SEVILLE, Spain -- European Union leaders, alarmed by the rapid escalation of Middle East violence, on Saturday called for a quick return to talks and the establishment of a Palestinian state based on 1967 borders, said a draft of an EU summit declaration.

"The crisis...has reached a dramatic turning point," said the paper on Saturday on the final day of the two-day summit in this Andalucian capital.

"Further escalation will render the situation uncontrollable.

The parties on their own cannot find a solution," it said.

"A settlement can be reached through negotiation, and only through negotiation," it said.

"The objective is an end to the (Israeli) occupation (of Palestinian territories) and the early establishment of a democratic, viable, peaceful and sovereign Palestinian state, on the basis of the 1967 borderes, if necessary with minor adjustments agreed by the parties." "The end result," said the draft, "should be two states living side by side within secure and recognized borders, enjoying normal relations with their neighbors." The draft conclusions said a reform of Yasser Arafat's Palestinian Authority (PA), which Israel blames for the now regular suicide bombings, "is essential." "The European Council expects the PA to make good its committment to security reform, early elections and political and administrative reform," it said.

But, referring to Israel, it added: "Military operations in the occupied territories should cease. Restrictions on freedom of movement should be lifted. Walls will not bring peace." The draft also reiterated the EU's support for an international conference involving two parties, plus the U.S., UN, EU and Russia -- the so-called quartet -- and other Arab and involved states.

The EU would also offer economic aid to peace-building, including the reconstruction of the Palestinian economy, and help in monitoring peace, AFP reported.

"The message from the Europeans will be that we need a new political push, which might be an international conference or something else," said Javier Solana, EU high representative for foreign and security policy. "What form this takes is not that important," he said. "The important thing is that there be a political push, a perspective for getting out of the terrible situation in which we are now."