"Those kinds of extreme measures would have grave implications," said State Department spokeswoman Jen Psaki. The harsh American threat to the PA followed Yedioth Ahronoth's report that Palestinian President Mahmoud Abbas was considering shuttering the PA's government if the peace process did not yield results.
The move would leave Israel responsible for two-and-a-half million Palestinians.
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Psaki said the US was aware of the reports, but that "dissolving the Palestinian Authority is not in the interest of the Palestinians."
The State Department spokeswoman explained that "a great effort has been made in the last few years to build Palestinian institutions including with US financial aid" but that Abbas' proposal would "have implications on our relationship and our assistance."
Psaki said US Secretary of State John Kerry has no current plans to return to the region for a visit, though that might change if the State Department thought a trip would positively impact the negotations.
"We are still looking for a formula or a mechanism to move forward and extend the talks. We hope the parties can reach an agreement as soon as possible," Psaki said.
'Let us know when you want peace'
During the Mimouna celebrations in Or Akiva, Prime Minister Benjamin Netanyahu addressed Abbas' proposal and the scheduled reconciliation meeting with Hamas in Gaza: "Yesterday the Palestinian Authority discussed dismantling, today it is mulling uniting with Hamas. Let them decide whether to dismantle or unit."
Netanyahu then drew a sharp line between Israel and the Palestinian leadership: "When they want peace, they should let us know. Because we want a lasting peace. Today, on a holiday, our enemies launched rockets on our towns, and our policy is clear – respond with immediacy and intensity."
The prime minister emphasized Israeli resolve to protect its citizens, "We hurt those who aim to hurt us. That's what we have done and it is what we will continue to do."
Economy Minister Naftali Bennett, who participated in Bayit Yehudi's Mimuna celebrations in Yavne, also addressed the upcoming reconciliation talks between Fatah and Hamas. "The Mimuna is a holiday of coming together, of peace. Today we again call on our neighbors to make peace, and we will not stop calling on them for peace, but every coin has two sides.
"We will not be extorted and we will not be threatened. Against the brotherhood of terrorism between Fatah and Hamas we have our own brotherhood, the nation of Israel."
Rough proposalAbbas' proposed move, as first reported in Yedioth Ahronoth, would see the Palestinian leadership walking away not only from the negotiations table, but from self-rule and the two-state solution as a premise for peace.
Such a move would annul the Oslo Accords and revoke the status of the PA as a sovereign authority, leaving Israel with full responsibility of the Palestinian population in the West Bank.
Senior sources in the IDF's Central Command, who recently met with the heads of the Palestinian security services, confirmed their West Bank counterparts were sincerely debating dismantling and disarming the PA's forces.
If the plan proceeds, the Palestinian leaders will lose their official authority, but settlements will be significantly more vulnerable to litigation in international courts.
With the deadline for the end of the agreed-upon frame for the negotiations looming, the Palestinian Central Council will convene Saturday for a special conference.
"The proposal may be discussed at the conference, but it is not clear it will pass," said Palestinian sources.
Meretz Chairwoman Zehava Galon commented on Abbas' threat, calling on Netanyahu "to heed (Abbas') words. Just like he petitioned to join UN organizations after the fourth wave of prisoners release was called off, he may return the keys to (to the PA to) Israel.
"Dismantling the PA will force Israel to create a civilian administration to control the population in the territories, expand the occupation, and open the door to international sanctions on Israel; it will turn Israel into an isolated vagabond on the world stage."
In recent weeks, both Israel and the Palestinians have reached out, with the help of US mediators, in attempts to salvage the talks – after the fourth wave of prisoners release was cancelled and Abbas' efforts to join 15 international organizations, treaties, and conventions.
Elior Levy contributed to this report.