Israeli PM: Hamas A 'Terror Authority'

Acting Prime Minister Ehud Olmert on Sunday called the new Hamas-led Palestinian legislature a "terror authority," ruling out all contacts with the militant group but saying Israel would allow humanitarian aid to reach the Palestinians.

Olmert made the comments to the Israeli Cabinet, which met a day after the new Hamas-dominated Palestinian legislature was sworn into office.

Hamas on Sunday nominated Gaza lawmaker Ismail Haniyeh to be Palestinian prime minister.

The nomination, announced in a text message sent to reporters, had been widely expected. Haniyeh is considered to be a member of Hamas' pragmatic wing and has good working relations with the rival Fatah movement.

Olmert asked the Cabinet to consider a series of economic sanctions against the Palestinians. Israel has warned that the moment Hamas enters parliament, relations with the Palestinians would be affected.

"Given the Hamas majority in parliament ... the Palestinian Authority becomes in effect a terror authority," Olmert said. "Israel won't agree to that."

Israeli officials last week said they planned a series of measures aimed at crushing the already battered economy of the Gaza Strip in response to Hamas' electoral victory.

Israel is threatening to withhold 50 million dollars in monthly taxes it collects from the Palestinians, reports CBS News Correspondent David Hawkins, and the United States says it will cut off all foreign aid.

Other proposals range from a ban on Palestinian laborers entering Israel to a possible wide-ranging blockade of Palestinian exports. Almost all Palestinian exports from Gaza must pass through Israeli crossings.

Olmert told his ministers that Israel "won't compromise with terror" and ruled out any contacts with a government in which Hamas participates. "On the other hand, we have no intention of hurting the humanitarian needs of the Palestinian people," he said.

Palestinian leader Mahmoud Abbas was expected later Sunday to formally charge Haniyeh with the task of putting together a new Cabinet. Haniyeh would then have three weeks to submit a government to Abbas for approval.

Addressing the parliament on Saturday, Abbas said he expected Hamas to honor existing peace accords with Israel and halt violence. Hamas leaders rejected those calls, but signaled a willingness to compromise.

Born in Gaza's Shati refugee camp, Haniyeh graduated from Gaza City's Islamic University in 1987 with a degree in Arabic literature and became a close associate of Hamas founder Sheik Ahmed Yassin.

Haniyeh was expelled by Israel to south Lebanon in 1992, returned to Gaza a year later and became the dean of the Islamic University. In 1998, he took charge of Yassin's office.

A pragmatist, he served as a liaison between Hamas and Palestinian Authority, established in 1994 and dominated by the rival Fatah movement.

He rose to prominence after Israel's assassinations in 2004 of Yassin and Yassin's successor, Abdel Aziz Rantisi. He has been a member of the political leadership of Hamas since the 1990s.

After Saturday's session, both Abbas and Haniyeh, Hamas' said they would try to resolve their deep differences through dialogue.

Haniyeh said he hoped a compromise could be reached, despite conflicting views. "We will deal with this difference in the political position through dialogue and understanding, to preserve the national unity of the Palestinian people and promote the higher interests of our people," Haniyeh said.

Hamas is pledged to Israel's destruction, opposes peace negotiations and has said it is not moderating its ways, despite international pressure and threats of tough Israeli sanctions, such as a blockade of the Gaza Strip.