Israel threatened Monday to impose new sanctions against the West Bank-based Palestinian Authority after a new unity government was sworn in under a deal with Gaza rulers Hamas.
A security cabinet meeting called to discuss the new Palestinian government decided "to authorise the prime minister (Benjamin Netanyahu) to impose additional sanctions on the Palestinian Authority," Netanyahu's office said, without elaborating.
It added that Israel would hold the PA entirely responsible for any attacks on the Jewish state.
The long-awaited unity government took the oath before president Mahmud Abbas after a landmark reconciliation deal in April with the Islamist movement Hamas.
The surprise agreement sought to end years of rivalry which saw the establishment of separate Palestinian administrations, with the West Bank ruled by the mainstream Fatah-dominated PA, and Gaza by Hamas.
"Abu Mazen (Abbas) has forged a pact with Hamas, an organisation which has been declared a terrorist organisation in the US, Europe... and throughout the world," Netanyahu said.
"The agreement with Hamas makes Abu Mazen directly responsible for the terrorism emanating from Gaza."
Abbas has pledged the new administration will abide by the principles laid down by the Middle East peace Quartet -- to recognise Israel, reject violence and abide by all existing agreements.
But Israel has vowed to boycott any unity government which includes Hamas, whose charter calls for the destruction of the Jewish state.
Israel unveiled sanctions against the Palestinians in April as peace talks with the PA faltered.
Israel, which collects about 80 million euros ($111 million) in taxes on behalf of the PA -- two-thirds of its revenues -- decided to freeze the transfer of that money, an official said.
Israel was also suspending its participation with the Palestinians in developing a gas field off Gaza and putting a cap on Palestinian deposits in its banks.