Israel has taken further steps to isolate the Palestinian Authority, two weeks after the Islamic militant group Hamas took power. The Israeli measures have sparked angry Palestinian reaction.

Palestinian Prime Minister Ismail Haniyeh

Israel has suspended formal security ties with the Palestinians, a day after it declared the new Hamas government a "hostile entity."

The army shut down a district coordination office outside the West Bank town of Jericho, the last security facility to be manned by both Israelis and Palestinians. It is a sign of the utter breakdown of the peace process, because security cooperation was a key element of the Oslo Accords signed in 1993.

Mark Regev

Israeli spokesman Mark Regev says Israel is severing ties with the Palestinian government, because Hamas seeks the destruction of the Jewish state, and has rejected international demands to renounce violence.

"Under Security Council Resolution 1373, it is illegal to have a cooperative relationship with a terrorist organization," said Mark Regev.

That is one of the reasons why the United States and European Union have cut off nearly $1 billion in annual aid to the Palestinian Authority. As a result, the Hamas-led government is broke, after just two weeks in power, and it is unable to pay the salaries of 140,000 government employees, which are 10 days overdue.

Saeb Erekat (file photo)

Palestinian legislator Saeb Erekat says economic sanctions hurt the people, not the government.

"We urge the American administration to do whatever it takes to ensure that we do not face a human catastrophe, due to the dire financial situation that we're facing," said Saeb Erekat.

Moderate Palestinian President Mahmoud Abbas said Israel's decision to sever ties is a violation of peace agreements and international law. Hamas described Israel's position as a "declaration of war."