Israel's Defense Minister warned Monday that Israeli forces could retaliate if Palestinian militants do not stop rocket attacks from the Gaza Strip. Meanwhile, United Nations officials say they are reinforcing security at U.N. facilities in Gaza following an attack against a U.N. run school by extremists on Sunday that left a security guard dead.

Over the past few days there has been a spike in rocket attacks by Palestinian militants in the Gaza Strip against the Israeli town of Sderot, which is the nearest town in Israel to the Gaza border. One missile on Monday morning narrowly missed a kindergarten.

Amir Peretz (Jan 2007)

Peretz, who also heads the Labor Party, says Israelis will not hesitate to attack Palestinian militants in Gaza if the attacks do not stop. He says Israelis want peace but will not put peace before security.

The militant group Islamic Jihad is claiming responsibility for most of the attacks over the past few days. Most Palestinian armed factions, except Islamic Jihad agreed to a truce in Gaza with Israel late last year.

A Palestinian checks the damage in a U.N vehicle next to a U.N.-operated elementary school after an attack by Palestinian militants at Rafah refugee camp, southern Gaza Strip, 06 Sun 2007

John Ging, the senior U.N. official in Gaza says the problems with security in Gaza can be tied to problems with money.

"The bottom line is that security forces that we all rely on to uphold law and order have been without their regular salaries for well over a year," he said. "They are demoralized, de-motivated and it's basically down to that."

"This was predicted, it is predictable, and until there is a solution to the funding crisis that faces the Palestinian Authority and all elements of the public sector, we can expect deterioration in public services, including security services, to continue," he continued. 

Most international funding to the Palestinian Authority was suspended last year following the Hamas victory in Palestinian legislative elections. A new Palestinian unity government has managed to get some funding restored, but mainly for humanitarian assistance.

Ging says despite the deteriorating security situation, the U.N. has no plans to curtail its extensive operations in Gaza. Palestinian security officials say the same group that attacked the U.N. run school appears to be behind a string of attacks on internet cafes, video rental stores and other recreational facilities in Gaza.

Monday also marked the eighth week of captivity for the BBC's Gaza correspondent Alan Johnston. Johnston was the only western reporter permanently based in Gaza. Despite global calls for his release there is no information about his condition or whereabouts.