15 October 2004	Friday	29 Shaban 1425

JERUSALEM, Oct 14: Israel could end up on a collision course with the European Union and face international sanctions like apartheid-era South Africa if the conflict with Palestinians is not resolved, a government report warns.

In a confidential 10-year forecast, foreign ministry analysts suggest that Israel could turn into a pariah state, increasingly isolated in the world, as the EU grows more influential, political sources said.

The report says that if the recently expanded 25-nation bloc can set aside internal differences and forge a unified foreign policy, it could cut into the clout wielded by the United States, Israel's chief ally, and "harm Israeli interests".

A strengthened EU would be expected to demand that Israel reach a settlement with the Palestinians or else exert damaging economic pressure on the Jewish state, the document warns.

"This could put Israel on a collision course with the European Union," the report says. "Such a collision course holds the risk of Israel losing international legitimacy and could lead to its isolation in the manner of South Africa."

The report reflects Israel's growing worries about the threat of international sanctions after four years of battling a Palestinian uprising. Israel's relations with the EU have long been strained over what it sees as favouritism toward the Palestinians.

But the situation has deteriorated in the face of European criticism of Israel's crackdown in the Palestinian territories. For its part, Israel has complained of what it sees as growing European anti-Semitism and a failure to combat it.

STALLED PEACEMAKING: Israel prefers to deal almost exclusively with Washington on Middle East diplomacy. President George Bush is seen as the most pro-Israel US leader ever, having agreed the Jewish state should be allowed to keep swathes of occupied West Bank land.

But Palestinians have always insisted on a European role, seeing them as more sympathetic to their cause than Washington. Prime Minister Ariel Sharon threatened in July to freeze the EU out of peacemaking after EU states backed a UN General Assembly resolution demanding that Israel tear down a barrier it is building largely inside the occupied West Bank.

Israel calls it a bulwark against suicide bombers. Palestinian have condemned it as a "racist apartheid wall". Christina Gallach, spokeswoman for EU foreign policy chief Javier Solana, acknowledged "big disagreements" with Israel on peacemaking but said Europe had the right to play a major role.

"Israel wants to limit EU ties to trade and technology," she said. "But we must have a part in the Middle East peace process." On Wednesday, Solana unveiled a four-point plan to revive Middle East talks, offering new assistance to the Palestinians and warning Israel its aid was at risk if it did not cooperate. But Israeli suspicions of the EU limit the chance of success.

Meanwhile, Palestinians at the United Nations are pushing for sanctions against Israel modelled on anti-apartheid measures against South Africa. The United States, which wields a veto in the Security Council, has made clear it would block any such effort.

In Geneva, a UN human rights investigator said on Thursday the EU should consider suspending a free trade deal with Israel because of its policies in the occupied territories. -Reuters