At a cocktail reception on a balmy evening in East Jerusalem this past week, officials from the European Commission and Council were in a somewhat testy mood with their guests - a cross-party delegation of European members of parliament visiting the occupied Palestinian territories. They had spent most of the day fielding phone calls from their Commission colleagues in Brussels, from journalists, and from increasingly irate Israeli authorities, so they felt they were more than justified in demanding to know what, exactly, was going on.
Our delegation of MEPs had dared to challenge the official EU position of boycotting the new Palestinian government of national unity, and - against the advice of Council and Commission - had been holding direct talks not only with Prime Minister Ismail Haniyeh, but with a number of his Hamas ministers, and urging other EU institutions to do the same.
"Thankfully this delegation does not speak for the EU," fumed Mark Regev, the Israeli foreign ministry spokesman. Back in Brussels, a Commission spokesperson delivered assurances that the parliament doesn't have legislative powers in foreign affairs.
In view of the catastrophe towards which official EU policy is pushing the occupied territories, it's a great pity that the parliament doesn't. The EU continues to withhold direct aid from the Palestinian Authority (PA), as it has done for more than 12 months, even though a new government of national unity has been formed which essentially meets the demands of the international community for renunciation of violence, respect for previous political agreements and recognition of the state of Israel. This suspension of aid was a response to the decisive victory of Hamas in parliamentary elections in January 2006, and followed a decision by Israel to suspend the transfer of tax revenues it collects on behalf of the PA.
The consequences have been dramatic. In the past year alone, the number of Palestinians living in poverty has increased by 30 per cent. Essential services have been wrecked and there is growing violence on the streets.
Three months after aid was suspended, the EU established a "temporary international mechanism", designed to provide support to Palestinians without going through government channels. But despite helping some of the poorest people, this mechanism has been unable to prevent the growing humanitarian crisis caused by the financial boycott. Moreover, in bypassing official government structures, it is de-institutionalising the apparatus and authority of the state.
Worse, by failing to recognise the new government fully, the EU has stripped itself of any leverage it could have had with the Israeli authorities to pressurise them to release the Palestinian tax revenues - amounting to two-thirds of total government income - and to normalise access and movement. In the meantime, however, the chaos grows, and the ability of this government to survive is put into doubt.
At a meeting with Mustafa Barghouti, minister of information (who wryly apologised for being unable to serve us tea, as his staff were on strike in protest at not having been paid for months), we were left in no doubt of the stakes. "If the EU wants the Palestinian Authority to collapse, spreading chaos and violence to the whole region, then it should say so. But be very clear that's what will happen if this policy continues," he said.
What is clear, as the International Crisis Group has observed, is that - unless urgent action is taken, starting with EU recognition of this government - the occupied Palestinian territories are in danger of achieving the distinction of becoming a "failed state" even before they have become a state.
Caroline Lucas is MEP (Green) for south-east England