Can Mr Huggy bring peace?

Europe may yet succeed in the Middle East where America has failed - thanks to a wily Spaniard

Last month, Saudi Arabia's Crown Prince Abdullah revived an old idea in an interview with the New York Times: Israel should pull back to its 1967 borders, in return for the normalisation of relations with the Arab world. The first senior western politician to visit Riyadh to find out about this initiative was Javier Solana, the European Union's "high representative" for foreign and security policy.

Solana immediately pledged the EU's backing and promised to try to get the Americans on board. This month, he has been in Washington. "Solana believes that the Saudi initiative brings back some much-needed political vision to the peace process," says an aide. The EU envoy, he explains, "is the honest broker who can help get the sides together".

Over the past 18 months, Solana has helped to give the EU a role in the Middle East peace process. This Spaniard has now won the confidence of all sides involved - Palestinians, Israelis, the Bush administration and, crucially, the national governments of EU member countries. In autumn 2000, President Jacques Chirac recognised that France's own efforts in the region were achieving little, and asked Solana to represent the EU at a peace conference in Egypt. Then President Clinton persuaded Solana to serve on the committee headed by George Mitchell, which was set up to investigate the intifada.

In the year since the Mitchell report appeared, with tit-for-tat violence worsening in Israel and Palestine the Bush administration has often been absent from the region. Solana has tried to fill the vacuum by talking to all concerned. He has worked hard to prevent an overt EU-US rift over what should be done, and just about succeeded. He can claim to have had some influence on the Americans. Last December, the US was close to following the lead of the Israeli prime minister, Ariel Sharon, by cutting off all contact with Yasser Arafat. Visiting Washington in December, Solana helped to persuade the Bush team to maintain links with Arafat.

The Palestinians also listen to Solana. Just after 11 September, he was instrumental in persuading Arafat to give solid support to the US, rather than repeat the mistake he made in 1990, when he backed Saddam Hussein.

"In the last 18 months, we've moved from national policies to an EU policy on the Middle East, and that gives Solana influence," says one of his advisers.

But there is always the risk of national diplomacy reappearing. In January, France called for new elections in the Palestinian territories. Solana and most other EU governments thought that unhelpful: elections might show how radicalised Palestinian opinion had become. The French plan did not get far. However, Paris tried to prevent Solana from flying to the Middle East at the end of January, on the grounds that he did not have a clear negotiating mandate. Solana was not bothered by the lack of mandate and thought a fact-finding mission would be useful. Encouraged to go by the US Secretary of State Colin Powell (a good friend) and Josep Pique, the foreign minister of Spain, which holds the presidency of the EU, Solana embarked on the trip that took him to Riyadh.

The EU certainly matters economically in the Middle East. It is the largest provider of aid to the Palestinian Authority, with programmes worth 250m a year. And the EU takes 45 per cent of all Israeli exports. But the EU has never managed to extract much political leverage lfrom its economic weight in the region.

One reason is America's security guarantee to Israel. This means that any US administration can - if it wishes - exert much more influence on Israel than the EU.

Another is that the Europeans have often been divided over exactly how to promote peace in the Middle East. The French have tended to curry favour in the Arab world, the Germans are reluctant to criticise Israel, and the British are wary of straying too far from the American line.

"When the Europeans are divided, it is hard for the EU to get tough with Israel," says a Solana adviser. "We reacted meekly last year when the Israelis blew up Gaza airport and harbour, which we had paid for." Similarly, the EU has been unwilling to insist that Israel end the practice of exporting goods from the occupied territories under a "Made in Israel" label; as a result, these goods enter the EU under the preferential terms of Israel's association agreement.

And yet, for all these difficulties, the advent of Solana - appointed as the first ever high representative in June 1999 - has given the EU a more authoritative external voice. As a young man, he campaigned against Spanish membership of Nato - yet he served as Nato secretary general during the bombing of Kosovo and Serbia. He has worked as a theoretical physicist, and also served as Spain's foreign minister under Felipe Gonzalez. He is a canny, wily operator who avoids direct confrontations. He prefers to overcome a problem by drawing on the assistance of a wide network of friends. He can deploy considerable charm, and has a penchant for giving hugs - his nickname in Spanish, Senor Abrazo, can be translated as "Mr Huggy".

Hugs are not enough in the Middle East, where Solana believes that if the Europeans work against the US, they will achieve nothing. The Saudi proposals, for example, cannot succeed without Israel dismantling most of its settlements in the occupied territories - and only the US can push Israel to take such a step.

That said, the EU's emergence as a more effective operator in the Middle East may prove critical to the peace process. If the big European powers can suppress their urge to run solo diplomatic initiatives, and if EU governments can agree to enhance Solana's position, then the Union will have more clout in the Middle East. The stronger Europe's voice, the more the Americans, Arabs and Israelis will listen to it.

Charles Grant is director of the Centre for European Reform