Israeli Prime Minister Ariel Sharon has suffered a major setback due to tie his hands in any future attempts at peace in the Middle East.

After hours of hostile debate, the Likud party’s 2,500 strong central comittee voted on a resolution which rejected the creation of a Palestinian state forever.

The vote was both a defeat to Sharon, and a "slap in the face" to US president Bush, Palestinian cabinet minister Saeb Erekat said. Both Bush and Sharon have publicly acknowledged the possibility of a future Palestinian state, which is at the centre of Palestinian demands.

Yet the vote is more than a slap in the face to the Israeli leader, it is a major blow to the Middle East peace process.

Netanyahu’s political launchpad

Only last week, Ariel Sharon won praise for deciding to hold off a military offensive against the Gaza Strip.

The vote against Palestinian statehood was pushed forward by former Prime Minister Benjamin Netanyahu (photo), who saw a chance to make a first major step in regaining party leadership before next year’s general election.

The vote shows that there is a large section in the Likud which strongly opposes any concessions to the Palestinians.

However, Sharon's defeat does not necessarily have immediate repercussions for his position as prime minister. He still enjoys a 64 per cent approval among Israeli voters.

And as head of a government coalition which includes members of the centre-left Labour party, Likud as well as other minor parties, supporters argue that Sharon must continue to negotiate in the interests of the whole Israeli nation.

International criticism

Sharon already feared yesterday’s outcome, warning that a vote against a Palestinian state would only deepen Israel’s position in the international community.

"Any decision taken today on a permanent agreement is dangerous to the state of Israel and will intensify the pressures on us", he said.

The vote met with sharp criticism amid European ranks. "Everybody has recognised that the only way to peace is through a state (for the Palestinians)", EU foreign policy chief Javier Solana said, on arrival at the monthly meeting of EU foreign ministers which began on Monday.

"It is very sad when internal politics of a political party interfere in the search for peace".

The Middle East conflict is set to dominate the foreign ministers’ meeting in Brussels and this week’s plenary session at the European Parliament in Strasbourg.

Hopes dampened

The Likud vote sets Ariel Sharon on a fresh collision course with both the EU, and Washington, who have been attempting to ignite a diplomatic process of sorts in the Middle East.

Indeed, these efforts appeared to have borne fruit last week, following an end to the 39-day Israeli siege of the Church of Nativity in Bethlehem.

The Israeli army withdrew from Bethlehem on Friday under a deal which saw 13 Palestinian fighters sent to into exile. The EU is to decide on their fate at the Brussels meeting on Monday.