The current holder of the European Union presidency opened two days of talks with Israel and its Arab neighbors Monday, trying to rescue the frayed Middle East peace process.

Finnish Foreign Minister Erkki Tuomioja, whose country holds the position, said the cease-fire provided "rays of hope" for peace and reiterated the EU will restore relations with the Palestinians once they have a national unity government.

"It is important the Palestinians have a credible, representative government which no one will have any excuse not to engage with seriously," Tuomioja told reporters.

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He also said peace between Israel and the Palestinians was crucial for stability in Lebanon.

"No cease-fire will hold forever unless there is also a political process" that in the long-held view of the international community must lead to a two-state solution, he added.

Tuomioja chaired a meeting between EU foreign ministers and their counterparts from Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria, Turkey and Tunisia.

The meeting capped a year marked by nine chaotic months of a Hamas-led Palestinian government that does not recognize Israel and an July-August war between Israel and Hezbollah militants based in southern Lebanon.

Disagreements at the meeting focused on the future of the peace process and conditions for both sides to return to the negotiating table.

The Palestinians are trying to form a national unity government which could allow donors to restore direct aid to Palestinians but first, Hamas would have to recognize Israel, renounce violence and honor existing agreements with Israel.

As delegations arrived in this southern Finnish town, the Gaza Strip cease-fire stoked hopes that Israel and the Palestinians would be able to restart long-stalled peace efforts after five months of deadly clashes. Palestinian militants in Gaza fired two rockets at Israel on Monday, despite the two day-old cease-fire.

On Sunday, Israeli troops withdrew from the Gaza Strip as part of the cease-fire, but two major Palestinian militant groups continued to fire homemade rockets into Israel.

Hamas chief Khaled Mashaal said his group was willing to give peace talks six months, but threatened a new uprising if the talks do not lead to a Palestinian state in Gaza and the West Bank.

"The violence and suffering ... in the Palestinian territories, Lebanon and northern Israel in the summer of 2006 have underlined the importance of reinvigorating the peace process," the European Commission said in a report to the foreign ministers.

The emergence of a Hamas-led Palestinian government has forced the EU, the United States and other donors to stop direct aid - and Israel to withhold tax revenues on imports - to the Palestinian government. The EU has crafted a financing formula that bypasses official Palestinian channels and pays those Palestinians hardest hit by the financial crisis.

The EU's Euro-Mediterranean aid program aims to shore up peace efforts by bringing Israel and its neighbors together in a partnership meant to lead to a free trade zone. To make that possible, the EU has since 1995 funneled -21 billion in grants, aid and soft loans - mostly to Arab nations.

The EU's main goal is to engage countries on the southern and eastern shores of the Mediterranean in a "zone of peace, security and prosperity" by extending cooperation in areas including energy, tourism, environmental protection, education, law enforcement, migration, trade promotion and investments.

This has produced mixed results. There is no peace and it is debatable if the EU has raised its standing in a region where the United States remains the key to the peace process.

At a 2005 summit, marking the 10th anniversary of the EU's economic aid for Israel and its neighbors, only one Arab head of state showed up and the EU failed to get its southern neighbors to agree on a definition of terrorism.