The United States is pulling out of UNESCO because of what Washington sees as its anti-Israel bias and a need for “fundamental reform” of the U.N. cultural agency, AP reported.

While the Trump administration had been preparing for a likely withdrawal for months, the announcement by the State Department on Thursday rocked UNESCO’s Paris headquarters, where a heated election to choose a new director is under way.

The outgoing UNESCO chief expressed her “profound regret” at the decision and tried to defend the reputation of the U.N. Educational, Scientific and Cultural Organization, best known for its World Heritage program to protect cultural sites and traditions.

The U.S. stopped funding UNESCO after it voted to include Palestine as a member in 2011, but the State Department has maintained a UNESCO office and sought to weigh on policy behind the scenes. The U.S. now owes about $550 million in back payments.

In a statement, the State Department said the decision will take effect Dec. 31, 2018, and that the U.S. will seek a “permanent observer” status instead. It cited U.S. belief in “the need for fundamental reform in the organization.”

UNESCO’s outgoing director-general, Irina Bokova of Bulgaria, called the U.S. departure a loss for “the United Nations family” and for multilateralism. She said the U.S. and UNESCO matter to each other more than ever now to better fight “the rise of violent extremism and terrorism.”