(MENAFN- The Peninsula) The European Union has distributed a confidential document to its 28 member states that contains the draft of a proposal for sanctions to be imposed on Israel if it takes action in the West Bank that could make the two-state solution impossible, European diplomatic sources and senior Israeli officials said.
In what amounts to Europe's toughest-ever line with the Israelis, punishments such as trade restrictions could result if continued settlement building on occupied land is deemed to be at odds with reaching a two-state solution to the decades-old conflict - defined as an independent Palestine alongside Israel.
A catalogue of measures has been set out in a secret document prepared by the European External Action Service and distributed to the EU's 28 member states.
While diplomats are shying away from characterising them as "sanctions", the paper - whose contents are said at the early discussion stage - advocates a "carrot and stick" approach to relations with Israel.
Three European diplomats and two senior Israeli officials, all of whom spoke on condition of anonymity because of the sensitivity of the issue, said the document deals mainly with "sticks and carrots" for Israel with regard to maintaining the two-state solution, although they said the document contained mainly sticks.
Rebuffing international criticism, Israeli Foreign Minister Avigdor Lieberman told his German counterpart point-blank yesterday that Israel will not stop building homes for Jews in East Jerusalem.
His remarks were likely to compound Western frustration over Israeli settlement policy on occupied land that Palestinians seek for a state.
"We won't accept any limitations on building in Jewish neighbourhoods in Jerusalem," Lieberman told a joint news conference with German Foreign Minister Frank-Walter Steinmeier.
Since the start of October, Israel has advanced building plans for some 4,300 homes on West Bank land annexed to Jerusalem, heightening tensions in a city which is already on edge following confrontations over access to a renown holy site.
The slew of construction announcements have angered the European Union and the United States, which deem Israeli enclaves on occupied land as illegal and an obstacle to peace.
Palestinians want East Jerusalem to be the capital of the state they aspire to establish in the West Bank and Gaza Strip areas captured by Israel in a 1967 war. Israel quit the Gaza Strip in 2005, but blockades the Hamas Islamist-ruled enclave.
Israel considers all of Jerusalem as its united capital, a claim that is not recognised internationally, and an estimated 150,000 Jews live in East Jerusalem.
"Whoever dreams the Israeli government will surrender and limit construction in Jerusalem is mistaken," said Lieberman, who himself lives in a West Bank settlement.
"We are ready to defend our independence, our sovereignty, and there won't be any compromise. I think any pressure here will be very, very negative and very counterproductive."
Steinmeier said the establishment of an independent Palestinian state was the only solution to the decades-old conflict. Palestinians fear settlements will deny them a viable and contiguous country.
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