A leaked report prepared by heads of European missions in Jerusalem warns that the city has reached a dangerous boiling point, and that the rising violence and polarization are threatening the "viability of the two-state solution."



The report, obtained by the Guardian, also calls for further sanctions against products made in the settlements and steps against "known violent settlers."



“2014 has been distinguished by a number of specific, disturbing and often violent developments,” the report says, cautioning that “these incidents have occurred against the background of the systematic increase in settlement activity, tensions over the Haram al-Sharif and rising levels of tensions and acts of violence on both sides.”



The report is a document prepared annually by the European countries' missions in Jerusalem, who advise EU foreign policymakers.



The Guardian quotes "well-informed European sources" who say that the document "is now being discussed in Brussels" and "reflects a strong desire from European governments for additional measures against Israel over its continued settlement-building."



The report comes as the U.S. announced it plans to 'reassess' its Israeli-Palestinian peace policy in light of Prime Minister Benjamin Netanyahu's statements before the election earlier this week.

Days before the election, Netanyahu said in an interview with the right-aligned NRG website that no Palestinian state would be established if he was reelected prime minister.

A few days earlier, Netanyahu said that his speech at Bar Ilan in 2009, during which he announced his readiness to accept a Palestinian state, was no longer relevant due to the security situation in the region.

Although Netanyahu backtracked on these statements Thursday in interview with the NBC – reiterating his belief in a two-state solution – President Barack Obama told the Israeli premier in a phone call that the White House will need to reassess its options regarding the Israeli-Palestinian peace process.