Ammon News - AMMONNEWS - Palestinian president Mahmoud Abbas on Saturday said that Israel had threatened to cut ties with the Palestinian Authority if the PLO and Hamas formed a government of national unity as they intend to, but that he was prepared to respond to the threats , Ma'an reported.

Abbas made the statements during a visit of French solidarity activists in Ramallah, after days of intense negotiations between the two largest Palestinian political parties regarding the make up of the national unity government they pledged to form on April 23.

During the statements, Abbas said that the national government should be formed by Monday, and would be "composed of independents and experts, not members of Fatah or Hamas or any other organization."

Abbas stressed that the PA was taking Israeli threats seriously and would be prepared to respond if Israel followed through and cut ties with the PA, which could potentially mean Israel's withholding of Palestinian tax revenues.

"We will take things step by step and we will not be the ones who initiative. We will respond against any action. When Israel decides to prevent us from (accessing) the money that it collects on our behalf as opposed to the three percent that it takes (currently) that is not their right we will have a response."

He also stressed that Israel had no reason to boycott the national unity government, as it would merely continue policies the existing policies of the Palestinian Authority.

"The policy of the (unity) government is our policy. ... The government will adopt (the policies) that we have adopted. The government recognizes the state of Israel. The government recognizes international law," he said.

"Where is the mistake that Israel is opposing this government for?"

"Israel wants to boycott us because we made an agreement with Hamas ... but Hamas is part of our people," he added.

Israel collects taxes on foreign imports and value added taxes on Israeli goods as part of a complex system of Israeli control over the Palestinian economy and all of its borders.

It is supposed to forward these taxes to the Palestinian Authority, but it frequently cuts these funds in the event of political disputes.

In mid-May, Israel announced it would begin a series of punitive economic measures in response to the Palestinian national reconciliation deal, including preventing Palestinian banks from making deposits in Israeli shekels.

The move is unprecedented and could have potentially disastrous on the Palestinian banking sector, which is structurally dependent on the Israeli banking system due to the occupation.