JERUSALEM (AFP) -- Israel warned on Saturday that it would cut the supply of water and electricity to the Gaza Strip if rival Palestinian movements Fatah and Hamas form a unity government.
"The foreign ministry is examining the possibility of Israel pulling out of the Gaza Strip in terms of infrastructure," Deputy Foreign Minister Danny Ayalon told the daily Yediot Aharonot website.
A unity government deal "would transform the Palestinian Authority into a terrorist authority and would put an end to any hope for a peace agreement" with Israel, said Ayalon, who is also a Knesset deputy from the nationalist Yisrael Beitenu party.
On Friday, Israeli ministers decided to maintain a freeze on the transfer of tens of millions of dollars in tax revenues to the Palestinian Authority hours after President Mahmoud Abbas held top-level talks with Hamas chief Khalid Mashaal at which they announced a new era of "partnership."
The transfer of funds, which make up a large percentage of the authority's monthly budget, was frozen on November 1 as a punitive measure after the Palestinians won full membership of the UN cultural organization.
"If the Palestinians have signed an agreement over a unity government, it would make a transfer of funds impossible," a senior government official told AFP.
In January, Prime Minister Benjamin Netanyahu had already threatened to cut off water and power to Gaza, which has been controlled by Hamas since the Islamist group ousted Fatah from the territory in 2007.
Israel, which unilaterally withdrew from Gaza and dismantled Jewish settlements in 2005, continues to supply the territory with water and 70 percent of its electrical power, the rest being supplied by neighboring Egypt or local power plants.
Israel has imposed a land, sea and air blockade on the coastal enclave since 2007.
The International Committee of the Red Cross has called the blockade 'a collective punishment in clear violation of international humanitarian law' and urged the international community 'to ensure that repeated appeals by States and international organizations to lift the closure are finally heeded.'