JERUSALEM–Israel was weighing its options Sunday for further punishing the Palestinians after freezing millions in tax revenues as a first response to their bid to join the International Criminal Court. The Palestinian move to join the Hague-based court sets the scene for potential legal action against Israel for war crimes, in a bid to put pressure on the Jewish state to pull out of the territories.

But the request to join the court, formally presented on Friday, infuriated Israel which quickly moved to freeze the transfer of half a billion shekels (US$127 million, 106 million euros) in tax revenues to the Palestinian Authority.

��The Palestinian Authority has chosen to take a path of confrontation with Israel, and we will not sit idly by,�� Prime Minister Benjamin Netanyahu told cabinet ministers on Sunday, vowing to put up a vigorous defense of Israel’s soldiers.

Although Palestinian chief negotiator Saeb Erakat denounced the freezing of the transfer as ��piracy,�� Israeli officials warned it was only the first in a series of punitive steps.

��If the Palestinian Authority doesn’t take a step back, I think we have to take much more severe steps,�� said Strategic Affairs Minister Yuval Steinitz, a close associate of Netanyahu, referring to a ��gradual dissolution�� of the PA.

��We should not aid the existence of this authority.�� Israel may also file countersuits against top Palestinian officials, a source close to the government said on Friday.

But, in an unusual development, Israel was not planning to announce any new settlement construction in the settlements, a senior foreign ministry official said on Sunday.

Speaking to Israeli diplomats serving in Europe, foreign ministry director general Nissim Ben Sheetrit said Israel’s response would be ��harsher and more comprehensive�� than just freezing the taxes, but would not include settlement announcements, ministry spokesman Emmanuel Nahshon told AFP. ��Israel is about to switch from defense to attack mode,�� Nahshon quoted him as saying, confirming comments first published by Haaretz website.

After the Palestinians won the upgraded U.N. rank of observer state in November 2012, Israel froze the tax monies and also announced plans for 3,000 homes in a highly sensitive area of the West Bank, as well as in annexed east Jerusalem, triggering a furious response from the international community.

A senior official quoted by Haaretz said the government had learned a lesson from that incident and would not be taking any steps making Israel the focus of criticism rather than the Palestinians. ‘A nuisance for Israel’

��We will not let Israel Defense Forces (IDF) soldiers and officers be dragged to the International Criminal Court in The Hague,�� Netanyahu told ministers on Sunday. The ICC can prosecute individuals accused of genocide, crimes against humanity and war crimes committed since July 1, 2002, when the court’s founding treaty, the Rome Statute, came into force.