A Palestinian unity deal brokered between Mahmoud Abbas’s Fatah faction of the PLO and the Islamist Hamas shows Abbas is not interested in peace, Prime Minister Benjamin Netanyahu told US Secretary of State John Kerry Wednesday, signaling that the reconciliation pact could spell the end of US-mediated peace efforts.

Netanyahu also called an emergency meeting of his security cabinet for Thursday morning to discuss Israel’s next steps after the agreement, which could bring the terrorist Hamas movement into the Palestinian Authority fold.

The security cabinet comprises nine top ministers, including Defense Minister Moshe Ya’alon, Finance Minister Yair Lapid, Economy Minister Naftali Bennett, Justice Minister and chief peace negotiator Tzipi Livni and Communications and Home Front Defense Minister Gilad Erdan.

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A senior Israeli government official said Netanyahu called Kerry to complain about Abbas’s move.

Netanyahu told Kerry that Fatah’s reconciliation with the Hamas terror organization is a “Palestinian modus vivendi” the official said. “Whenever it comes to decision time, the Palestinians run away,” the prime minister told Kerry, according to the official. “Whoever wants peace with Hamas is not interested in peace with Israel.”

The official did not say how Kerry responded to Netanyahu’s words.

In the wake of Wednesday’s Palestinian reconciliation deal, US officials reportedly said that any PA government including Hamas — designated by the US, Israel and others as a terrorist organization — would have to accept three key PA commitments, recognizing Israel, renouncing violence, and accepting previous Israeli-Palestinian agreements, or the US government would not recognize it and would not provide any funds for it.

As a first concrete reaction to the Hamas-Fatah deal, Israel on Wednesday canceled a planned meeting of Israeli and Palestinian negotiators. And an unnamed official in Jerusalem termed the unity deal “the beginning of the end of the peace process,” Channel 2 news reported. However, Jerusalem has so far refrained from formally declaring an end to the peace talks.

Chief Palestinian negotiator Saeb Erekat told AFP that no meeting with the Israelis had been planned for Wednesday. “Netanyahu stopped the negotiations a long time ago,” Erekat said. “He chose the settlements instead of the peace. He is demolishing the peace process.”

Erekat said that the Palestinians would meet bilaterally with US peace envoy Martin Indyk in Ramallah on Thursday.

Earlier, Netanyahu charged that the unity deal showed that Abbas had picked terror over peace efforts.

“Tonight, as talks were still ongoing about the extension of peace negotiations, Abbas chose Hamas and not peace. Whoever chooses Hamas doesn’t want peace,” Netanyahu said.

For his part, Abbas said that the unity deal did not preclude peace efforts.

“There is no incompatibility between reconciliation and the talks, especially since we are committed to a just peace on the basis of a two-state solution in accordance with the resolutions of international law,” Abbas said in a statement issued by his office.”

“This move, supported by the Arab world and internationally, will strengthen the ability of the Palestinian negotiators to realize the two state solution,” he also said.

Echoing comments he made Tuesday to Israeli journalists in Ramallah, Abbas added that “there is no contradiction whatsoever between reconciliation and negotiations.”

The Fatah-Hamas unity deal came after seven years of bitter fighting between Hamas and the Palestine Liberation Organization, which is dominated by Abbas’s Fatah party.

Announcing the deal in Gaza, Hamas Prime Minister Ismail Haniyeh said the agreement called for the formation of a unity government within five weeks and new elections within six months after that. He also called for a reassessment of peace talks with Israel, which he said did not serve the Palestinian interest.

News of the deal drew harsh reactions from Jerusalem lawmakers.

Economy Minister Naftali Bennett, from the hard-line Jewish Home party, said the agreement meant that the PA was now “the world’s largest terror organization.”

Foreign Minister Avigdor Liberman said in a statement: “It’s impossible to make peace with both Israel and Hamas, a terror organization that calls for the destruction of Israel. The signing of an agreement for a unity government between Fatah and Hamas is a signature on the end of negotiations between Israel and the Palestinian Authority.”

Wednesday was not the first time that a national unity government has been announced by the rival Palestinian factions, and on several previous occasions attempts to form an administration have collapsed.

Fatah and Hamas signed a reconciliation accord in Cairo in 2011 aimed at ending the political divide between Gaza and the Palestinian Authority-ruled West Bank. But deadlines came and went without any progress in implementing provisions of that accord.

Also Wednesday, Israeli planes struck Gaza, reportedly targeted an Islamic Jihad terrorist, but missing and injuring a number of bystanders.

A short while later, at least three rockets were fired out of Gaza at Israel, but all landed in open areas.

Elhanan Miller and AFP contributed to this report.