Israeli ministers and officials expressed skepticism on Thursday about the announced Hamas-Fatah unity government.

Defense Minister Ehud Barak said the agreement between the Palestinian factions has "dramatic potential" but it is doubtful that it will mature into a joint government.

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Barak admitted that Israeli intelligence had foreseen a low probability for a reconciliation agreement between the two factions, and noted that Palestinian officials were also skeptical about it.

On Gilad Schalit, Barak told Israel Radio that he does not know how the unity deal will affect negotiations for the release of the captured soldier.

The defense minister also reiterated Israeli's position that it would not hold any discussions with Hamas, "a murderous organization whose aim is to destroy Israel."

However, he said that if a joint Palestinian government were to rise, Israel would hold talks with the new government only if Hamas would dismantle its terrorist infrastructure and recognize Israel and previous agreements made with the PLO.

Foreign Minister Avigdor Lieberman also commented on the unity agreement on Thursday, saying the deal means that terrorists will launch missiles from the West Bank.

"A red line has been crossed, and Israel must decide what we are going to do," Lieberman told Israel Radio. "Hundreds of terrorists from Hamas will go free throughout Judea and Samaria.

"The international community should enforce the terms it gave the Palestinians: abandoning terror, recognizing Israel, and respecting previous agreements," Lieberman said.

He also explained that the agreement between the two Palestinian factions came because of "panic" on both sides. Hamas is concerned that their "patron," Syrian President Bashar Assad, is facing a crisis, and Fatah's no longer has the support of former Egyptian president Hosni Mubarak, Lieberman explained.

Opposition leader Tzipi Livni denounced Hamas, but hoped the unity government would agree to return to the negotiating table.

"Hamas is a terror organization that represents an extremist ideology that does not recognize Israel's right to exist or previous agreements with Israel," Livni said in a statement.

"Any Palestinian government will have to accept the Quartet's conditions and work for peace with Israel. This is the time for Israel and the PA to make decisions; it will be a test," she added.

Livni also said that "unilateral steps are not the way to solve the conflict. Founding a Palestinian State could only be done through an agreement with Israel that will be reached through negotiations."

Kadima MK Nachman Shai called the Hamas-Fatah agreement Prime Minister Netanyahu's "great failure."

"Netanyahu failed to understand the strategic changes in the Arab world and their implications on the Palestinians. The unity between Hamas and Fatah produces a new political and security reality, which surprises Israel and forces it to present a new political program that is not under the control of the prime minister. The result is that the road to international recognition of a unilaterally-declared Palestinian state is open," Shai said in a statement.

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