A report by European Union delegates in Jerusalem and Ramallah is calling for the reinstatement of the Palestinian Liberation Organization and for the advancement of Palestinian Authority policies in East Jerusalem.

The report, a copy of which was obtained by Haaretz on Sunday, also recommends sharing information on violent settlers in East Jerusalem, in order to assess whether they should be allowed to enter EU member states.

"Without Jerusalem as the future capital of two states, a sustainable peace agreement between Israel and the Palestinians will not be possible," said the opening sentence of the report, which is currently being sent to foreign ministries in various capitals, and for a discussion at the Political and Security Committee of the European Union in Brussels.

The report takes the same stance as one written in 2011 by EU delegates to Brussels, which dealt for the first time with Area C of the West Bank.

The current report holds that, among other things, Israel is working to annex Eastern Jerusalem to Israel – a policy that the European Union sees as illegal - and that Israeli policies in the city are "increasingly undermining the feasibility of Jerusalem as the future capital of two states."

According to the report, Israel's policies since 2001 have encouraged the emigration of Christian residents of the city. Such policies include placing obstacles in the way of family unification, resident rights and property appropriation.

The report presents the position of church leaders in the city, who claim that, "The Government of Israel is increasingly implementing policies aimed at fundamentally altering the character and status of the Holy City of Jerusalem by stressing the Jewish character and history of the city at the expense of the Christian and Muslim narratives."

"Over the past few years, Israel's actions in East Jerusalem have run counter to its stated commitment to a sustainable peace with the Palestinians through the two-state solution," said the report. "Attempts to emphasize the Jewish identity of the city, at the expense of its Muslim and Christian residents, threaten its religious diversity and provide fuel to those who want to further radicalize the conflict, with potential regional and global repercussions".

The report details a series of steps taken by Israel that hurt the Palestinian population, including the following:

• Some10,000 Palestinian children living East Jerusalem are not registered with the Interior Ministry, because one of their parents is from the West Bank or Gaza. This negatively impacts their access to basic education, health services and other social services.

• In 2011, all private schools in East Jerusalem were required to change their school books to ones issued by Israel, who also censors the contents of the Palestinian Authority's school books. Despite protests by the parents of school children, many schools adhered to the instruction.

• Since 2008, Palestinian hospitals in East Jerusalem have been forbidden to purchase medicines produced in the West Bank and Gaza Strip. This caused logistical problems and increased costs. In addition, they were forbidden to expand or renovate their facilities.

Recommendations: Don't meet Israeli representatives in East Jerusalem

The report, which is very similar to that of 2011, recommends a series of steps, including the advancement of Palestinian Authority policies, and the return of PLO presence in Jerusalem. In addition, the report recommends sharing information on violent settlers in East Jerusalem, in order to assess whether to allow them to enter EU member states.

The recommendations cover diplomatic issues, suggesting that EU delegates refrain from meeting Israeli officials in their East Jerusalem offices and avoid having Israeli security and/or protocol accompanying high ranking officials from member states when visiting the Old City or East Jerusalem.

In addition, the report recommends that EU member states prevent or discourage financial transactions to actors supporting settlement activity in East Jerusalem. It also recommends proposing appropriate EU legislation to prevent or discourage financial transactions in support of settlement activity, and that EU missions with offices or residences in East Jerusalem regularly host Palestinian officials with senior EU visitors.