Traditionally, the EU has had a supportive function in the Israeli–Palestinian peace process. While the US has taken the diplomatic lead, the EU, like other donor countries such as Norway, has taken on the economic responsibility for constructing Palestinian state-like institutions and has offered diplomatic backing to the two-state solution. This division of labour has had two premises at its core: first, that a two-state solution is viable; and second, that Israel, the Palestinian Authority and the US all want a two-state solution. Today, these premises are no longer present. This policy brief calls these foundations into question in light of the current situation, raising important questions regarding a future EU policy.