The Palestinians have no partner for peace. They will only have one if Israel agrees to recognise Palestine’s right to function.

Thank goodness for the Swiss. Alone in Europe, their government has dared to condemn what the Israelis are doing to Gaza. It is collective punishment, they say. It violates the principle of proportionality. Israel has not taken the precautions required by international law to protect civilians.

Inevitably, the bloggers are pouring out the usual irrelevancies about the role of Swiss banks during the Nazi period. But as the depository of the Geneva conventions, one of the key legal advances to emerge from the ravages of the 20th century, Switzerland has a duty to speak out.

Its statement stands in contrast to the European Union’s shamefully muted voice. The Palestinians kill two soldiers and take one prisoner and, in response, power stations are blown up, sewage and water systems grind to a halt, bridges are destroyed, sonic booms terrify children day and night, and all this is inflicted on a hungry people who are under siege in what is effectively a huge open prison. The EU’s response? Vague expressions of "concern" and calls for "restraint".

Is it World Cup madness? The rush for last-minute cheap summer holiday deals? Couldn’t European leaders show a tenth of the courage of Israel’s brilliant columnist, Gideon Levy? "It is not legitimate to cut off 750,000 people from electricity. It is not legitimate to call on 20,000 people to run from their homes and turn their towns into ghost towns. It is not legitimate to kidnap half a government and a quarter of a parliament. A state that takes such steps is no longer distinguishable from a terror organisation," he wrote this week in Haaretz.

In a two hour appearance before MPs on Tuesday, all that Tony Blair could produce was a classic fence-sitter: "I have learned enough about this situation over the years to realise that going in and condemning either side is not deeply helpful."

European impotence in the Israeli-Palestinian conflict is of course an ancient problem. The disease’s latest aggravation began in January after Hamas’s election victory. Here was an event which was bound to have huge repercussions in Israel, on every state’s relations with the Palestinian authority, on the future of political Islam throughout the Arab world, as well as on the west’s image among Muslims. In short, it was a moment where the time-honoured diplomatic technique – a pause for reflection – was vital. The device is often used to cover unnecessary delay. This time there was a genuine need to analyse and consult before rushing to conclusions. There was no urgency since Israel was already refusing to negotiate with President Mahmoud Abbas.

Yet the EU promptly lined up with the US and Israel in demanding Hamas change its policies or be punished. The Quartet, a relatively recent body set up to coordinate policies between the US, the EU, Russia and the UN, became a trap, acting as an arm of the US state department for keeping other states in line. The Quartet’s demands on Hamas were identical to Israel’s.

Some European diplomats now regret their haste. The decision to cut aid as well as contacts with the Palestinians is seen as a mistake. Last month’s French initiative to find a mechanism for resuming aid to Gaza was the Quartet’s first admission of error.

Refusing contact with Hamas was equally mistaken, especially as Hamas had maintained a unilateral ceasefire for over a year (a point which Israel tries to suppress). The fact that Hamas is defined as a terrorist organisation need not have been a bar, since governments have spoken to similar movements with nationalist agendas, be it the IRA, the Tamil Tigers, or Eta. But again, thank goodness for the Swiss. As non-EU members, they keep contact with Hamas and act as intermediaries for other European governments which have trapped themselves into not doing the same.

The outcome of the current crisis is unclear. However it ends, the moment has surely come for Europe to break from its useless policy of backing the US and Israel. The Olmert government is trying to destroy not only Hamas but Mahmoud Abbas. Like Sharon’s, it wants to undermine every moderate Palestinian by showing them up as powerless. It seeks only domination, not negotiation. Whether the ultimate agenda is to starve all Palestinians into fleeing to Egypt, Jordan and even further afield, or merely to keep Gaza as a prison of the unemployed and the West Bank as a bunch of Bantustans, Israeli policy mocks every UN resolution on the conflict.

The EU should admit that the Palestinians have no partner for peace. They will only have one if Israel recognises Palestine’s right to function. Statements that Israel recognises a Palestinian state’s right to exist are empty as long as Olmert expands Jewish settlements and the separation wall, and refuses to spell out how that state can operate as a viable entity. Without the right to function, the right to exist is hollow.

Olmert and his Labour party allies must also come clean on the last serious Israeli peace formula, the Barak proposals which were put at Taba five years ago. The Palestinians did not accept them, but political circumstances were inauspicious – a fading Baruk government and an ill Yasser Arafat. The same proposals might be acceptable now and should be revived. If Kadima thinks of imposing or offering anything less than Taba, then Israel cannot claim to want an end to the conflict.

Finally, Israel must renounce violence, in particular the assassinations of Palestinian leaders. The number of civilians killed in these attacks this year alone far exceeds the number of Israeli victims since Hamas declared its ceasefire last year. The facts do not support the notion that Israel is "retaliating" to provocations. Last week’s Palestinian attack on a military outpost followed much greater carnage by Israeli shells.

Some will argue that if the EU were to condemn Israeli actions, it would lose influence with the Israeli government. But what has this alleged influence managed to achieve since Sharon and Olmert have been in power? The record is paltry.

Governments have greater effect by being morally clear and politically firm. Condemnation and psychological isolation create "facts on the ground" which can alert electorates, if not immediately their governments. But the audience is not only in Israel. There is a global audience which expects Europe to take the right stand. Whether Israel chooses to listen should not be the decisive factor.