* Trump administration halted funding to UNRWA in 2018
* Washington accused agency of flawed operation
* Internal U.N. probe found mismanagement in UNRWA
* UNRWA chief: Israeli pressure felt in East Jerusalem
By Nidal al-Mughrabi
GAZA, Jan 16 (Reuters) - The interim head of the U.N. agency that aids Palestinian refugees accused the United States on Thursday of lobbying foreign parliaments to stop donations to the organisation, to which Washington cut off funding in 2018.
Christian Saunders, in an interview with Reuters in his Gaza office, also said Israel was seeking to replace United Nations Relief and Works Agency (UNRWA) services for Palestinians, mandated by the U.N. General Assembly, in occupied East Jerusalem with those of its own.
UNRWA has faced budgetary difficulties since 2018, when the United States, its biggest donor, halted its annual aid of $360 million. The United States and Israel have both accused UNRWA of mismanagement and anti-Israeli incitement.
Last November, UNRWA commissioner-general Pierre Krahenbuhl resigned amid an investigation into misconduct allegations.
In the interview, Saunders, now acting commissioner-general, said the inquiry by the U.N. Office of Internal Oversight Services was complete and Secretary-General Antonio Guterres had confirmed there had been no corruption or misuse of funds.
Saunders said the investigation had uncovered mismanagement related to human resources and abuse of authority, and that major donors, who had withheld funding while the inquiry was under way, have resumed contributions.
But he said the United States was "advocating against funding UNRWA in the European parliaments and elsewhere".
"We are engaged with the U.S., we will continue to engage with them in the hopes that they will see UNRWA as a reliable partner and worth supporting," Saunders said.
UNRWA, Saunders said, was also feeling "the pressure in East Jerusalem in particular", where Israel was in the process of building schools and institutions "to compete" with the agency and stop it from operating there.
"The important thing to remember here is that UNRWA has a mandate from the (U.N.) General Assembly, from the rest of the world, the member states, to provide services to Palestinian refugees in East Jerusalem," Saunders said.
Israel considers all of Jerusalem, including the eastern part captured along the West Bank in the 1967 Middle East war, as its "indivisible capital". Palestinians want East Jerusalem to be the capital of a state they seek to establish in the West Bank and Gaza.
Last month, the U.N. General Assembly renewed UNRWA's mandate for another three years. The agency aids more than 5 million registered refugees in the West Bank, Gaza Strip and East Jerusalem, as well as in Jordan, Lebanon and Syria.
Saunders said he felt confident UNRWA had enough money for at least the first quarter of 2020, but it still faced a tough road ahead. (Editing by Jeffrey Heller and Mark Heinrich)
Our Standards: The Thomson Reuters Trust Principles.