This story was last updated at 12:16 p.m.

By NICOLE WINFIELD, Associated Press

VATICAN CITY (AP) — The Vatican officially recognized the state of Palestine in a new treaty finalized Wednesday, immediately sparking Israeli ire and accusations that the move hurt peace prospects.

The treaty, which concerns the activities of the Catholic Church in Palestinian territory, makes clear that the Holy See has switched its diplomatic recognition from the Palestine Liberation Organization to the state of Palestine.

The Vatican had welcomed the decision by the U.N. General Assembly in 2012 to recognize a Palestinian state. But the treaty is the first legal document negotiated between the Holy See and the Palestinian state and constitutes official diplomatic recognition.

"Yes, it's a recognition that the state exists," said the Vatican spokesman, the Rev. Federico Lombardi.

The Israeli foreign ministry said it was "disappointed."

"This move does not promote the peace process and distances the Palestinian leadership from returning to direct and bilateral negotiations," the ministry said in a text message.



The United States and Israel oppose recognition, arguing that it would undermine U.S.-led efforts to negotiate an Israeli-Palestinian deal on the terms of Palestinian statehood. Most countries in Western Europe have held off on recognition, but some have hinted that their position could change if peace efforts remain deadlocked.

The treaty was finalized days before Palestinian President Mahmoud Abbas visits Pope Francis at the Vatican. Abbas is heading to Rome to attend Francis' canonization Sunday of two new saints from the Holy Land.

"This is a very important recognition as the Vatican has a very important political status that stems from its spiritual status," said Abbas' senior aide, Nabil Shaath. "We expect more EU countries to follow."

The Vatican has been referring unofficially to the state of Palestine for at least a year.

During Pope Francis' 2014 visit to the Holy Land, the Vatican's official program referred to Abbas as the president of the "state of Palestine."



The Vatican's foreign minister, Monsignor Antoine Camilleri, acknowledged the change in status, but said the shift was simply in line with the Holy See's position.

The Holy See clearly tried to underplay the development, suggesting that its 2012 press statement welcoming the U.N. vote constituted official recognition. Nowhere in that statement does the Vatican say it recognizes the state of Palestine, and the Holy See couldn't vote for the U.N. resolution because it doesn't have voting rights at the General Assembly.

The 2012 U.N. vote recognized Palestine as a non-member observer state, made up of the West Bank, Gaza Strip and east Jerusalem, lands Israel captured in the 1967 Mideast war.

The Palestinians celebrated the vote as a milestone in their quest for international recognition. Most countries in Africa, Asia and South America have individually recognized Palestine. In Western Europe, Sweden took the step last year, while several parliaments have approved non-binding motions urging recognition.

This isn't the first time that the Vatican under Francis has taken diplomatic moves knowing that it would please some quarters and ruffle feathers elsewhere: Just last month, he referred to the slaughter of Armenians by Turkish Ottomans a century ago as a "genocide," prompting Turkey to recall its ambassador.

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AP writers Ian Deitch in Jerusalem and Mohammed Daraghmeh in Ramallah, West Bank contributed.