestinian Authority," the influential Democrat told the committee.
For weeks, Washington has deployed its entire diplomatic arsenal to try to persuade the Palestinians not to submit a formal request to become the 194th member of the United Nations, in the face of US and Israeli opposition.
The United States has repeatedly said that only direct talks between the two sides can lead to genuine Palestinian statehood, and the UN bid, expected on September 20, will only raise tensions.
Republican representative Steve Chabot told the committee that most of the $US600 million ($A582.64 million) in annual US aid would be withdrawn if the Palestinians did not change course.
"If the Palestinians continue on their current path, the question before this Congress will not be what portion of our aid will be cut, but rather what portion will remain," Chabot said.
But Elliot Abrams, who was a deputy national security adviser for president George W Bush, urged politicians against hasty action.
"Some of the programs that are up for cutting are actually in our interests and in the interests of Israel, such as the security programs," said Abrams, who is now an expert at the Council on Foreign Relations think tank.
"Generally cutting off the PA (Palestinian Authority) is a very difficult thing to do," he said, warning that the PA's collapse would benefit the extremist group Hamas.
Instead, he urged politicians to differentiate between the PA, which is an effective administrative body, and the Palestine Liberation Organisation (PLO), which he said is the driving force behind the UN bid.
For this reason, he said, politicians should endorse a move to close the PLO office in the United States if the Palestinian UN bid goes ahead.
David Makovsky, a specialist at the Washington Institute for Near East Peace, also urged caution.
"A total suspension of assistance would certainly be warranted if the PA took a pre-meditated turn towards a third intifada ....but President (Mahmud) Abbas's record strongly suggests that this is not his intent," he said.
Policy makers must ask who would would benefit from an aid cut-off, he argued.
"The group that stands to gain the most from a cut-off of US aid to the PA would be Hamas," he said.
"In stark contrast, the PA's cooperation and security relationship with Israel over the last four years has produced real and favourable change."
