Qatari envoy Mohammed Al-Emadi gestures during an interview with Reuters in Gaza City, August 24, 2019. REUTERS/Mohammed Salem

The Western-backed Palestinian Authority has pulled out of an agreement to provide funding from Qatar to the Gaza Strip over concerns its involvement could expose it to legal issues, the Gulf state’s aid envoy said on Friday.

Doha has underwritten Gaza rebuilding and infrastructure projects since the 2014 war between the Palestinian enclave’s Islamist Hamas rulers and Israel, but another round of fighting in May prompted Israeli and US demands to revise the payouts. They have since been on hold.

Israel and Egypt hold Gaza under a blockade, citing threats from the Hamas terrorist group. The World Bank has said that the restrictions have contributed to soaring unemployment and poverty in the enclave, home to 2 million Palestinians.

Envoy Mohammed Al-Emadi had said that Qatar would soon resume separate funding for civil servants and poor families in Gaza under a new mechanism involving the United Nations and the PA. Under the scheme, cash would be deposited into PA banks in Gaza.

But on Friday, Emadi said the PA had withdrawn from the agreement “due to fears of legal prosecution and accusations that banks were ‘supporting terrorism.'”

Emadi’s office was working to resolve the issue and find a different route to disperse the funding, it said in a statement.

The PA did not immediately provide comment. Hamas said the PA’s move “reflects (its) desire to deepen the humanitarian crisis in the Gaza Strip instead of contributing to a solution.”

The Qatari funding scheme has won support from Israel, whose defense minister, Benny Gantz, said it would ensure money reached those in need while bypassing Hamas.

Qatar and Egypt have both promised funds to help rebuild the Palestinian territory. Having already pumped more than $1 billion into Gaza projects since 2014, Qatar pledged another $500 million in late May.