Israel not happy with EU's leaked Jerusalem proposal

Bloc says reaching peace requires finding a way to settle the future status of the city 'as the capital of the two states'

TEL AVIV // Israel lambasted a possible plan by the European Union yesterday that would officially call for Jerusalem to be divided into Israeli and Palestinian capitals, warning that the move would be another blow to stalled peace talks. While Haaretz, a liberal Israeli newspaper, suggested the EU plan required only approval at a conference next week of the bloc's foreign ministers, some EU officials said adoption of such a call was still far from certain.

Nevertheless, such a possibility may strain the EU's relations with the current, predominantly right-wing Israeli government, which considers the entire disputed city to be its capital. The draft proposal for the plan that was leaked to Haaretz also indicated the EU might eventually support a move by the Palestinians to unilaterally declare statehood, a possibility that had recently raised much concern among Israeli officials.

Israel's foreign ministry, led by Avigdor Lieberman, the leader of an ultra-nationalist party, lashed out at Sweden, the current holder of the EU's rotating presidency, for initiating the draft proposal and cautioned that its adoption would undermine the EU's role in the Middle East peace process. In a statement, the foreign ministry said: "The process being led by Sweden harms the EU's ability to take part as a significant mediator in the political process between Israel and the Palestinians."

The ministry said Israel has taken "important steps" towards the resumption of peace talks - a reference to last week's decision to partially suspend new building in Jewish settlements in the occupied West Bank - and urged the EU to "exert pressure" on the Palestinians to return to the negotiating table. It added: "Steps like those being taken by Sweden only contribute to the opposite effect." According to Haaretz, the possible EU call may take place at the end of a two-day gathering of EU foreign ministers in Brussels that begins Monday. The draft proposal states that the EU will voice support for peace negotiations aimed at creating an "independent, democratic, contiguous and viable" Palestinian state comprising the West Bank and Gaza and with East Jerusalem as its capital.

The bloc may also stress that it has never recognised Israel's annexation of East Jerusalem after the 1967 Arab-Israeli war, and that reaching peace requires finding a way to settle the future status of Jerusalem "as the capital of the two states". The proposal also includes a demand for Israel to reopen Palestinian institutions that it has shut in recent years in East Jerusalem, as well as cease discrimination against Palestinians living in the area.

The document makes little mention of the Israeli government's decision last week to impose a limited 10-month moratorium on new building in Jewish settlements in the West Bank. Benjamin Netanyahu, the Israeli prime minister, has pitched the construction restrictions as a significant bid by his government to persuade the Palestinians to renew peace talks that have been stalled since Israel's punishing attacks in Gaza last December and January.

Palestinians, however, have dismissed the Israeli step as insufficient and have condemned it for not including areas in the West Bank that Israel annexed to its Jerusalem municipality after capturing the territory from Jordan in the 1967 war. The draft proposal also gives little credit to Israel for easing some curbs on Palestinian movement in the West Bank, instead criticising it for still leaving many restrictions in place to protect Jewish settlements.

Furthermore, the document welcomed a statehood-building plan by Salam Fayyad, the prime minister of the western-backed Palestinian Authority, and added that it would be able to recognise a Palestinian state "at the appropriate time". In June, Mr Fayyad, an internationally respected economist viewed by many Palestinians as a technocrat who possesses no significant political base, set a goal of establishing the national institutions of a state within two years.

According to Haaretz, Israel has stepped up diplomatic efforts in recent days to hinder the adoption of such a proposal. Ran Koriel, the country's ambassador to the EU, despatched letters to the foreign ministry in Jerusalem in the past week in which he accused Sweden of leading the EU on a "collision course" with Israel. Ties between Israel and Sweden have cooled in recent months, hurt by Sweden's praise for the so-called Goldstone report, which accused Israel of committing war crimes during its Gaza attacks, and Stockholm's criticism that Israel should have co-operated with the UN-mandated investigation team. Israel has vehemently rejected the report's allegations. Tensions have also been spurred in August, when Sweden rejected Israel's demand to condemn an article published in a Swedish tabloid alleging that Israeli troops stole and sold body parts of dead Palestinians.