A confidential report, prepared by top diplomats representing the 25 EU governments, has been leaked to The Independent. European Foreign Ministers put in a veto when publication of the report was planned. They will not risk its relationship with Israel. For the first time, Israel has given its blessing to the EU to play a key security role in the region. 
According to The Independent, the report provides the most detailed and remorselessly critical account yet produced by a Western international body of Israel's policy in East Jerusalem. The 11-page page document concludes that European governments should consider direct intervention in an attempt to curb the systematic measures being undertaken by Israel to increase its control and population in the historically - and legally - Arab eastern sector of Jerusalem. 
During discussions at last Monday's meeting, EU foreign ministers decided to express "deep concern" over Israel's activities in East Jerusalem and its surroundings, including establishing settlements, constructing the  West Bank barrier and demolishing homes. 
Israel's policies in Arab East Jerusalem are hurting the prospects of a final agreement on the city with the Palestinians. A major expansion of Ma'ale Adumim, the largest Israeli West Bank settlement, will be joined to Jerusalem and this threatens to complete the encircling of the city by Jewish settlements, dividing the West Bank into two separate geographical areas.
In the 1967 Six-Day War Israel seized East Jerusalem, along with the rest of the West Bank and Gaza, and claims the city as its "united and eternal capital". Palestinians want East Jerusalem as the capital of a future state of their own.
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Confidential EU report about Israels annexation of East Jerusalem