The UNRWA is the caretaker human development and relief agency for Palestinian refugees. It provides educational programs, relief and social services, health programs, microenterprise and microfinance programs, and emergency relief. In January, 2010, the Canadian government announced it would curtail funding to UNRWA and redirect aid to projects in the Palestinian Authority (PA). This position paper explains why Canada’s decision will be counterproductive if it seeks to address the root causes of extremism and promote peace and stability between Israel and Palestine and provides recommendations.