UPDATE: Haaretz concurs.
The Israeli government has rejected an offer by Qatar to resume diplomatic relations severed in Operation Cast Lead back in late 2008/early 2009. The reason why? Qatar's offer was dependent on being able to carry out a series of reconstruction projects in the Gaza strip. So in exchange for diplomatic ties with a more moderate Arab state, the price for Israel would be the free reconstruction of buildings - that Israel would have otherwise had to pay for anyway. Qatar would also be importing concrete which, if stolen, could be used to make weapons which would harm Israel. But Qatar has an interest in not letting this happen, especially considering that its relationship with Egypt, the center of the Arab world, would be at stake if it were to be seen as aiding Hamas. And Israel could have made the offer dependent (and reasonably so) on sufficient guarantees of security rather than rejecting it outright.
Perhaps the more important factor for Israel is that letting Qatar in would be seen as projecting weakness, and harming the so-called efficacy of the siege on Gaza. But the fact that Israel's current leadership is willing to jeopardize a chance for normalization in the region to support an ineffective and inhumane siege on Gaza, is cause for concern. The benefits of normalization were tangible enough that Israel and Qatar shared diplomatic relations for 12 years (1996 - 2008). Throwing this relationship away to support a siege that isn't working is an unequivocally poor policy choice.