The Vatican has recognised Israel since it was founded in 1947, but has refused to accord it full diplomatic relations until agreement on full international protection for Jerusalem and its holy places, and on full rights for the Palestinians can be reached.
Relations between Israel and the Holy See have been improving as hopes in the peace process have risen, but yesterday's announcement surprised the diplomatic community in Israel, and angered the Palestinian leadership.
The chief Vatican spokesman, Joaquin Navarro-Valls, said in Rome that the commission would study subjects of mutual interest with a view to achieving 'normalisation of relations'. Although this statement was carefully worded and neither side attempted to dramatise its implications, it is certain to have wide- ranging repercussions.
Palestinian delegates to the peace talks yesterday saw the rapprochement as a further betrayal by the international community. Hanan Ashrawi, their spokeswoman, said the Vatican was following others by 'paying and rewarding' Israel for entering the peace process before any substantial headway had been made. 'Yet again the Palestinians are getting all the stick and Israel is getting all the carrot. I feel, as a Christian, that as long as the Holy Land is in a painful situation, this development has come too soon.'
Several countries, including India and China, have been opening embassies in Israel, and the Vatican is now insisting not that all of Jersualem be 'internationalised', but only the holy places.
The statement is expected to anger Arab countries with Christian minorities and where the Vatican has valuable property. These countries have lobbied against Vatican ties with Israel. Such Christian minorities may even be at risk of fresh persecution by Muslim extremists. In Egypt, for example, fundamentalists would welcome new evidence that their Christian victims are pro-Western and pro-Israel.
The Vatican's decision appears to have been motivated not just by its concern for Jerusalem's status, but also by its desire to defuse, once and for all, the allegations of anti-Semitism that are frequently levelled at the Holy See. It was not until 1965 that the Second Vatican Council formally rejected the notion of collective Jewish guilt for the death of Christ.
Some commentators were predicting yesterday that the new commission may help the Pope to fulfil his dream of visiting the Holy Land to pray together with Muslims and Jews.
Others suggested, however, that the commission was little more than a facade that would produce no early results. And some Israelis believe that to seek the Vatican's recognition implies Israeli recognition of the Holy See's sovereign status.
'Israel's desire for recognition from the Vatican is typical of the state's ghetto mentality and inferiority complex,' said Zwi Werblowsky, professor of comparative religion at Hebrew University.
'We certainly should not seek diplomatic relations with an organisation that sometimes assumes an allegedly purely religious role and sometime plays the sovereign state.'