The Middle East peace process is in danger of collapse, following a reconciliation pact between rival Palestinian factions and a tough Israeli response.
Israel’s Security Cabinet decided to suspend peace talks with the Palestinian Authority, after it agreed to form a unity government with the rival Islamic militant group Hamas.
Palestinian President and Fatah leader Mahmoud Abbas rules the West Bank, while Hamas controls the Gaza Strip.
Israel has been holding peace talks with Abbas for nine months, but Hamas supports armed struggle to liberate all of Palestine and says negotiations are a waste of time.
“Hamas does not change its very hardline positions," said Israeli government spokesman Mark Regev. "Hamas is stuck in a very extremist, terrorist mode. And as the result, if Hamas is now part of the Palestinian government, we will not talk to people who say the State of Israel must be destroyed.”
Israeli Prime Minister Benjamin Netanyahu had earlier criticized the announcement, saying Palestinian President Mahmoud Abbas, who represents Fatah, is complicating ongoing peace talks.
"Instead of moving into peace with Israel, he is moving into peace with Hamas and he has to choose. Does he want peace with Hamas or peace with Israel. You can have one, but not the other," he said.
Netanyahu called Hamas a "murderous terror organization that calls for the destruction of Israel." Israel, the United States and the European Union consider Hamas a terror group.
Fatah officials say reconciliation is an internal Palestinian affair and it reflects the will of the people. Palestinian Cabinet minister Hisham Abdel Razek believes a unity government would actually advance the peace process.
Abdel Razek told Israel Radio that Hamas would have to accept the policies of President Abbas, which is a negotiated peace based on a two-state solution.
Hamas Prime Minister Ismail Haniyeh says he was not surprised by the Israeli response.
"The Israeli position was expected. This is occupation, and absolutely they do not want the Palestinian people to be united and want the division to continue," he said.
Palestinian legislator Mustafa Barghouti said the reaction by Netanyahu was "very strange."
"When we are divided, Mr. Netanyahu claims that he can not find a Palestinian that can represent all Palestinians and thus he cannot make peace and when we are united he claims that he cannot make peace with a unified Palestinian front," he said. "In my opinion it is Mr. Netanyahu that is the problem, it is his extreme government that is the problem. Mr. Netanyahu has chosen settlements over peace."
Hamas and Fatah split violently in 2007, and have since divided their people between two sets of rulers.
It remains unclear how this plan would succeed where past attempts have repeatedly failed. It also adds new complications to U.S. efforts to mediate a peace deal between Israel and the Palestinians.
In Washington, State Department spokeswoman Jen Psaki said Washington is "disappointed" by the announcement, and she warned it could seriously complicate peace efforts.
She said, "It is hard to see how Israel can be expected to negotiate with a government that does not believe in its right to exist."