RAMALLAH (AFP) — Europe’s top diplomat Saturday called for a Palestinian state sharing Jerusalem as its capital with Israel, hours after the police killing of an Arab-Israeli further fanned tensions.

The appeal by the European Union’s Federica Mogherini followed the dawn killing of the man by police in northern Israel, with his family saying he was killed “in cold blood” and a video showing he was shot in the back.

“I think Jerusalem can be and should be the capital of two states,” the new EU foreign policy chief told reporters in the West Bank city of Ramallah.

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The status of Jerusalem is a sensitive issue that has blocked peace efforts for decades.

Palestinians are seeking to achieve statehood in Gaza and the West Bank with annexed east Jerusalem as their capital. Israel claims Jerusalem as its undivided and eternal capital.

In recent weeks tensions have soared, with Israel pushing plans to build new homes in East Jerusalem and Jewish extremists demanding the right to pray at the flashpoint Al-Aqsa mosque compound. Prime Minister Benjamin Netanyahu has repeatedly made clear that this will not happen.

Also on Saturday, Mogherini visited the Gaza Strip, the coastal enclave devastated by a 50-day summer war between its Hamas terrorist rulers and Israel, before talks in Ramallah with Palestinian Authority Prime Minister Rami Hamdallah.

In the latest violence, Israeli security forces shot dead an Arab-Israeli man who threatened them with a knife as he tried to prevent a relative being arrested, police said.

But the family of Kheir Hamdan, 22, said he was “shot dead in cold blood” in the north Israel village of Kafr Kanna.

Police said Hamdan was killed after they fired warning shots.

But an Internet video link police provided shows the young man running after trying to attack security forces. As he flees as police officer is seen shooting him in the back.

Israeli say an internal investigation has begun.

Another night of clashes

Hamdan’s death triggered a protest in his village, and on the outskirts hundreds of youths erected barricades and set fire to tires as police deployed reinforcements.

Arab Israelis account for about 20 percent of Israel’s population.

The shooting followed another night of clashes in East Jerusalem between youths hurling stones and firecrackers and police who retaliated with rubber bullets, stun grenades and tear gas.

Mogherini has been pushing for ways of reviving the peace process that has been frozen since April, since beginning her first official visit to Israel and the Palestinian territories on Friday.

The world “cannot afford” another war in Gaza, she said there early on Saturday, and also appealed for the creation of a “Palestinian state.”

“We need a Palestinian state — that is the ultimate goal and this is the position of all the European Union,” she said during a trip to the territory devastated by its third conflict in six years.

Palestinian Authority President Mahmoud Abbas said on Saturday that a draft resolution was on course to be submitted to the UN Security Council this month calling for an end date for Israeli occupation.

The text is expected to be vetoed by permanent member the United States.

On Friday, Mogherini met Netanyahu, who dismissed her criticism of Israeli building in annexed East Jerusalem and at West Bank settlements.

“I reject the fictitious claim that the root of the continuous conflict is this or that settlement,” he said. “Jerusalem is our capital and as such is not a settlement.”

Netanyahu has ordered the security forces to either seal or demolish the homes of any Palestinian involved in anti-Israeli attacks, an official said on Friday.