Kerry Asks European Union to Halt Ban on Aid to Israeli Institutions Abir Sultan/European Pressphoto Agency Gilo, an Israeli development in Jerusalem. European guidelines preclude financing in areas occupied by Israel after 1967. "I think it's important that the Israeli people and the government see that coming to the talks, taking the risk of moving toward peace is worthwhile," Mr. Kerry said. In June, the European Union issued guidelines that would preclude financing and cooperating with institutions in territories occupied by Israel after the 1967 war. The guidelines, which have yet to take effect, were intended to pressure Israel to change its policy on Jewish settlements in the West Bank and seek a peace agreement with the Palestinians. The restrictions were of great concern to Israeli officials, who feared they would be the opening salvo in a campaign to isolate Israel and punish its economy. Mr. Kerry asked for the suspension in a closed-door meeting on Saturday of European Union foreign ministers in Vilnius, Lithuania. Mr. Kerry also discussed the current status of the talks, which have resumed after almost three years. A senior State Department official said that the European Union was open to the idea of suspending the restrictions, but that it would not make a decision before its foreign ministers meet again in October. Israeli officials were encouraged by the move. Yigal Palmor, a spokesman for Israel's Foreign Ministry, said that Israel had been involved in an "intensive diplomatic effort" with European countries since the guidelines were published to urge that they not be implemented in the strictest possible way. He added that the European Union was sending a delegation to Israel on Tuesday to continue those discussions. But in a statement that reflected the deeply entrenched differences between the Israelis and Palestinians, a senior Palestinian official said that suspending the European Union guidelines would reduce the pressure on Israel to make meaningful concessions. "The announcement of the E.U. guidelines was a very positive step which played a significant role in the decision to resume negotiations," Hanan Ashrawi, a member of the executive committee of the Palestine Liberation Organization, said in a statement. "Reports of U.S. lobbying the E.U. on behalf of Israel are extremely discouraging and cast serious doubts on the U.S. mediation role," she added. Mr. Kerry said, however, that the Palestinians were also benefiting from the decision to resume talks, as the Israeli government was allowing communications equipment and building materials to be sent to Gaza and had arranged for the Allenby Bridge, which crosses the Jordan River and links the West Bank with Jordan, to be open 24 hours a day, among other steps. In a modest move intended to bolster the peace process and the West Bank economy, the Israeli government on Sunday increased by 5,000 the number of permits allocated for Palestinians working inside Israel. Tens of thousands of Palestinians already hold such permits. As for the Israelis, Mr. Kerry argued that it was important to recognize Prime Minister Benjamin Netanyahu's decision to resume negotiations. "Because he has paid some political price for making his decision," Mr. Kerry said, "I think it's important for Europe to say in return, "See what this gets? This gets a change in our relationship, a change for the better." " The peace talks between the Israelis and the Palestinians formally resumed in July. Because of the secrecy surrounding the negotiations, it is difficult to say if any meaningful progress has been made. Mr. Kerry spoke at a news conference after meeting in Paris with Arab foreign ministers whom he hopes to persuade to support the Middle East peace process. They also discussed the Syria crisis. Mr. Kerry then left for London where he met with Mahmoud Abbas, the president of the Palestinian Authority. Mr. Kerry had planned a meeting in Rome with Mr. Netanyahu, but the Israeli prime minister decided not to leave Jerusalem because of the tense situation in Syria. Mr. Kerry said that he planned to meet with Mr. Netanyahu "shortly, as our schedules permit." Michael R. Gordon reported from London, and Isabel Kershner from Jerusalem.