RAMALLAH, West Bank (AP) — The formation of a Palestinian unity government backed by rival factions Hamas and Fatah will be announced Monday, Palestinian Authority President Mahmoud Abbas said Saturday, adding that Israel already warned him it would take punitive steps against the new alliance.

Abbas said Saturday that he would respond to any Israeli punitive measures, such as withholding the monthly transfer of some $100 million in taxes and customs Israel collects on behalf of his Palestinian Authority. The funds are vital to keeping the self-rule government afloat.

The long-running Hamas-Fatah rivalry escalated in 2007 when Hamas seized the Gaza Strip from the internationally backed Abbas in 2007. Hamas, which has carried out scores of bombing, shooting and rocket attacks against Israeli targets, is considered a terror group by Israel and the West.

After the April collapse of a US-mediated Israeli-Palestinian peace talks, the Palestinian rivals revived reconciliation efforts. Negotiators met repeatedly to agree on a government of technocrats backed by both sides that is to prepare for general elections in 2015. In recent days, there were last-minute disagreements, but Abbas’ announcement suggests the issues have been resolved.

“The announcement of the government will be on Monday,” he said during a meeting with several dozen pro-Palestinian activists from France. “The Israelis informed us today that they are going to boycott us immediately after we form the government.”

“They are going to withhold our money,” he said, referring to the monthly transfers. “This is our money, not aid from Israel, and we will not stay silent. They want to punish us because we have an agreement with Hamas, which is part of our people.”

In recent days, there were last-minute disagreements over the cabinet lineup, but Abbas suggested Saturday that the issues were resolved.

Abbas said that “we are going to react to any Israeli action.”  He did not elaborate. However, Abbas and his aides have said in the past that they might step up efforts to gain further international recognition of a state of Palestine. The United Nations General Assembly recognized such a state in the West Bank, Gaza Strip and east Jerusalem — lands Israel captured in 1967 — as a non-member observer in 2012.

Palestinian officials have said a state of Palestine is eligible for membership in 63 international organizations, treaties and conventions. Last month, Abbas signed membership requests for 15 conventions, and his aides have said the Palestinians planned to sign up for more in several stages.

Earlier Saturday, Hamas said it will not agree to the continuation of Palestinian security cooperation with Israel once it teams up with Abbas.

A senior Israeli government official said the formation of a unity government “is a great leap backward,” but declined to say whether Israel would take punitive action. He spoke on condition of anonymity because he was not authorized to discuss the issue with journalists.

Abbas had been scheduled to announce the formation of the government on Thursday, but was forced to delay it after Hamas reportedly rejected his preferred appointment for foreign minister.

“The government is ready, but there is only one problem, and that is that Fatah and Hamas reject Riyad al-Maliki as foreign minister, something Abbas is insisting on,” a Palestinian official told AFP, speaking on condition of anonymity.

A source close to Hamas said the Islamist movement wanted the post to be held by Ziyad Abu Amer, one of two deputy premiers currently serving under Prime Minister Rami Hamdallah.

Hamas and the Western-backed PLO, which is dominated by Abbas’s secular Fatah party, signed a surprise reconciliation agreement on April 23 to end years of bitter and sometime bloody rivalry.

The agreement gave them five weeks to set up a unity government which was to have been announced by May 28.

AFP contributed to this report.