The United States announced the closure of the Palestinian mission in Washington, DC, in what Palestinian leaders described as "a declaration of war" on peace efforts by the administration of President Donald Trump.
In a statement on Monday, the US State Department said the Palestinian Liberation Organization (PLO) office "has not taken steps to advance the start of direct and meaningful negotiations with Israel".
"We have permitted the PLO office to conduct operations that support the objective of achieving a lasting, comprehensive peace between Israelis and the Palestinians since the expiration of a previous waiver in November 2017," the statement said.
It added the PLO leadership "has condemned a US peace plan they have not yet seen and refused to engage with the US government with respect to peace efforts and otherwise".
In response, the Palestinian Authority (PA) said the move would allow Israel to continue "their policies against the Palestinian people and land".
"It is a declaration of war on efforts to bring peace to our country and the region," PA spokesman Yousef al-Mahmoud was quoted as saying by Wafa news agency.
PLO Secretary-General Saeb Erekat said in a statement the decision was "yet another affirmation of the Trump administration's policy to collectively punish the Palestinian people, including by cutting financial support for humanitarian services including health and education".
Targeting the ICC
"The United States will always stand with our friend and ally, Israel," Bolton said in a speech to the Federalist Society, a conservative group, in Washington, DC.
"The Trump administration will not keep the office open when the Palestinians refuse to start direct and meaningful negotiations with Israel."
Bolton said the US will target the ICC it it formally proceeds with opening an investigation into alleged war crimes committed by US service members and intelligence professionals during the war in Afghanistan.
The action against the PLO, which serves as the main entity representing the Palestinian people, is the latest in a series of measures by the Trump administration against the Palestinian leadership.
Over the past year, Jared Kushner, Trump's son-in-law and senior adviser, has repeatedly questioned Mahmoud Abbas' commitment to peace and the US president's so-called "deal of the century".
The Palestinian leadership, which sees East Jerusalem as the capital of their future state, has suspended contacts with the US, after Washington recognised Jerusalem as the capital of Israel late last year.
The Palestinians insist the status of the city is an issue to be negotiated between them and the Israelis.
The US gives Israel annual military aid of $3.1bn. Next year, that figure will increase to $3.8bn under a 10-year deal agreed by Barack Obama shortly before he stepped down as president.
While the details of Trump's so-called "deal of the century" have not officially been released, leaks have suggested that the Palestinians would initially control the Gaza Strip and less than half of the occupied West Bank, while a Palestinian capital would be created from villages surrounding Jerusalem.
The Israelis would retain security control over the Jordan valley and have total control over Palestinian travel between the West Bank and Gaza, while a corridor will be created between Palestinian territory and Jerusalem's holy sites.
It appears meanwhile that Palestinians would have to surrender the principle of the right of return of Palestinian refugees expelled during the creation of Israel, while the future of illegal Israeli settlements and the final border between Palestine and Israel would be decided at a later date.
'Siding with the bully'
According to Diana Buttu, a Palestinian lawyer and analyst who served as a legal adviser to the Palestinian negotiating team from 2000 to 2005, Monday's decision is part of a list of requests the Israeli government made to the Trump administration last year.
"The US was handed a wishlist by Israel, and that wishlist has everythig the Netanyahu government wants the Trump government to do," Buttu told Al Jazeera.
"Slowly, piece by piece, the Trump administration is checking off everything that is on this list."
"First we saw the recognition of Jerusalem as the capital of Israel in May," Buttu said.
"Then we saw the limiting of the number of refugees and stop funding for UNRWA last week, and lastly there not allowing the Palestinians to have official representation in the US, which is what happened now."
According to Buttu, the US is rewarding Israel for "bad and illegal behaviour", while at the same time punishing Palestinians living under occupation.
"The US is saying they are always going to side with the bully while punishing those that demand to live under freedom."
According to Buttu, Monday's decision will not affect the already failed peace process.
"The fact that we're still talking about a peace process is laughable," she told Al Jazeera.
"All they are doing is keep talking about this "deal of the century", but they haven't presented anything yet and I think it is just an attempt to bring Palestinians to their knees," Buttu added.
"But that is not going to happen, because the Palestinian people have been through the Nakba and more, and if the US thinks these decisions will bring them to their knees they're wrong."
Cut in funding
Monday's announcement comes just weeks after the US said it would cut more than $200m in economic aid for the Palestinians.
The US had planned to give the Palestinians $251m for good governance, healthcare, education and funding for civil society in the current 2018 budget year that ends on September 30.
On Sunday, Haaretz reported that the US has also decided to cut more than $20m in foreign aid meant to support hospitals in East Jerusalem.
According to Haaretz, the hospitals treat Palestinian patients who require cancer and eye treatments.
The decision to cut funding comes amid a severe humanitarian crisis in the Gaza Strip, where more than 160 Palestinians protesting for their right to return to the areas from which they were forcibly expelled from in 1948 have been killed by Israeli gunfire since March 30 during weeks-long demonstrations near the fence with Israel.