Defense Minister Avigdor Lieberman has ordered to cut civil and diplomatic contacts with the Palestinian Authority in retaliation for a resolution passed by the United Nations Security Council on Friday condemning settlement building in the West Bank.

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Israel's defense establishment will continue security coordination with the Palestinians, as normal, according to Lieberman's directive to the Coordinator of Government Activities in the Territories, as initially reported by Army Radio.

A decision last week by Israel's cabinet to issue more work permits for Palestinians, raising the quota for construction workers to 6,000, could be affected by Lieberman's decision.

Another possible casualty could be a revived plan by Israel to establish an industrial zone in Tarqumiya in the southern West Bank, a project that won the interest of Israeli defense officials and the Palestinian Authority.

Prime Minister Benjamin Netanyahu had also approved the transfer of five armored jeeps from Jordan to Palestinian security forces. A senior Israeli official said at the time the decision was highly exceptional and taken against the backdrop of a rise in security problems in areas under Palestinian control.

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Sources in the Israel Defense Forces say Palestinian security forces have been taking effective steps against terrorists in Area A where the Palestinians have both civilian and security control, and Area B where the Palestinians have civilian control.

Palestinian security forces are responsible for foiling 30 to 40 percent of attempted terrorist attacks that have been thwarted, the IDF sources said.

In recent months, the IDF has gradually begun to reduce its operations in West Bank cities, against the backdrop of these Palestinian successes.

On Saturday, Palestinian President Mahmoud Abbas, in his first comments since Friday's vote, said the anti-settlements resolution won't solve the Palestinian problem but defines the problem.

"The world has explicitly said that there’s a need to end the occupation and reach a two-state solution,” Abbas said at a Christmas event in Bethlehem.

The UN resolution, he said, is a “clear statement by the world that the settlement enterprise in the territories occupied in 1967, including Jerusalem, is an illegitimate enterprise.”

“We have waited 35 years for the world to speak [since the last Security Council resolution on the subject], and finally the world has spoken,” Abbas said.