LUXEMBOURG - As U.S. Secretary of State Colin Powell presses ahead with his search for peace in the Middle East, the European Union foreign ministers will debate a German peace plan Monday and assess the way forward in the troubled region with their Russian counterpart.

The German plan is a surprise initiative from a country not readily seen as having any role in Mideast peacemaking.

Foreign Minister Joschka Fischer has drafted a two-year timeframe for, among other things, a durable cease-fire, the withdrawal of Israeli troops, the dismantlement of Jewish settlements, the creation of a Palestinian state and an internationally monitored buffer zone.

This would be followed by talks on touchy "final status" issues such as the future of Jerusalem and the exact borders of Israel and the Palestinian state. The German plan also provides for international security guarantees under the auspices of the United Nations, the United States, the European Union and Russia.

The EU ministers will discuss the Middle East with visiting Russian Foreign Minister Igor Ivanov.

They were also to debate moving toward trade sanctions to punish Israel for its heavy-handed crackdown on Palestinian cities and towns across the West Bank since March 29.

No unanimity is expected, despite last week's appeal from the European Parliament, the 626-member EU assembly, to suspend trade relations with Israel.

Officials said the foreign ministers will assess the chances of holding a scheduled meeting with their counterparts from Israel and its Arab neighbors next week in Valencia, Spain.

The fighting in the Middle East has cast a shadow over a 7-year-old Euro-Mediterranean aid-and-trade program through which the EU pumps billions of euros (dollars) into Israel and its neighbors to underpin the peace process that has long been directed by the United States.

Spanish officials, whose country holds the EU presidency, are confident the April 22-23 EU-Mediterranean meeting is not at risk. Other officials question that.

The EU ministers meet as Powell tours the Middle East, struggling to get Israeli Prime Minister Ariel Sharon and Palestinian leader Yasser Arafat to agree to a cease-fire.

On Sunday, Arafat told Powell that Israel must first withdraw from Palestinian centers it has occupied in recent weeks. Sharon has renewed his proposal for an international peace conference - without Arafat - with Lebanon, Saudi Arabia and Syria.

Powell planned to meet again with Arafat on Tuesday at the Palestinian leader's heavily damaged headquarters, which is still besieged by Israeli troops.

While trade sanctions against Israel were unlikely, officials said, there was still the option of the EU imposing less visible punishment by slowing down future trade and cooperation talks, taking a tougher stance in existing trade spats and pushing harder for compensation for damage done to EU-funded projects in Palestinian areas.

The EU is Israel's largest trade partner; Israel is the EU's 15th largest trade partner.

Last year, its exports to the EU totaled 9.3 billion euros (8.3 billion) and its imports reached dlrs 12.3 billion euros (dlrs 14 billion) in 2001. Israeli exports included largely diamonds, electrical equipment, chemicals, plastics and rubber and farm produce.

EU ministers are also expected to hold urgent talks on Zimbabwe, Afghanistan and Russia.