The security cabinet voted on Wednesday to declare the Gaza Strip a hostile political entity. The ministers also discussed the continuous rocket attacks against Israel.

The unanimous vote also authorized the imposing of economic sanctions against Gaza, so long as they do not affect the civilian population. The measures to be taken against Gaza include cutting back on the supply of electricity and fuel, in accordance with international law.

Hamas spokesman Fawzi Barhoum said that Israel's decision constituted a "declaration of war."

"This is a dangerous escalation of the attempt to legitimize destroying Palestinian land, criminal behavior and bringing a humanitarian disaster on the Palestinian people. This is Israel attempting a knock-out blow against Hamas following its successes in taking control of Gaza.

"I find the silence and cooperation of the man in Ramallah (Palestinian President Mahmoud Abbas) with the enemy to be very curious indeed," said Barhoum.

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The security cabinet met on Wednesday morning to discuss recent events in Gaza, including last week's Qassam attack against the Zikim military base. Over 60 soldiers were wounded in the attack.

All cabinet ministers and Prime Minister Ehud Olmert voiced their objection to retaking Gaza at this time.

On Tuesday Defense Minister Barak convened the IDF chief of staff and other senior military officials, including representatives from the Military Advocate General specializing in international law, to discuss possible punitive measures Israel could take against Gaza as the rockets continue to fall.

Following the meeting Barak conclude that Gaza and the Hamas government must first be declared a hostile entity.

Barak's office said that in accordance with international law – in dealing with a hostile entity, Israel would be able to respond without imposing a collective punishment against the civilian Palestinian population.

Those measures include preventing the flow of funds into Gaza, restricting the operations of the various border crossings, cutting off the Israeli supply of fuel to Gaza and cutting back the amount of electricity provided to the public.

Barak said however that Israel would not cut off the supply of drinking water and food or equipment and electricity required by Gaza's health services. The defense minister said he believed the international community would understand Israel's decision.

At present time Barak is not expected to order a large-scale military campaign in Gaza but rather maintain the current policy of carrying out pinpointed operations.