A briefing paper on the pros and cons of boycotting Israel published by the Methodist Church today has been criticised by the Israeli Embassy and the Board of Deputies.

The report, which sets out the arguments for and against sanctions without making recommendations, will go for discussion to the Methodist conference in the summer.

It follows an online consultation by the church last year, which attracted 2,500 responses, and a visit to Israel and the Palestinian territory by Methodist leaders, accompanied by representatives from the Jewish community.

But the document was condemned by the Israeli Embassy as "harmful, divisive and will help neither Palestinians nor Israelis move towards peace".

An embassy spokesman added; "This attempt to legitimise the extremist BDS [boycott, divestment, sanctions] political campaign is a troubling departure from the Methodist Church's long tradition of genuine listening and promoting reconciliation and justice. We hope that the Church will use its influence to make a positive investment in the region and strengthen supporters of peace on. all sides."

The Board called the exercise skewed and flawed because it offered no alternatives for action other than boycott.

Jonathan Arkush, Board vice-president, commented: "In view of the clear and present dangers to the peace process today, the last thing we need are more ways to prise apart the two national communities. We need to find ways to bridge the gaps, not to widen them."

He described BDS as "a maximalist movement that wants all the land and opposes dialogue or compromise. It is a movement that seeks to unfairly punish all Israelis – including Israeli Arabs, and even sometimes Palestinian workers themselves – for a conflict for which some on both sides bear responsibility."

While the report partly recognised the reality of BDS, he said, it had done so "nowhere near as much as it should".

Mr Arkush stated, "People of good-will know that there is no future in a Greater Palestine or a Greater Israel. Two peoples will need to share the land, and according to all polls their consistent preference is for two-states. Achieving this will take the dialogue and compromise that is anathema to the BDS movement."

Although support for a two-state solution remains among both Israelis and Palestinians, the report concluded, “it is clear that, in both communities, public confidence in its viability is diminishing”.

For West Bank Palestinians, “every aspect of everyday life is overshadowed by the experience of military occupation and, in the case of Gaza, by the experience of blockade,” the report said.

“In contrast, since the end of the second intifada, the cost of occupation to many Israelis living in a settlement or in Israel is much less tangible. This inequality may skew the dynamic and quality of dialogue.”

It added: “There is little expectation within the Palestinian community that a continued stress on dialogue to the exclusion of more coercive actions could reverse the trend of the past 20 years.”

Support for boycott was usually considered by the Methodist Church in response to “a significant call by those suffering abuse”, citing South Africa, Namibia and Myanmar/Burma as other examples.

Although a boycott could hit Palestinians economically, it noted that the endorsement of BDS "by the major Palestinian trade unions and farmers unions indicates that many Palestinians take the view that the pain inflicted by BDS is necessary to achieve rights in the longer term”.

The report challenges the view that the ultimate aim of the BDS campaign is a one-state solution and the dismantling of Israel, saying that the movement does not specify a preference for one or two states.

But it added: “There is little doubt that BDS is likely to entrench division. This is potentially problematic given that genuine peace will require not just an agreed set of borders but also reconciliation and mutual understanding.”

The notion of boycotts also contained echoes for Jews of the Nazi campaign against Jews in Germany. “Any formal call for boycott from Churches strengthens a perception among some within the Jewish community that Christians are unwilling to counter antisemitism,” the report warned. “This would present difficulties for relationships between Methodists and many in the Jewish community.”