JERUSALEM, April 9 (JTA) — Even before he formed Israel’s new governing coalition, Prime Minister-elect Ehud Olmert was pressing a two-fisted campaign against Palestinian terrorism. As representatives of Olmert’s Kadima Party opened formal talks with potential partners Sunday, Olmert convened top officials to decide on ways of heightening the international isolation of the new Palestinian Authority government under Hamas. Having cut ties after Hamas won January elections in the West Bank and Gaza Strip, Israel formalized the suspension. Furthermore, Israeli officials announced the country would shun any foreign dignitaries who maintain ties with the radical Islamic group — a rebuff to Russia and China, countries that have already weakened U.S.-led isolation efforts by courting senior Hamas officials. “We need to press the policy already in place, and get the world to close ranks around the understand that a terrorist government, even if it is democratically elected, is no interlocutor,” Olmert confidant Ze’ev Boim told Israel Army Radio. But Israel left the door open on potential diplomacy with Palestinian Authority President Mahmoud Abbas by not including him in the blacklist. With international mediators complaining of an economic crisis in Gaza, Olmert also authorized the siphoning off of funds from withheld Palestinian Authority tax levies in order to pay Israeli electricity and water companies to keep supplying the coastal strip. On the ground in Gaza, matters were far from conciliatory. After months of mounting cross-border rocket barrages, Israel stepped up its military response over the weekend. At least 17 Palestinians, most of them combatants, were killed by shelling from the air, sea and land. The offensive prompted Islamic Jihad, the most violent Palestinian terrorist group since Hamas’ turned its attention to politics, to announce it was suspending rocket launches for a week. But the decision was reversed within hours. With Olmert proposing to evacuate swathes of the West Bank as a follow-up to last year’s Gaza Strip withdrawal, Israel believes it cannot afford to allow any spread of Palestinian terrorist tactics. In what security sources called a blow to Palestinian capabilities in the West Bank, troops killed a top fugitive who was said to have set up a base in Bethlehem in a bid to import rocket-making techniques. Olmert has emphasized that his “convergence plan” would bolster Israel’s hold on major West Bank settlement blocs while evacuating more isolated and hard-to-defend enclaves. “The idea is that most of the settlements that would have to be removed” will be “converged into the blocs of settlements that will remain under Israeli control,” the prime minister-elect told Newsweek in his first interview with a foreign publication since winning last month’s elections. “The blocs of settlements which include Ma’aleh Adumim, the Etzion bloc and Ariel will be augmented by more settlements,” Olmert added. “The rest of the territories will not have any Israeli presence and will allow territorial contiguity for a future Palestinian state.” The prime minister-elect said that he would set Israel’s border more or less along the route of the West Bank security fence, and seek U.S. endorsement for the move. “The time has come for a change, and I am absolutely determined to accomplish it. It’s been discussed and debated and argued in Israel for decades. I think that there is an opportunity now which never existed before. This is a combination of the position of the public opinion of Israel, my commitment, and the understanding and hopefully future support of President George W. Bush,” Olmert told the magazine. But with Kadima holding only 29 seats in the Knesset, Olmert needs a broad coalition. The Labor Party, which was the first to enter government-building talks with Kadima, looks likely to come aboard. So is the Sephardi religious party Shas, which has tentatively backed territorial concessions to the Palestinians in the past. Another party viewed as a coalition shoo-in is the Pensioners Party, which focuses on the rights of senior citizens and whose leader, former spymaster Rafi Eitan, has voiced support for Kadima’s diplomatic efforts. The only wild card is the hawkish, immigrant-rights Yisrael Beiteinu under Avigdor Lieberman, who garnered a strong Knesset showing on the promise of rejecting any further unilateral withdrawals in the face of Palestinian violence. But since the elections, Lieberman has assumed a more accommodating stance, allowing it to be known that Kadima’s platform could be acceptable to Yisrael Beiteinu. “We want permanent borders that are recognized by the international community. If this is within Olmert’s platform, we will support it. If not, we won’t be a partner,” he told Israel’s Channel 2 television Saturday.