Prime Minister Rami Hamdallah chaired the first meeting of the Palestinian Cabinet in the Gaza Strip for three years on Tuesday, in a move towards reconciliation between the mainstream Fateh Party and Islamist group Hamas.
That statement contradicted President Abbas who on Monday said that Hamas would have to hand over its weapons to the unity government.
Netanyahu's remarks come hours after the extremist right wing Minster of Education Naftali Bennet called for Israel to halt the transfer of tax revenue to Palestinians on Tuesday, in response to both Palestine INTERPOL's membership and the current reconciliation process between Hamas and the PA. Analysts say the weakening and isolation of Hamas's main financial backer Qatar after Saudi Arabia, the UAE, Egypt and Bahrain imposed an economic boycott over its alleged support for terrorism also played a role.
While previous attempts at reconciliation have failed, including a previous visit by Hamdallah in 2015, years of worldwide isolation and steadily worsening conditions in Gaza appear to have pushed Hamas toward compromise this time around. "We are coming to Gaza again to deepen the reconciliation and end the split".
As the Palestinians launch negotiations, Israel fears Hamas, the terror organization committed to its destruction, is using the reconciliation to gain global legitimacy as part of the Palestinian Authority, while still retaining the goal of destroying Israel and seeking to retain the armed forces and weaponry to serve that goal.
Israel said any deal would be unacceptable unless Hamas disarmed.
He stressed that there are clear instructions from Egyptian President Abdel Fattah Al-Sisi to make an effort to end the division. And a similar effort in 2014 tanked after Israel and Hamas started a brief war in Gaza. Hamas expected the sanctions to be lifted after it dismantled the committee and invited the PA to return to Gaza.
The Hamdallah delegation's visit is seen to be largely symbolic and preparing the ground for further talks, probably in Cairo.
Mr Abbas said "differences remain" with Hamas.
The United States and the European Union blacklist Hamas as a terrorist organisation, complicating the formation of any potential unity government.
The above is the traditional position of the United States and the Quartet countries in recognizing any PA government: it must recognize Israel, renounces terror, and respect previous agreements already presented in 2006.
Hamas won parliamentary elections in the occupied territories the previous year, and reinforced its power in Gaza after ousting Fatah from the enclave. The squabbling palestinian are considered as one of the obstacles to a settlement of the israeli-palestinian conflict and one of the causes of the despair of the two million Gazans crammed on their land jammed between Israel, Egypt and the Mediterranean.