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Trump threatens US aid cut to Palestinians

US President Donald Trump has threatened to cut off aid to the Palestinians. (AAP)

US President Donald Trump is threatening to withhold aid to the Palestinians unless they come back to peace talks with Israel.

Acknowledging his push to broker peace in the Middle East has stalled, President Donald Trump appears to have threatened to cut off US aid to the Palestinian Authority, saying they are not prepared to continue peace talks.

Trump, in a pair of tweets, said the US pays "the Palestinians HUNDRED OF MILLIONS OF DOLLARS a year and get no appreciation or respect."

"They don't even want to negotiate a long overdue ... peace treaty with Israel," he wrote.

Trump infuriated Palestinians and Muslims across the Middle East when he announced late last year that the US would consider Jerusalem the capital of Israel and move its embassy there, upending decades of US policy and igniting protests.

While the Palestinians haven't closed the door to a potential deal with Israel, Palestinian leader Mahmoud Abbas said the announcement has destroyed Trump's credibility as a Mideast peace broker, calling the decision "a declaration of withdrawal from the role it has played in the peace process".

Tuesday's tweets mark a tacit admission by Trump that his decision to move the US embassy in Israel from Tel Aviv to Jerusalem has thrown a wrench into his administration's plans to restart the peace process between Israelis and Palestinians, which he had dubbed "the ultimate deal".

By recognising Israel's claim to Jerusalem, Trump was seen by the Palestinians as siding with Israel on the most sensitive issue in the conflict: the Palestinians seek east Jerusalem - which Israel captured in 1967 - for their capital.

Trump says his decision merely recognises the reality that Jerusalem already serves as Israel's capital and wasn't meant to prejudge the final borders of the city.

In his tweets, Trump argued his decision had taken "Jerusalem, the toughest part of the negotiation, off the table, but Israel, for that, would have had to pay more."

Trump on Tuesday also issued a threat to cut off foreign aid dollars to an unspecified list of countries that don't reciprocate.

"It's not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others," Trump wrote, appearing to reference a January 1 tweet lambasting Pakistan for failing to do enough to combat terror groups while taking US aid. "No more!" Trump had tweeted on Monday.

Trump's envoy to the United Nations, US Ambassador Nikki Haley, foreshadowed Trump's warning earlier on Tuesday at the UN Security Council, saying the president doesn't want to give more funds "until the Palestinians are willing to come back to the negotiation table".

"We still very much want to have a peace process. Nothing changes with that. The Palestinians now have to show they want to come to the table," Haley said.

"As of now, they're not coming to the table, but they ask for aid. We're not giving the aid. We're going to make sure that they come to the table."

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