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Israel said on Monday it was “deeply disappointed” by the U.S. State Department saying it would work with a Palestinian unity government that includes Hamas Islamists opposed to Israel’s existence.

In a statement to reporters issued after Washington’s announcement, an Israeli official, speaking on condition of anonymity said:

“We are deeply disappointed by the State Department regarding working with the Palestinian unity government.”

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The statement said Washington could advance peacemaking by urging Western-backed Palestinian President Mahmoud Abbas “to end his pact with Hamas and return to peace talks with Israel”. Israel suspended the talks last month after Abbas made an initial deal with Hamas, which Israel shuns as a terrorist organization.

The United States said on Monday it intends to work with the new Palestinian unity government and will continue to disburse aid to the Palestinian Authority but will carefully monitor its policies.

Palestinian President Mahmoud Abbas swore in a unity government on Monday in a reconciliation deal with Hamas Islamists, who advocate Israel’s destruction.

In its first comment since the government took office, the State Department stressed that it regarded the new Cabinet as made up of technocrats.

“At this point, it appears that President Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki told reporters at her daily press briefing.

“Based on what we know now we intend to work with this government but will be watching closely to ensure that it upholds principles that President Abbas reiterated today,” she said, referring to Abbas’ commitment to honor past peace deals and the principles underlying the peace process with Israel.

“But we will continue to evaluate the composition and policies of the new government and calibrate our approach accordingly,” she added.

By law, U.S. aid to the Palestinians may not benefit Hamas, which Washington regards as a terrorist group, “or any entity effectively controlled by Hamas, any power-sharing government of which Hamas is a member, or that results from an agreement with Hamas and over which Hamas exercises undue influence.”

Annual U.S. aid to the Palestinians has run at about $500 million in recent years, although it fell to roughly $440 million in the fiscal year that ended on Sept. 30, 2013, according to a Congressional Research Service report.

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