By David Brunnstrom

BRUSSELS, April 29 (Reuters) - The European Union on Sunday urged the United States to press on with its Middle East peace efforts, saying it was important momentum be maintained.

On the eve of a U.S.-EU summit in Washington, EU External Relations Commissioner Benita Ferrero-Waldner told Reuters the European Union and the United States needed to work together to raise the profile of the Middle East peace process.

Speaking by telephone from Washington, she said Brussels backed diplomatic efforts by U.S. Secretary of State Condoleezza Rice and added: "They should continue, because it's highly important that the momentum should be kept up."

Ferrero-Waldner pointed to "important" developments in recent weeks, including a renewed Arab peace initiative and the prospect of regular meetings between Palestinian President Mahmoud Abbas and Israel Prime Minister Ehud Olmert.

She said Brussels and Washington had been working closely together to encourage the peace process and would discuss what more could be done, including the possibility in future of helping the new Palestinian government in institution building.

"We want to do everything possible to stabilise the situation that is there," she said.

U.S. President George W. Bush has taken a hands-off approach to Middle East diplomacy, backing most Israeli policies since he took office in 2001 soon after a Palestinian revolt erupted.

But in recent months Rice has repeatedly visited the region, apparently recognising the need to reactivate peace efforts if Washington is to win cooperation from its Arab allies as it grapples with Iraq and Iran.

TECHNICAL ASSISTANCE

A renewed Arab offer of peace with Israel if it returns occupied land has so far won mild interest from Israelis and their U.S. allies, but no commitment to revive negotiations aimed at ending the Middle Eastern conflict.

The Quartet of Middle East peace brokers -- the United States, Russia, the United Nations and the European Union -- suspended direct aid to the Palestinian Authority after the militant Hamas group formed a government last year but maintained its refusal to recognise Israel's right to exist.

Palestinian Finance Minister Salam Fayyad met Ferrero-Waldner in Brussels in early April and said a new unity government formed to replace that needed more than $1.3 billion in aid this year to avert a humanitarian crisis.

Ferrero-Waldner promised technical assistance to enable his ministry to receive aid once the Palestinian Authority meets Quartet conditions of recognising the right of Israel to exist, respecting past peace agreements and renouncing violence.

Despite the freeze in direct aid, the European Union remains the biggest aid donor to the Palestinians and increased indirect assistance to 700 million euros ($953 million) last year from 500 million the previous year.

AlertNet news is provided by