The bomb attack in Tel Aviv yesterday highlights the desperate need to achieve a peace settlement. It highlights, too, the futility of the wall Israel is building in Palestinian land, a wall condemned by the international court of justice last Friday and whose route was condemned by Israel's supreme court last month. What action is needed to put an end to this dance of death?

When the international court demanded the removal of the wall, the Israeli government replied that it had a "moral duty" to protect its citizens. Quite apart from the fact that this government - the most rightwing and bellicose in Israel's 56-year history - could not recognise a moral duty if hit in the face by one, the protection of citizens is, above all, the duty in which it is failing.

Since the second intifada was sparked in September 2000 by the provocative visit by Ariel Sharon (then an opposition leader) to the Temple Mount, sacred to Muslims, in Jerusalem, more than 1,000 Israelis have been killed by terrorist action - far more than in any comparable period since Israel was created. In the same period, of course, more than three times as many Palestinians have been killed by Israelis.

In justifying the wall, the Israeli government points to what it claims to be its success in reducing terrorism by physically cordoning off the profoundly deprived Palestinians of the Gaza strip. Well, that success was demonstrated two weeks ago when a rocket from the Gaza strip killed an Israeli toddler, not in one of the illegal Israeli settlements in the strip, but in the nearby Israeli town of Sderot. Shortly afterwards, another rocket fell within a couple of hundred yards of Sharon himself, paying a condolence and "we will not be moved" visit to Sderot.

The wall has no chance of halting terrorism, even though $1bn is being squandered on it at a time when unemployment is at record heights, destitution is hitting large numbers of the Israeli underclass, tourist revenue is spiralling downwards and the economy is almost in freefall. When I toured the wall a few months ago, I visited the Palestinian town of Qalqilya, which is strangled in a near-total noose by the wall but which I was able to enter in a UN vehicle. The next day Israeli soldiers at a checkpoint I had passed, in view of that part of the wall, were killed in a bomb attack.

Although the Israeli supreme court argued that the wall was not illegal, it did insist that this barrier is causing "unjustified hardship" to some 35,000 Palestinians penned into isolated enclaves and cut off from agricultural land, medical care, schools and universities. If the wall is completed, hundreds of thousands more Palestinians will suffer, with a city such as Bethlehem facing destruction of its tourism and agriculture.

What, then, should be done? It is pointless to take the issue to the UN security council, since the Bush administration, seeking to win Jewish votes from the Democrats while impelled to support Sharon by Texas Christian wacky fundamentalism, would veto any resolution condemning the Israeli government.

Economic sanctions and an arms ban against Israel are the only way of breaking the impasse. Such a policy brought down apartheid in South Africa, which was similarly condemned by the world court in 1971 for its illegal occupation of South West Africa (now free and democratic Namibia). It was sanctions imposed by a President Bush (the incumbent's markedly more sensible and principled father) that forced a rightwing Israeli prime minister, Yitzhak Shamir, to peace talks in Madrid after Bush suspended $10bn of loan guarantees for resettling Russian immigrants in Israel.

Obtaining sanctions and a weapons ban today will not be easy. That is all the more reason why a strong campaign needs to be mounted as soon as possible. A recent report by the House of Commons international development committee pointed to the leverage available through making European trade agreements conditional on Israel's compliance with international law and security council resolutions (all flouted by Israel).

War on Want has stated: "A trade policy could provide a key mechanism for exerting pressure on Israel. A full economic embargo would be in line with article two of the EU-Israeli association agreement, which states that trade restrictions can be enforced in deference to a country's poor human rights record." As emerges incontrovertibly from the Israeli supreme court's ruling, let alone that of the international court, this government's human rights record is appalling.

Moreover, while the US is Israel's principal arms supplier, European countries such as Germany are also involved. Pressure must be exerted here, too. That there is increasingly explicit acceptance of the need for a just settlement for the Palestinians was demonstrated by a significant parliamentary reply by Tony Blair (to a question by myself) in the Commons recently. He said that a "viable Palestinian state" must be "based ... on the 1967 boundaries". Those boundaries are what the wall, reaching far into Palestinian land to embrace illegal Jewish settlements on the West Bank, is aimed at destroying.

That a task is difficult does not mean that it should not be attempted. There is no point in seeking to change Israeli policy by appealing to its government's better nature, since such a nature does not exist. Sanctions and an arms ban must be our objective. Even a determined campaign may itself help to shift the Sharon government's policies and bring about a peace settlement to end the plight of Palestinians and Israelis alike.

· Gerald Kaufman is Labour MP for Manchester Gorton

kaufmang@parliament.uk