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"The Palestinians are using the security fence as an excuse to continue their violent attacks, but from Israel's point of view, the fence saves lives and does not diminish the possibility of creating a Palestinian state, quite the opposite," said Foreign Minister Tzipi on Thursday.
Livni made the remarks after meeting Louis Michel, the European Union commissioner for development and humanitarian aid.
The foreign minister went on to say that any portrayal of terrorists as freedom fighters must be avoided. "Israel shares European values and expects Europe to fairly judge others according to the attributes prevalent there," she said, adding that the Gaza Strip could have flourished following the disengagement but instead it was turned into a "nest of terror" by Palestinians.
"There is no excuse for what is happening is Gaza or for the Kassam fire," Livni exclaimed.
Earlier Thursday, a top UN refugee official urged the European Union to do more to alleviate the crisis in the Palestinian territories caused by international sanctions and a collapsing economy.
Karen AbuZayd, commissioner general for UN Relief and Works Agency, said her agency urgently needed US$246 million in emergency funding to continue providing education, health care, social services and aid to 4.4 million Palestinian refugees living in the West Bank and Gaza Strip, Lebanon, Syria and Jordan.
AbuZayd cited the recent Arab League peace initiative and formation of a Palestinian Authority national unity government including the Hamas and Fatah as positive signs which required some "reward" from the international community.
Since Hamas won the Palestinian election in 2006, the international community has bypassed the government and paid hundreds of millions of dollars in social assistance through the so-called Temporary International Mechanism.
The principles set out by the "Quartet" of Middle East peacemakers - the United Nations, EU, Russia and the United States - include accepting the right of Israel to exist, renouncing violence and accepting previous Palestinian-Israeli agreements.
The European Union already has said it is willing to deal directly with non-Hamas members of the new government who support Quartet principles, including PA Finance Minister Salam Fayyad.
AbuZayd said that most Palestinians had a positive view of the 27-nation EU in contrast to their view of Israel and the United States, which they blame for their economic difficulties. Last year, the EU provided about 694 million Euros (US$930 million) in assistance to the Palestinians under the Temporary International Mechanism.
"It's important for Europe to hear that (Palestinians) count on the Europeans to be more impartial, less biased toward one party, listening to their side of the story and to help more," she said in Brussels where she is meeting European lawmakers and EU officials.
AbuZayd said that in certain parts of the Palestinian territories such as Gaza, four-fifths of the population now lived beneath the poverty line.
"The economy is almost completely devastated. All the businesses are gone, the Erez industrial zone is gone."
She said the deterioration of the security situation caused by widespread poverty was also affecting the work of the UN relief agency. UN staff were no longer allowed to live and move freely in Gaza.
"We all need armored cars we all need a presidential guard or police escort," she said.