Prime Minister Benjamin Netanyahu hinted Thursday in discussions with a visiting delegation of U.S. Congress members that the United States should consider stopping economic aid to the Palestinian Authority if a Hamas-Fatah unity government did not recognize Israel and renounce terror.

Netanyahu also told the seven U.S. lawmakers that Israel would not recognize a Palestinian unity government if it did not meet these conditions. “Israel would not recognize any government in the world that included members from Al-Qaida,” Netanyahu said.

Speaking to the American legislators, Netanyahu quoted remarks by Secretary of State Hillary Clinton in April 2009, that Israel would not hold talks with or economically support a Palestinian government, including Hamas, until Hamas recognized Israel and abandoned violence.

Senior government officials familiar with the details of yesterday’s meeting of the septet said the main decision was to launch a diplomatic campaign, with particular emphasis on the European Union, to thwart international recognition of the unified Fatah-Hamas government.

Intelligence officials told the septet that Hamas had agreed to sign a reconciliation agreement with Fatah out of Hamas’ fears over the implications for its organization in light of the riots in Syria.

Joining the ministers at the meeting were Finance Minister Yuval Steinitz, Israel Defense Forces Chief of Staff Benny Gantz, MI chief Maj. Gen. Aviv Kochavi and senior figures in the Mossad and the Shin Bet security service.

The MI officials told the ministers that Hamas is worried about the instability of the regime in Syria, which it considers the patron of the organization ‏(Hamas’ headquarters is in Damascus‏). Hamas’ alliance with Bashar Assad has been harshly criticized in the Arab world.

Israel is expected to demand that the international community boycott the new government if it does not meet the conditions the Quartet has set for Hamas.

After Hamas won a majority in the 2006 elections to the Palestinian parliament, the Quartet − consisting of the United States, Russia, the European Union and the United Nations − demanded that Hamas recognize Israel and existing agreements and renounce terror in exchange for international recognition.

Foreign Ministry Director General Rafael Barak sent a classified cable to Israel’s ambassadors to the EU, directing them to to make clear that Israel expects European leaders not to automatically release statements welcoming the Palestinian unity government.

“Hamas is a terror organization and the demand must first be made that it meet the conditions of the Quartet,” he wrote.

Defense Minister Ehud Barak yesterday said Israel asked its friends in the world not to talk to Hamas, unless the group undergoes “deep and fundamental changes” by dismantling its terror infrastructure and accepting the Quartet’s conditions.

In an interview yesterday on Army Radio, Foreign Minister Avigdor Lieberman called for sanctions against the PA, such as withholding tax revenues. However, senior officials in Jerusalem and the septet have decided for now not to take punitive steps against the PA but rather to wait for clarification about the platform of a new Palestinian government.

Most of the European announcements about the Palestinian unity government emerging yesterday did not include the Israeli demands. European Union foreign affairs chief Catherine Ashton said the European Union has long been calling for internal Palestinian reconciliation.

The German Foreign Minister, Guido Westerwelle, said in a statement that Hamas is “not a dialogue partner for us because we don’t work with organizations that fight with violence against Israel’s right to exist.”