The US described the dissolution of the Palestinian Authority — as reportedly threatened by President Mahmoud Abbas and other top Palestinian officials — as an “extreme step” that could fundamentally alter relations between Washington and Ramallah.

State Department Spokesperson Jen Psaki told reporters Monday that she was aware of reports that Abbas was considering canceling the 1993 Oslo Accords, disbanding his security forces and transferring responsibility of the Palestinian population in the West Bank to Israel, saying the move would have “grave implications.”

“A great deal of effort has gone into building Palestinian institutions by Palestinians as well as the international community, and it would certainly not be in the interests of the Palestinian people for all of that to be lost. We — the United States has put millions of dollars into this effort. It would obviously have very serious implications for our relationship, including our assistance going forward,” she said.

Psaki emphasized that the US was focused on extending negotiations between the parties, which have all but collapsed in recent weeks. She had no comment on reconciliation efforts between the PA and Hamas, said to be in full swing once again.

Hamas official Moussa Abu-Marzouq in Gaza, December 7, 2012 (photo credit: Abed Rahim Khatib/Flash90)

Hamas official Moussa Abu Marzouk in Gaza, December 7, 2012 (photo credit: Abed Rahim Khatib/Flash90)

A senior Hamas leader based in Egypt was in Gaza earlier Monday for talks aimed at reaching a reconciliation agreement between the two rival Palestinian groups.

Moussa Abu Marzouk met with Hamas leaders in the Strip ahead of a visit by Fatah officials on Tuesday. Hamas freed 10 Fatah prisoners before the meetings as a good-will gesture.

Prime Minister Benjamin Netanyahu cynically referred to the renewed Palestinian reconciliation efforts during holiday festivities in Or Akiva, just north of Netanya, where he was participating in a traditional Maimouna.

“Today we see the Palestinian Authority, which yesterday spoke about disbanding, talking with Hamas about unity. They should decide whether they want to disband or have unity, and when they want peace, they should let us know,” he said.

Netanyahu added, “on our holiday today, our enemies fired missiles at our communities and our policy is clear — to respond quickly and strongly. We strike at whoever comes to attack us. This is what we have done and this is what we will do.”

Prime Minister Benjamin Netanyahu, center, and his wife Sara attend the Jewish Moroccan celebration of Maimouna, in Or Akiva on April 21, 2014. (photo credit: Avishag Shaar Yashuv/Flash90/Pool)

Prime Minister Benjamin Netanyahu, center, and his wife Sara attend the Jewish Moroccan celebration of Maimouna, in Or Akiva on April 21, 2014. (photo credit: Avishag Shaar Yashuv/Flash90/Pool)

AP contributed to this report.