A European Union document suggesting East Jerusalem be the capital of a future Palestinian state has prompted a sharp response from Israel. The Israeli foreign ministry said that the move damages the ability of the European Union to take a role and be a significant factor in negotiations between Israel and the Palestinians.<br/><br/>According to Israeli newspaper Haaretz, the draft document strongly criticises Israeli policies towards the Palestinians and suggests a future Palestine should be made up of the West Bank and Gaza with East Jerusalem as its capital.<br/><br/>Analysts believe that the document, which is to be discussed by EU foreign ministers, next week, appears to be part of a diplomatic effort to strengthen the Palestinians and encourage them to return to talks. The talks between Palestinians and Israel broke following Gaza war in January this year and Palestinians are demanding total freeze on settlement activities in West Bank and east Jerusalem before resuming any negotiations.<br/>