BRUSSELS (EJP)—Will the EU reassess its relations with Israel to express its frustration over the question of settlement construction in the West Bank ? This question was raised these last days ahead of a meeting of European Union Foreign Ministers Monday in Luxembourg during which the Mideast peace process and Gaza will be among the agenda’s main topics.

Earlier this month, in a statement condemning Israel’s announcement of a plan to build 2,610 residential units in Givat Hamatos and to allow Jewish families to move into the city’s Silwan neighbourhood, the EU’s External Action Service (EEAS), led by EU foreign policy chief Catherine Ashton, said that ‘’this represents a further highly detrimental step that undermines prospects for a two-state solution and calls into question Israel’s commitment to a peaceful negotiated settlement with the Palestinians.’’

Calling on Israel to reverse the decisions the statement added, “We stress that the future development of relations between the EU and Israel will depend on the latter’s engagement towards a lasting peace based on a two-state solution.’’

More recently, at her confirmation hearing in the European parliament, Ashton’s successor, Italian Federica Mogherini, the current Italian Foreign Minister, noted that the EU ‘’might’’ use financial ‘’incentives and disincentives’’ to get Israelis and Palestinians restart peace talks.

According to European diplomatic sources quoted by Reuters this week, frustration over Israel’s construction programme has reached ‘’a new high’’and EU officials are looking at new ways to press Israel to halt it.

While discussions are at an early stage, the officials said the EU may look at ‘’stopping Jewish settlers convicted of crimes from visiting the EU and could examine the fine print of a free-trade agreement, although there is no talk of sanctions.’’

‘’Nobody is talking about trade sanctions but the level of frustration with Israel is growing and we have many tools on our disposal that can dispel this frustration,’’ a diplomat was quoted as saying. Denmark, for example, is pushing among the EU for a tougher stance towards Israel. But while several of the EU’s 28 member states have profound concerns about Israel’s settlement construction, Jerusalem also has many staunch EU defenders.

The EU has already imposed ‘’guidelines’’ banning Israeli scientific institutions beyond the Green Line from EU funding that operate in West Bank and is moving ahead with plans to label Israeli products made in the settlements.

Moreover, the EU Commission annunced that it would ban the entry into the EU of all animal products, including eggs, poultry and dairy, from areas beyond the pre-1967 borders (the West Bank, Golan Heights and East Jerusalem).

An Israeli official says Europe is misguided. “By focusing only on one issue (settlements and only on Israel, they are not doing the Palestinians a favour and they are definitely not playing as productive a role as they could do in peace talks,” he said.

“Europe could be much more productive in its engagement if its messages to the Palestinians were that it’s time for them to fundamentally accept the legitimacy of the Jewish state,” said the official, who asked not to be named.

”Whenever news of the construction of settlements is announced, any goodwill accumulated by Israel evaporates faster than a drop of rain,” writes European Friends of Israel (EFI), the pro-Israel lobby group.

But while the EU is threatening Israel with possible ‘’punitive measures,’’ it also has promised both Israel and the Palestinians of a ‘’Special Priviliged Partnership’, an unprecedented including upgraded bilateral relations in several domains.

Despite differences over Gaza and the settlements, Israel’s ambassador to the EU, David Walzer, said he remains positive about relations with the EU.

This is reflected by the EU being one of Israel’s biggest economic partners, which, according to the European commission, traded in goods amounting to approximately €29bn in 2013.

Despite close relations with the EU, the Israeli ambassador admits the strong differences over the settlements may not be overcome for the time being, he stressed, “We can still do business on many other issues for the benefit of both Israelis and Europeans,’’ he said.

Walzer cites Horizon 2020 (the joint EU flagship programme for research and innovation), dealing with Ebola and space technology, along with projects looking at food security and water management as areas of possible increased cooperation.

Besides recent announcements of Israeli settlement activities, EU Foreign Ministers on Monday are also set to discuss the situation in Gaza two months after the 50-day conflict between Israel and Hamas, including the prospects for a durable ceasefire and the reconciliation between the Palestinian Authority and Hamas.

EU foreign policy Ashton will debrief ministers on the outcome of the Gaza donor’s conference for Gaza earlier this month in Cairo which she co-chaired. The EU and its member states pledged €450 million for the reconstruction of Gaza strip. The EU is the largest aid contributor to the Palestinians.

The European Union has welcomed the ceasefire agreement reached in August and urged the parties to respect it and to continue negotiations leading to a fundamental improvement of living conditions in Gaza.

It has also called for ‘’an end to the threat to Israel posed by Hamas and other militant groups,’’, stressing that ‘’all terrorist groups in Gaza must disarm.’’

The EU Foreign Ministers’ meeting comes as Sweden announced recently that it would unilaterally recognize a state of Palestine – the first EU member state to do so-and as the British parliament voted earlier this week a motion to recognize a Palestinians state.