What was supposed to mark the launch of a long-awaited series of negotiations at the UN aimed at developing the first binding treaty on international arms sales appears to have degenerated into a diplomatic debacle.

On Monday, the opening of negotiations on the UN Arms Trade Treaty was halted over whether Palestine should participate as a full state.

Arab requests that the Palestinians participate – and not as an "observer entity" as they are currently considered at the UN – led to the threat of the US and Israel walking out of the room. This would mean the complete collapse of negotiations.

Palestine is still not considered a state in the UN system, but a UN "observer entity".  Its representatives normally sit in on negotiations here in New York, but cannot directly participate.  They do so through another UN member state, which speaks for them.

Riyad Mansour, the Palestinian Ambassador to the UN, explained to reporters that ever since Palestine joined the UN Education, Scientific, and Cultural Organization (UNESCO), as a full member in October last year, they should be allowed in the negotiations.

"We are doing it because it is our obligation and our right," he said. 

"After we became a member of UNESCO, we are a state - the state of Palestine, recognised by 132 countries."

Such a move would become a precedent for future negotiations and could support Palestine's bid for full statehood under international law. 

That's precisely what Western diplomats fear. Many have told me that they are concerend the Palestinian cause is being exploited by some Arab countries, who simply don't want the arms-trade treaty in the first place. 

International advocacy groups, including Amnesty International, OXFAM, and Control Arms told reporters that the delay is an alarming distraction.

"We are urging governments not to be distracted or diverted by side issues," said Suzanne Nossel, from Amnesty International.

"The ground work has been laid, we want to see the talks get under way."

These groups have been pushing for more international oversight of the arms trade for years, pointing to the fact that there are strict controls for such things as bottled water and bananas, but not for the estimated $60bn international trade in guns. 

Many of these weapons end up in the hands of the world's poorest regions, and areas, most affected by violence such as Mali, Yemen, and Syria.

On Tuesday morning, Secretary General Ban Ki Moon officially opened the conference, but it was suspended shortly after he spoke, pending resolution of the dispute.