Sweden has become the first Western European country to officially recognise the state of Palestine and Israel swiftly reacted by withdrawing its ambassador from Stockholm in protest.
Swedish Foreign Minister Margot Wallstrom said her government hoped it would bring a new dynamic to the situation.
"Our decision comes at a critical time because over the last year we have seen how the peace talks have stalled, how decisions over new settlements on occupied Palestinian land have complicated a two-state solution and how violence has returned to Gaza," she said.
The move drew immediate criticism from Israel, with Foreign Minister Avigdor Lieberman calling it a "wretched decision" that would bolster extremist Palestinian elements.
"The Swedish government should understand that Middle East relations are more complex than a piece of self-assembled Ikea furniture, and the matter should be handled with responsibility and sensitivity," Lieberman said in a foreign ministry statement.
Swedish Foreign Minister Margot Wallstrom said her government hoped it would bring a new dynamic to the situation.
"Our decision comes at a critical time because over the last year we have seen how the peace talks have stalled, how decisions over new settlements on occupied Palestinian land have complicated a two-state solution and how violence has returned to Gaza," she said.
The move drew praise from Palestinian President Mahmoud Abbas and criticism from Israel, and has displeased the United States, Israel's principle supporter.A total of 135 countries already recognise Palestine, including several east European countries that did so before they joined the EU. Sweden was the first Western European country to do so.
But Wallstrom rejected accusations that Sweden was taking sides and said she hoped other EU countries would follow its lead.
Palestinians seek statehood in the Israeli-occupied West Bank and the blockaded Gaza Strip, with East Jerusalem as their capital. The land was captured by Israel in the 1967 Middle East war, although Israeli soldiers and settlers pulled out of Gaza in 2005.
Years of efforts to forge a two-state solution have made little progress, with the last effort at negotiations collapsing in April. Palestinians now see little choice but to make a unilateral push for statehood.
The move drew immediate criticism from Israel, with Foreign Minister Avigdor Lieberman calling it a "wretched decision" that would bolster extremist Palestinian elements.
"The Swedish government should understand that Middle East relations are more complex than a piece of self-assembled Ikea furniture, and the matter should be handled with responsibility and sensitivity," Lieberman said in a foreign ministry statement.