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Israel yesterday reacted angrily to a draft EU proposal for East Jerusalem to be a future Palestinian capital that allows the possibility of endorsing a unilaterally declared Palestinian state.

A draft policy document by the Swedish EU presidency, if approved next week by European foreign ministers, would significantly harden the EU's support for the likely Palestinian stance in any on-going negotiations on a two-state solution.

A statement by Israel's foreign ministry accused Sweden of leading a process which it claimed "harms the European Union's ability to take part as a significant mediator in the political process between Israel and the Palestinians".

The Israeli statement said that "important steps" had been taken by Israel to enable talks to resume, and the EU should now exert pressure on the Palestinians to return to the negotiating table. Steps like those being taken by Sweden, it said, "only contribute to the opposite effect".

In fact, the Swedish EU move is thought to be designed to encourage Mahmoud Abbas, the Palestinian Authority President, to enter negotiations with Israel by providing him with additional guarantees that the international community envisages broadly the same outcome as he does.

The Israeli Prime Minister Benjamin Netanyahu's declaration of a partial 10-month settlement freeze has triggered anger on the pro-settler right, but the moderate Palestinian leadership is concerne... >>>