Israeli settlement building and curbs on economic development in the occupied West Bank risk wrecking Palestinian hopes of creating their own state, the European Union was reported by Reuters as stating on Monday.Clearly frustrated by long-stalled peace talks, European Union foreign ministers issued a detailed statement, accusing Israel of accelerating settlement construction and tightening its control over East Jerusalem at the expense of Palestinians.

Israel condemned the report as ‘biased’ and said it would do nothing to help promote peace in the region.

‘The EU expresses deep concern about developments on the ground, which threaten to make a two-state solution impossible,’ EU foreign ministers said in a statement after their Monday meeting.

The bloc also criticized what it said were worsening conditions for the Palestinians living in Area C — the 60 percent of the West Bank which is under Israeli control and where most Jewish settlements are located.

EU ministers said Israel was forcing some Bedouin communities to leave their land in Area C, adding that economic life for Palestinians in the territory had to be improved.

‘The EU calls upon Israel to meet its obligations regarding the living conditions of the Palestinian population in Area C, including … halting forced transfer of population and demolition of Palestinian housing and infrastructure,’ it said.

EU diplomats in Jerusalem have been incensed by Israel’s destruction of projects in Area C that had received EU funding and backing.

According to data collected by international aid groups, at least 62 structures funded by the EU and its member states were demolished by Israel in 2011 and 2012, including water cisterns, animal shelters, and agricultural and residential buildings. In addition, over 110 structures are at risk after receiving demolition or stop-work orders from Israeli authorities, said the so-called Displacement Working Group, which joins together NGOs and international bodies operating in the West Bank.

Israel says it issues demolition orders for projects that failed to receive planning permission. The EU said the Israeli bureaucracy had to be simplified.

‘The EU will continue to provide financial assistance for Palestinian development in Area C and expects such investment to be protected for future use,’ the statement said.

The Israeli Foreign Ministry issued a sharp riposte. ‘The (EU) conclusions … include a long list of claims and criticism which are based on a partial, biased and one-sided depiction of realities on the ground. Such a public presentation does not contribute to advancing the process,’ it said.

Israel retains military authority and full control over building and planning in Area C. Up to 70 percent of it is off-limits for Palestinians, classified as Israeli settlement areas, firing zones, or nature reserves, the UN and NGOs say.

In the remaining 30 percent there are restrictions that make it almost impossible for Palestinians to get building permits.

The EU also reiterated its commitment to Israel’s security on Monday and said it was ‘appalled’ by rocket attacks from Gaza, which is governed by Hamas.

Europe is the largest donor to the Palestinian Authority, which has limited self-rule in the West Bank.

The Israeli armed forces have destroyed $65.08 million worth of EU-funded development projects in the West Bank and Gaza Strip over the last 10 years, according to European Commission figures seen by Reuters in April. A signifiant part of this was during Israel’s ‘Cast Lead’ attack on Gaza in 2008/9 and during the 2nd Palestinian Intifada in the early 2000s.