There's credibility to be gained in breaking the Gaza blockade

The issue here is not making peace between Israel and the Palestinians. The 'proximity talks' agreed this week are a miserable charade.

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Since her appointment three months ago, Catherine Ashton, the European high representative for foreign affairs and security policy, has not made much of an impact on the world. But next week is her big chance to shine. To the surprise of many, she has secured Israeli permission to visit the Gaza Strip on Tuesday or Wednesday, the first senior European diplomat to do so since the Israeli assault over a year ago.

Many European foreign ministers have been refused by the Israelis on the grounds that such visits would be a boost to the Hamas government there. This is odd logic, since all of the visitors, including Lady Ashton, are boycotting the Hamas leadership. She follows in the wake of the foreign minister of Ireland, Micheál Martin, who blasted a hole in the Israeli policy of trying to hide the scandal of the continuing blockade of Gaza. Having been refused permission by the Israelis, Mr Martin got in from the Egyptian side, and then persuaded Lady Ashton that her credibility depended on getting in.

This is a small victory for European foreign policy, which spends a lot of money but achieves practically nothing. She will be able to highlight the shocking facts that Gazans are still living in rubble more than a year after the end of the war, with an unemployment rate of 85 per cent. But there is more important work to do. It is clear that the European boycott of Hamas, imposed after it won the Palestinian parliamentary elections in 2006, has proved to be a spectacular own goal. It is time for the Europeans to be less squeamish about dealing with Hamas.

The issue here is not making peace between Israel and the Palestinians. The "proximity talks" agreed this week are a miserable charade. A genuine peace is out of the question so long as the Palestinians are bitterly divided and the Israeli political system, even if there existed a leader who believed in creating a Palestinian state, is too dysfunctional to permit such a grand step. The prospect of genuine peace talks has dimmed even further after the humiliation inflicted on the US vice president, Joe Biden, during his visit to Israel this week. After he lavished praise and affection on Israel, the government announced the construction of 1,600 new homes for Jewish settlers in East Jerusalem, a move seen by diplomats to be a provocative riposte to US calls for a total settlement freeze.

The goal for the Europeans should be something attainable: the ending of the blockade of Gaza, which is a stain on the whole of western policy. As an example to the Muslim world of western duplicity, it only serves to widen the split in Arab ranks between the pro-American and the pro-Iranian camps. The Israelis have never hidden their desire to punish the people of Gaza until they throw off the Hamas yoke. There are many in the Arab world, Egypt included, who want Hamas and its Iranian ally to get a bloody nose.

Yet the history of sanctions tells the opposite story. In Iraq the United Nations sanctions of the 1990s beggared the people, while reinforcing the ruling elite under Saddam Hussein and enriching a crony class of officially authorised sanctions-busters. The same is happening in Gaza. The people have no building materials, yet the Hamas leadership has total dominance over the economy through their control of the tunnels running across the Egyptian border through which pass all consumer imports.

On this page yesterday, Michael Young argued that throwing a lifeline to Hamas now would be naive and the world should wait until the Islamist movement is diminished. I do not see signs of that happening. Sanctions only strengthen the hardliners. The people of Gaza may grumble about Hamas, but they are not in a position to act. An end to the blockade will no doubt give the Hamas leadership a brief boost. But the Palestinians can see that Hamas has led them into an impasse. Cold-shouldering the movement will only drive it more firmly into the arms of Iran and rule out any rapprochement with Fatah.

In the past there has never been the stomach in the European Union to take independent steps in the Israel-Palestine crisis. While the US and Israel have been the playground bullies, Europe has run around like the spotty kid with rich parents who wants to join the big guys but only picks up the bills. Over the past decade alone, European Union countries have funnelled $4.5 billion to the Palestinians. In part, this has been guilt money, but it has also been a down payment for a big diplomatic role that has never emerged.

The purpose of all this funding was to build peace and a Palestinian state. It is becoming increasingly clear to European officials that its effect has been the opposite: to maintain the status quo. Effectively, the European taxpayers have been subsidising the occupation. They have built identifiable targets for the Israeli air force to bomb. This cannot continue. But now, it looks like European tax payers will have to dig even deeper into their pockets. The Palestinian prime minister, Salam Fayyad, has just announced a budget for this year with a deficit of $1.9 billion, which will come from foreign donors. Mr Fayyad has a plan: to build up Palestinian institutions by 2011. But what happens then?

If the donors continue handing over money as in the past it is easy to predict the future. It will all get reduced to rubble. To avoid that, Europe has to make sure that things start moving in the right direction as soon as possible, and the first step is to remove the bone in the throat of the Arabs that is the Gaza blockade. Europe must get something for its money. An end to the Gaza blockade is the first step, and then there must be conditionality - strings attached to the funds that demand some progress towards ending the Hamas-Fatah rift. Otherwise, we can quietly forget any idea of an effective European foreign policy and look forward to many more years of money down the drain.