Sweden's new government officially recognized a Palestinian state on Oct. 30. This week, Spain's Parliament approved a non-binding resolution recognizing a Palestinian state, following similar motions in Britain and Ireland.
Germany, Israel's closest European ally, has made clear it won't follow that lead.
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Merkel said Friday that Berlin supports a two-state solution and "we see how difficult that is, so we also believe that unilateral recognition of the Palestinian state won't move us forward" toward that goal.
She said it's better to focus squarely on getting Israeli-Palestinian talks going although "that appears very difficult in the current conditions."
Spanish lawmakers on Tuesday urged their government to recognise Palestine as a state, albeit only when the Palestinians and Israel negotiate a solution to their long-running conflict. 319 lawmakers voted in favor of the motion, two voted against and one abstained.
The wording in the motion was changed to emphasize that the move for a Palestinian state should be "the consquence of a process negotiated betweent the parties."
The Spanish initiative, promoted by Socialist former Foreign Minister Trinidad Jimenez, came after lawmakers in Britain and Ireland called for their governments to recognize a Palestinian state.
France is also eyeing such a non-binding resolution later this month after Sweden's center-left government took the lead by officially recognizing the state of Palestine within days of taking office last month.
The moves reflect mounting frustration in the European Union at Israel's expanding settlement program on land the Palestinians want for a state following the collapse of US-sponsored peace talks.
The EU's new foreign policy chief, Federica Mogherini, said the bloc's 28 foreign ministers discussed at a meeting in Brussels on Monday how they could start "a positive process with the Israelis and Palestinians to relaunch a peace process".
Asked about the PP amendment, Palestinian ambassador Musa Amer Odeh, who planned to attend the debate, said: "The most important thing is that the parliament is asking the government to recognize the state of Palestine."
The Israeli government had earlier dismissed the gesture, saying it came at the worst possible moment on the day of the deadliest incident in Jerusalem in six years.
"Nothing can be gained from unilateral moves such as the one being made by the Spanish parliament today and it distances us from negotiations with the Palestinians," said Israeli foreign ministry spokesman Emmanuel Nahshon.
"We call on Spain not to make unilateral moves, particularly on a shocking day like today," said Nahson.
The Associated Press and Reuters contributed to this report