Prime Minister Benjamin Netanyahu convened his senior ministers on Wednesday to discuss how Israel plans to cope with Palestinian efforts to secure UN recognition of a Palestinian state in September.

Several of the ministers urged preemptive sanctions against the Palestinian Authority in an effort to pressure PA President Mahmoud Abbas to back down, but Defense Minister Ehud Barak objected, warning that it could lead to the collapse of the PA.

Haaretz learned that the discussion also dealt with possible Israeli responses following the vote in the UN General Assembly, which is expected to recognize a Palestinian state along the 1967 borders by a large majority.

Among the preemptive sanctions discussed was a proposal by Finance Minister Yuval Steinitz to stop transferring the customs duties that Israel collects at its ports on the PA's behalf. The PA is suffering a severe cash shortage and is having a hard time paying its employees; the taxes Israel passes over are used to pay the lion's share of those salaries.

For this reason, Barak vehemently objected to the measure, saying it could lead to the PA's collapse, which would leave the territories in a state of anarchy. Representatives of the Justice Ministry and the military prosecution also warned against taking such unilateral steps.

The meeting lasted four hours and was attended by some 30 people; in addition to Netanyahu, Steinitz and Barak, also present were Interior Minister Eli Yishai, Strategic Affairs Minister Moshe Ya'alon, Minister without Portfolio Benny Begin and Israel Defense Forces Chief of Staff Lt. Gen. Benny Gantz.

Foreign Minister Avigdor Lieberman - who earlier this week said he would demand that the government cut all ties with the PA if it went to the United Nations, and who warned that the Palestinians were planning "bloodshed" for September - didn't show up for the meeting. Deputy Prime Minister Dan Meridor was in Washington.

Pressure on Abbas came from another quarter, though, as a senior western diplomat warned that cooperation between the United States and the PA would be seriously harmed if the Palestinians don't back down from their plan to ask for UN recognition in September.

"If the PA will go to the UN in September, it will make it harder for us to have the same relations with them as we had before when it comes to [economic] aid and security training," the diplomat said at a briefing in Tel Aviv for Israeli journalists.

"We want to continue that cooperation, but it will make it harder for us," the diplomat said. "It is easier to work together as partners."

According to the diplomat, the United States is focusing on efforts to prevent a confrontation at the United Nations in September.

"We are trying very hard to make clear to the Palestinians that only direct talks can achieve their goals," the diplomat said. "We told the PA that going to the UN is a bad idea and avoiding talks will not produce any results for them."

The diplomat responded to Lieberman's proposal that Israel cut all security and economic ties with the PA, saying that the United States is urging both sides to continue the security cooperation and to avoid anything that could cause the situation to deteriorate into violence.

"The security cooperation is a success story and resulted in improved security conditions on the ground," the diplomat said. "We want to see that continue. It is in Israel's interest and is a U.S. and PA interest, too."

President Shimon Peres, meanwhile, met with a congressional delegation of 26 Democrats, saying that while "peace is encountering difficulties," he believes it is achievable, "as always."

"The Palestinians are weighing going to the UN, but they themselves are not convinced this is the right thing to do," Peres told the congressmen.

Earlier, Netanyahu met with the delegation, telling them that UN recognition of a Palestinian state would harm chances for peace.