EU dismisses sanctions and backs Powell's peace mission

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The European threw its weight behind America's Middle East diplomacy yesterday, giving only limited backing to a German-inspired peace plan, and burying the idea of Europe taking economic sanctions against Israel.

European foreign ministers in Luxembourg welcomed a seven-point proposal from Germany but did not give it formal endorsement, deciding instead to concentrate on bolstering the mission of Colin Powell, US Secretary of State .

"We all recognise the key importance of Colin Powell's mission and have expressed our backing," Jack Straw, the Foreign Secretary, said:."The situation is dire but what hope there is rests on his efforts."

There was little appetite to follow last week's call from the European Parliament, which asked the EU to suspend its six-year-old association agreement giving Israel preferential trade terms with the EU.

Of the 15 EU member states only Belgium had openly suggested suspending the pact, and even its Foreign Minister, Louis Michel, backed away yesterday, saying he was "not a fierce supporter of tough sanctions". Anna Lindh, the Swedish Foreign Minister, said such a move "would only increase support for the militaristic policy by the Sharon government".

Sunday's statement from Ariel Sharon, the Israeli Prime Minister, that he was willing to attend an international peace conference – but without Yasser Arafat, the Palestinian leader, and with no apparent EU role – was seen as a small step in the right direction, rather than a breakthrough.

European diplomats welcomed the sign of flexibility from Mr Sharon. But they criticised Israel's failure to acknowledge a role for the EU and described the prospect of an international peace conference without President Arafat as a non-starter. Josep Pique, the Foreign Minister of Spain which holds the EU presidency, said: "If General Sharon wants to meet only those who agree with him he is going to be left without mediators very soon."

Earlier, Jacques Chirac, the French President, said any international conference on peace in the Middle East should include the EU foreign policy chief Javier Solana, the United Nations and Russia. One EU official added: "Yasser Arafat is the democratically elected representative of the Palestinian people. You cannot image having a peace conference on the Middle East without the Palestinians, and their highest elected official should be present."

Joschka Fischer, the German Foreign Minister, formally presented his country's peace plan, but officials played down expectations of a formal endorsement, aware that most countries wanted to stress their backing for the US while Mr Powell is in the region.

Germany, which has traditionally proved one of Israel's most supportive allies, has taken an uncharacteristically assertive stance in pressing its own blueprint, although the details are similar to those in other initiatives. EU officials describe the German plan as a valuable contribution in step with the agreement thrashed out by the so-called "quartet" of the EU, America, the UN and Russia in Madrid.

The German plan envisages a peace conference to conclude negotiations on all unresolved issues within two years and calls for Israeli withdrawal from the West Bank and Gaza and the clearing of settlements. The Israelis and Palestinian would recognise each other's right to exist and "any country which continues to support terrorism or its organisations or members will be completely isolated, politically and economically".