Vatican City, Nov 20, 2019 / 09:40 am (CNA).- The Holy See on Wednesday reaffirmed its support of a two-state solution for Israel and Palestine, after recent shifts in U.S. policy threatened to derail hopes of an agreement.

“In the context of recent decisions that risk undermining further the Israeli-Palestinian peace process and the already fragile regional stability, the Holy See reiterates its position of a two-state solution for two peoples, as the only way to reach a complete solution to this age-old conflict,” the Vatican press office stated on Wednesday.

The Holy See’s statement was issued two days after the Trump administration announced a reversal of U.S. opposition to Israeli settlements in the West Bank; the administration now said they did not violate international law.

The settlements are viewed as a significant obstacle to the Israeli-Palestinian peace process and to hopes for a two-state solution.

Previous U.S. administrations have taken varying stances on the legitimacy of the settlements, and the Trump administration reverted to the Reagan administration’s position that the settlements were not illegal. The announcement was a reversal of the Obama administration’s 2016 decision not to veto a UN resolution against the settlements.

“The establishment of Israeli civilian settlements in the West Bank is not per se inconsistent with international law,” U.S. Secretary of State Mike Pompeo told reporters on Monday.

Pompeo’s announcement contradicted the UN’s position of the settlements being in violation of international law. In December of 2016, the United Nations Security Council passed a resolution—with the United States abstaining as a member country—that reaffirmed its existing opposition to the Israeli settlements in occupied Palestinian territory.

Internationally, the U.S. move this week was viewed as a significant blow to hopes for a two-state solution. The UN’s Special Rapporteur on the situation of human rights in the Palestinian Territory, Michael Lynk, called it “the very last nail in the coffin of the two-State solution.”

On Wednesday, the Holy See recognized the legitimacy of the State of Israel within boundaries “recognized by the international community” while also upholding “the same right that belongs to the Palestinian people.”

Both Israel and Palestine, the Vatican said, should settle on an agreement respecting both sides “with the support of the international community and in compliance with United Nations resolutions.”

In 1967, Israel began occupying the West Bank territory after the Six-Day War. Around 400,000 Israelis and 2.8 million Palestinians live in the West Bank and East Jerusalem, which includes the Christian Quarter of the Old City.

Israel’s Prime Minister Benjamin Netanyahu supported Israeli sovereignty over existing settlements in the West Bank during his campaign for re-election earlier this year.

The transfer of a hotel in the Christian Quarter of the Old City of Jerusalem to Israeli settlers has also made international news for the possible consequences for the future of the city.

Patriarchs and heads of local churches warned in a statement this summer that a disputed 2005 land deal transferring ownership of the hotel would undermine both the status quo agreement and the integrity of the Christian Quarter of the city, which is home to some of the holiest pilgrim sites in Christianity.