By Philip Pullella
VATICAN CITY (Reuters) - The Vatican signed its first treaty with the "State of Palestine" on Friday, calling for "courageous decisions" to end the Israeli-Palestinian conflict with a two-state solution.
The treaty concerned the Catholic Church's activities in areas controlled by the Palestinian Authority.
The Israeli foreign ministry said it regretted the move, calling the signing of a treaty, which implies there is an official Palestinian state, "a hasty step (that) damages the prospects for advancing a peace agreement".
But Archbishop Paul Gallagher, the Vatican's foreign minister, said he hoped the agreement could be a "stimulus to bringing a definitive end to the long-standing Israeli-Palestinian conflict, which continues to cause suffering for both Parties".
He said he hoped that a peace process directly negotiated between Israelis and Palestinians could resume and lead to a two-state solution.
"This certainly requires courageous decisions, but it will also offer a major contribution to peace and stability in the region," he said..
The U.N. General Assembly adopted a resolution in 2012 recognizing Palestine as an observer non-member state. This was welcomed at the time by the Vatican, which has the same observer non-member status at the United Nations.
Since then the Vatican has de facto recognized a "State of Palestine" and Pope Francis referred to it by that name when he visited the Holy Land last year.
(Additional reporting by Maayan Lubell in Jerusalem Editing by Jeremy Gaunt)