As Ramallah readied to swear in a new unity government Monday, top Israeli ministers moved Sunday night to nix any negotiations with the Palestinians and withhold some tax transfers.

The decisions came as Prime Minister Benjamin Netanyahu convened an emergency meeting of his security cabinet, made up of eight senior ministers, to discuss Israel’s response to the imminent formation of a Palestinian unity government backed by rival factions Hamas and Fatah.

The unity government and a raft of new ministers are slated to be officially announced by Palestinian Authority President Mahmoud Abbas on Monday.

The Israeli cabinet members decided not to hold any further negotiations with the PA as long as Hamas, considered a terror group, takes part in government affairs, Army Radio reported. The cabinet further ruled that Israel would reallocate some Palestinian tax money and use the funds to pay off the Authority’s debts to Israeli companies, according to the report. The cabinet also barred three Hamas ministers from attending Monday’s government swearing-in ceremony, according to Israel Radio.

The US government, meanwhile, reportedly told Israel it does not intend to recognize the Fatah-Hamas backed Palestinian government, initially at least. Washington told Jerusalem over the weekend that it had not taken a final decision on the issue, Channel 2 news reported, but would, rather, assess the new government and then determine its position.

Although the formal line-up of the new government has not yet been made public, it has been pieced together by Abbas’s mainstream Fatah movement and Gaza’s Islamist Hamas rulers in line with a reconciliation deal inked in April.

According to a draft obtained by AFP, the new government will have 17 ministers, five of them from Gaza, and will be headed by current PA Prime Minister Rami Hamdallah who will also hold the interior portfolio.

Azzam al-Ahmed, Fatah’s representative on reconciliation issues, said the swearing-in ceremony would take place at Abbas’s Muqata presidential compound at 1:00 p.m. on Monday.

But in a sign of persistent tensions, Hamas refused to confirm the date, citing an ongoing row over the fate of the Palestinian ministry for prisoners, as reports suggested it would be transferred to the responsibility of the Palestine Liberation Organization (PLO).

Israel had reportedly warned Abbas that it would take punitive steps against the Hamas-Fatah alliance, despite Palestinian assurances that the new entity would be governed by non-political technocrats that will renounce violence and honor all peace agreements with Israel. Israel regards even such a government as unacceptable since it rests on support for Hamas, which is committed to the destruction of Israel.

On Saturday, Abbas said he would respond to any Israeli measures, though he did not elaborate.

Abbas and his aides have said in the past that they might step up efforts to gain further international recognition of a Palestinian state. The United Nations General Assembly recognized such a state in the West Bank, Gaza Strip and East Jerusalem as a non-member observer in 2012, but the PA put more applications for recognition on hold during nine months of peace talks that ended in April.

Palestinian President Mahmoud Abbas attends a meeting of Palestinian businessmen from East Jerusalem, April 29, 2014 (photo credit: Issam Rimawi/Flash90)

Palestinian President Mahmoud Abbas attends a meeting of Palestinian businessmen from East Jerusalem, April 29, 2014 (photo credit: Issam Rimawi/Flash90)

Earlier Sunday, Netanyahu urged world leaders not to recognize the new Palestinian unity government, adding that such a body would promote violence and terrorism.

“Hamas is a terrorist organization that calls for the destruction of Israel and the international community must not embrace it,” Netanyahu said at the weekly cabinet meeting.

The prime minister’s comments set the stage for what is likely to be a hard-fought battle for international opinion in the coming weeks. The reactions of the European Union and United States, which send the Palestinians hundreds of millions of dollars in aid each year, will be critical in determining whether it can survive and whether Israel will be forced to deal with it.

The Palestinians have been divided between two governments since Hamas wrested control of the Gaza Strip from Abbas’ forces in 2007, leaving the president in charge only of autonomous areas of the West Bank.

The rift is deeply unpopular among Palestinians, and presents a serious obstacle to establishing a Palestinian state. The Palestinians seek the West Bank and Gaza, along with East Jerusalem, for their state. Israel captured the three areas in 1967’s Six Day War.

