Right wing politicians in Israel and the US were delighted, and Palestinians and their supporters alarmed, by what looked from the outside like a rather sudden decision by the Trump administration to end all funding for the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA).

It creates a major precedent to question UNRWA’s very mandate and the principle that 5.5 million Palestinians – over ninety-five percent of whom were not born in 1949 when the agency was founded – should be considered refugees.

Many Israeli officials, while extremely critical of UNRWA’s mission and conduct, were concerned about the immediate implications of it losing a third of its budget. Most in Israel agree that the organisation’s role – which sees it maintain the Palestinians’ refugee status and their dependency on international aid – artificially props up an anti-Israel political agenda.

But they also recognise it is a primary source for funding schools, social programmes and tens of thousands of jobs.

UNRWA is already carrying a $217 million (£168 million) deficit and without American money, it will be hard-pressed to continue providing aid in the tense West Bank and in the volatile Gaza Strip – the latter already teetering on the brink of full-blown disaster.

There could be implications too for security coordination between Israel and the Palestinian Authority, and the chances of achieving that still-elusive long-term ceasefire deal with Hamas in Gaza.

The impact might be mitigated by increased donations from other donor nations and by efficiency moves by UNRWA itself, but even if the organisation manages to overcome the drastic shortfall and preserve its services, the US action signals a more long-term challenge.

It is looking increasingly doubtful that the Trump administration will ever present a comprehensive Israeli-Palestinian deal. What the administration is doing, encouraged by and in coordination with Israeli Prime Minister Benjamin Netanyahu, is to try change the fundamental basics this conflict’s diplomatic orthodoxies.

It did this last year by relocating the US Embassy in Israel from Tel Aviv to Jerusalem, a move the administration described as removing the issue “from the table”, and is doing so again with the refugees issue.

The Palestinians will try and fight this, but they have few options. The population of the West Bank and Gaza are tired of intifadas and warfare. From the rest of the world, most significantly the European Union and the Sunni Arab states, they receive mainly lip-service and not the kind of support that will give them the backing for a forceful diplomatic initiative.

And they are hampered by President Mahmoud Abbas’ disgruntled and dysfunctional leadership – and the unbridgeable split between Fatah and Hamas.

On both Jerusalem and the refugees, President Donald Trump and Mr Netanyahu are still on their own, with no other government prepared to support them.

It is quite likely that this attempt to challenge the received wisdom on the basics of a future settlement will fail, lasting only so long as Mr Trump remains in the White House. But for now at least, the Israeli and US governments are united in their effort to tear up this conflict’s rulebook.