EU External Relations Commissioner Chris Patten has lambasted the Israeli barrier through occupied territories in the West Bank, arguing it proved Israel is not committed to a two-state solution to Middle East violence.
That language is echoed in the draft of the EU's statement for next week's meeting.
"The EU is particularly concerned by the route marked out of the so-called security fence...(which) could prejudge future negotiations and make a two-state solution physically impossible to implement," the draft said.
"It would cause further humanitarian and economic hardships to the Palestinians," it said.
The draft for next week's meeting also rebukes Israel for snubbing EU's regional envoy Marc Otte, who has not been allowed to meet Prime Minister Ariel Sharon or senior Israeli officials on a formal basis since he met Arafat in September.
"It would cause further humanitarian and economic hardships to the Palestinians"
EU draft statement
Diplomats said there was wide agreement across the EU that Israel cannot continue to snub those it considers "contaminated" by contact with Arafat, who the bloc insists is a legitimate representative of the Palestinian people.
They said that although the United States has also sought to sideline Arafat, Israel's policy would frustrate other members in the so-called Quartet of mediators - Russia and the United Nations - and so block the "road map" peace plan.
Portugal, along with France, Spain, Sweden, Luxembourg and Greece favours a hard line approach to Israel. It recently said there was genuine dismay across Europe over Israel's policy towards the Palestinians.
An ambassador from one of these pro-Palestinian countries even said the EU should start considering sanctions against Israel.