Repeated attempts at reconciliation have failed in the past, and officials reported last-minute haggling on Sunday. Khalil al-Haya, a top Hamas official in Gaza, said a disagreement over the Palestinian ministry for prisoners held by Israel threatened to delay Monday’s announcement.

But both Palestinian factions now have incentives to finally repair ties.

Palestinian supporters of the Hamas movement attend a rally prior to the student council elections at Birzeit University, on the outskirts of the city of Ramallah, Tuesday, May 6, 2014. (photo credit: Abbas Momani/AFP)

Palestinian supporters of the Hamas movement attend a rally prior to the student council elections at Birzeit University, on the outskirts of the city of Ramallah, Tuesday, May 6, 2014. (photo credit: Abbas Momani/AFP)

Hamas is in the midst of a major financial crisis due to a blockade imposed by Israel and Egypt, while Abbas is in need of an accomplishment following the collapse of the peace talks with Israel in late April. Convinced that he cannot reach peace with Netanyahu, the Palestinian leader believes now is the time to get internal Palestinian affairs in order.

A statement from Hamdallah’s office Sunday denounced Netanyahu’s call, saying it was part of a campaign intended to “cement the occupation by all means.”

Palestinian Authority Prime Minister Rami Hamdallah (photo credit: CC BY Bundesministerium für Europa, Integration und Äusseres/Flickr)

Palestinian Authority Prime Minister Rami Hamdallah (photo credit: CC BY Bundesministerium für Europa, Integration und Äusseres/Flickr)

Since the Palestinian factions announced their intentions to reconcile in late April, Netanyahu repeatedly has condemned the plan, saying that even tacit backing from Hamas would make it impossible to deal with the new government.

Israel and the West consider Hamas, which is sworn to Israel’s destruction and has killed hundreds of Israelis in suicide bombings and other attacks, a terrorist group. Even after the unity deal, Hamas will keep control over a significant arsenal and thousands of fighters in Gaza.

In the past, Israel has applied financial pressure by withholding tens of millions of dollars in tax revenues it collects on behalf of the Palestinians each month. During a short-lived Palestinian unity government in 2006 and 2007, the West withheld international aid to the Palestinians because of Hamas’ participation.

But it is not clear whether the international community will back Netanyahu’s tough stance this time around. The US and European Union have signaled that they are willing to at least give the new Palestinian government a chance. The US and European Union are the largest donors to the Palestinians, providing hundreds of millions of dollars in aid to Abbas’s government each year.

Last month, the EU said it “looks forward to continuing its support” to the Palestinians if the new government commits to nonviolence and seeking peace with Israel.

The US has said it will not make any decision until it sees the makeup of the government and sees its formal program.

In this file photo provided on Nov. 24, 2011, by the office of Khaled Mashaal, Palestinian Hamas leader Khaled Mashaal, left, and Palestinian Authority President Mahmoud Abbas are seen together during their meeting in Cairo, Egypt. (Photo credit: AP/Office of Khaled Meshaal, File)

In this file photo provided on Nov. 24, 2011, by the office of Khaled Mashaal, Palestinian Hamas leader Khaled Mashaal, left, and Palestinian Authority President Mahmoud Abbas are seen together during their meeting in Cairo, Egypt. (Photo credit: AP/Office of Khaled Meshaal, File)

In the short term, Netanyahu may have a tough time isolating Abbas.

Yoram Meital, chairman of the Chaim Herzog Center for Middle East Studies and Diplomacy at Ben Gurion University, said it was likely that the European Union and possibly the US would recognize the new Palestinian government.

“The minute the world will recognize this government, that means not only unity between Hamas and Fatah, but also unity of the Palestinian land between the West Bank and Gaza,” he said.

Nevertheless, he said the Hamas-backed government plays into Netanyahu’s hands, giving him and his hard-line coalition an excuse to argue that there is no peace partner on the Palestinian side — even at the expense of butting heads with world leaders.

“His political interests are very clear: To survive as prime minister, to maintain the current government, the current coalition, and he doesn’t believe in any breakthroughs with the Palestinians,” Meital said.

AFP contributed to this report.