Israel is likely to take a tough approach
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The Israeli cabinet is due to meet shortly to discuss its policy with respect to the Palestinian Authority, now led by the militant group Hamas.
The Israelis are expected to announce a series of punitive measures.
They say Hamas's refusal to recognise the Jewish state entitles it to treat the new government as an enemy.
Palestinian leader Mahmoud Abbas has said people should not be punished for exercising their democratic choice.
The cabinet meeting comes a day after Hamas members took their seats in the new Palestinian parliament, following their election win last month.
After the ceremony, Mr Abbas urged MPs to accept the peace process with Israel - a call that was criticised by Hamas members.
Israel says it will not deal with the group unless it renounces violence and recognises Israel. Hamas has so far rejected the demands, but is observing an informal truce.
Borders
The Israeli cabinet will also consider whether to withhold millions of dollars of customs revenue it collects each month on behalf of the Palestinian Authority.
Israel's defence ministry has also suggested turning the Gaza-Israel crossing-points into international borders.
This could lead to tougher security checks and restrict the movement of Palestinians.
But Ismail Haniya, the man chosen by Hamas as prime minister, said earlier this week that the measures would amount to collective punishment.
"Hamas reflects the choice of our people, who will not be broken by a few measures taken by the Israeli occupiers," he said.