A senior diplomatic source says Israel will take further economic steps against the Palestinians if they continue unilateral efforts to upgrade their standing at the United Nations. According to the source, the Palestinians violated their commitment to refrain from unilateral steps during the period of the US-brokered peace talks. The source said Israel will respond to every violation, and it has many possible courses of action. Israel on Thursday announced it was deducting funds from the monthly tax revenue transferred to the Palestinian Authority to offset costs the Palestinians owe Israel. Israel also said it was capping Palestinian Authority deposits in Israeli banks and suspending its participation with the Palestinian Authority to develop an offshore gas field opposite the Gaza Strip. The Israeli measures came after the Palestinian Authority submitted applications to join 15 international treaties and organizations -- this in response to Israel's failure to free the fourth group of security prisoners as agreed upon in the US-brokered peace talks. Despite the economic sanctions, the Israeli source said contacts on extending the negotiations with the Palestinians beyond the nine-month framework will resume after the Passover holiday. The source said that at this point, no agreement has been reached on a deal, but there is a proposal for such a deal, and the sides will try to resolve the crisis. The United States over the weekend criticized both Israel and the Palestinians for their unilateral moves. White House spokesman Jay Carney chided the Palestinian Authority for turning to international organizations, but also expressed displeasure with Israel's sanctions on the Palestinians. Carney was quoted as saying that "unilateral moves by both sides will not accelerate the peace process, but will rather do the opposite." The US State Department termed "unfortunate" Israel's announcement to reeze the monthly transfer of Palestinian tax revenues. State Department spokesperson Jen Psaki said in a briefing on Friday that the US believes the regular transfer of the Palestinian Authority's tax revenues and economic cooperation between Israel and the Palestinian Authority has been beneficial and is important to the well-being of the Palestinian economy. Palestinian chief negotiator Saeb Erekat called Israel's decision to stop tax money transfers to the Palestinian Authority "piracy." Erekat said that contact with Israeli negotiators continue, though the "gaps remain big." Israel collects about 100 million dollars a month in taxes for the Palestinian Authority.