Defense Minister Avigdor Lieberman said Israel will not permit Hamas to rearm and build tunnels, and blasted the Gaza rulers for focusing on their military needs instead of infrastructure for the local Palestinian population.
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His comments came a day after Israel bombarded what it described as Hamas "terror targets" in Gaza in response to rocket fire on southern Israel.
"They build tunnels and 70 percent of their taxes go to rearming. They don't want to take care of their citizens, only rockets and tunnels," Lieberman said during a visit to an army base in the north.
"You know my opinions. I believe in reconstruction (of Gaza) in return for demilitarization. You cannot expect Israel will permit them to rearm and rob Gazans of their money. Where do the taxes go? No to the benefit of Gaza's resident and building homes."
Dozens of Israeli air and artillery strikes hit the Gaza Strip overnight Sunday and early Monday, reportedly wounding five Palestinians, after a rocket fired from the coastal territory struck between two houses in the southern Israeli town of Sderot.
A senior IDF official said the army largely targeted what they described as Hamas "infrastructure", in an attack they called "rare" in comparison to IDF actions since a Gaza war of two year ago.
Hamas denied its role in Sunday's rocket attack and blasted the Gaza group behind the attack, saying they are not dedicated to the Palestinian struggle.
"A group not committed to the principles of the resistance to the occupation is behind yesterday's rocket launch," Mahmoud al-Zahar, a senior Hamas official in Gaza, said Monday afternoon.
An organization in Gaza called Ahfad al-Sahaba-Aknaf Bayt al-Maqdis, affiliated with Salafist groups that identify with ISIS, claimed responsibility for the rocket fire. The group has been known to fire rockets in the past as a challenge to Hamas, the Islamist organization that governs in Gaza.