Israel has ended its policy of not engaging with the EU on the diplomatic process with the Palestinians.

The decision to suspend all dialogue on this issue was taken in the wake of the EU's decision six months ago to publish guidelines on labelling settlement products.

Despite the move by Israel, EU policy on labelling will not change.

The central role of the EU in various development programmes in the Palestinian Authority, and the value currently attached by the Israeli security establishment to these programmes as an incentive against Palestinian violence, prompted Israel's resumption of the ties.