The European Commission has rejected public pressure to ban Israeli settlement imports, while at the same time hosting a donor conference for a cash-strapped Palestinian Authority.

The commission on Tuesday (30 April) said it has no legal power to prohibit settlement products, following a demand by an European citizenship initiative (ECI).

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"We do not have the legal power to make such a proposal and as such we are not able to accept the ECI," a European commission spokeswoman told reporters in Brussels.

ECI is a form of transnational participatory democracy, requiring some one million EU citizens' signatures from at least seven member states, to propose legislation to the European commission.

The petition demanded a formal recognition to prohibit trade with Israeli settlements for the EU as a whole and all member states.

Earlier this year, Ireland passed a bill to ban the sale of goods from Israel's illegal settlements in the occupied West Bank. The ECI had demanded a similar law applied throughout the EU.

However, the commission says it is unable to comply because any such demand first requires a European Council decision under the EU's common foreign and security policy.

The EU has an association agreement with Israel, whose beneficial terms exclude the Occupied Palestinian Territory.

But goods made in the illegal settlements end up profiting from the EU-Israel deal anyway. In some cases, dates are misleadingly labelled to hide their West Bank settlement origin.

Archipelago of Palestinian 'islands'

Those settlements continue to expand despite international condemnation from the United Nations and the European Union, turning the West Bank into an archipelago of Palestinian "islands".

Around three million Palestinians live the West Bank, of which around 30 to 35 percent are UN-registered refugees.

Israel seized control in 1967, redrew the municipal boundary of Jerusalem, extended it into the West Bank, and then annexed that territory into the state of Israel.

The West Bank already has some 150 settlements and a 100 settlement outposts, including 60 fully-staffed checkpoints, plus hundreds of unstaffed obstacles like road gates and concrete blocks, trenches, fences, and dirt mounds.

Palestinians travelling inside the West Bank require extensive paper work and often suffer humiliating security screenings at checkpoints.

Recently, the Israeli government advanced at least 2,100 housing units in Area C alone, which spans some 60 percent of the West Bank.

Mogherini

"The very possibility of a two state is being dismantled," Federica Mogherini, the EU's foreign policy chief, warned on Tuesday.

She highlighted illegal Israeli settlement expansions as among the reasons behind the dismantlement of a two state solution.

Her comments came ahead of an annual spring meeting of the international donor group for Palestine, also known as the AHLC committee.

Set up in 1993, the committee was created by the Oslo agreement to help pave the way for co-existence of a Palestinian and Israeli state.

Speaking alongside Norway's minister of foreign affairs, Mogherini announced over €22m of additional humanitarian assistance for Gaza and the West Bank.

"A two state solution cannot be substituted by an endless technical and financial assistance and capacity building. It will simply not work," she said.

The Palestinian Authority money woes are linked to Israel's decision to withhold six percent of revenue it collects on its behalf.

The Palestinian leadership, meanwhile, has refused to accept any funds or clearance transfers from the Israelis until the full amount is re-instated.