By NBF News
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THE European Union (EU) is telling Israel that growing instability in the Middle East makes it imperative to immediately resume the stalled peace process with the Palestinians.

Hungary's foreign minister Janos Martonyi, whose country currently chairs the EU, according to The Associated Press (AP) told his Israeli counterpart Avigdor Lieberman yesterday that 'time is pressing' and that the Israeli-Palestinian talks 'remain the core issue.'

Lieberman, who is holding talks with the EU as part of a decade-old association agreement, also said it was important to resume direct peace talks with the Palestinian Authority.

Palestinians insist they will not restart the talks until Israel halts settlement building in the West Bank and East Jerusalem, which they want as a capital. Israeli-Palestinian peace talks collapsed just weeks after they restarted in September because Israel ended a 10-month moratorium on settlement construction.

Meanwhile, Israel and the U.S. have carried out a successful test of the Arrow anti-missile system off the coast of California.

Israel's Defense Ministry said the Arrow detected, intercepted and destroyed a target missile launched from an offshore platform inside a U.S. Navy firing range in a test carried out late Monday.

The statement yesterday said the trial, the latest in a series of successful tests of the system, 'provides confidence in operational Israeli capabilities to defeat the developing ballistic missile threat.'

Jointly developed by Israel and the U.S., the system is primarily aimed at defending Israel from the threat of an Iranian missile strike. The Arrow detects an incoming missile and destroys it with a second missile.

Israel has identified Iran as its biggest threat, citing the country's nuclear program and its development of ballistic missiles. Those fears have been compounded by Iranian President Mahmoud Ahmadinejad's repeated calls for the destruction of the Jewish state and the regime's support for militant groups fighting Israel.

Iran's Shahab-3 missiles have a range of up to 1,250 miles (2,000 kilometers), putting Israel well within striking distance.

Iran claims its nuclear work is for energy production.

Tensions between the two countries were raised further yesterday by the passage of two Iranian warships through the Suez Canal toward the Mediterranean Sea, marking the first time since the 1979 Islamic Revolution that Tehran has sent military ships through the strategic waterway.

The ships, a frigate and a supply vessel, are en route to a port in Syria, Israel's hostile northern neighbor and an Iranian ally.

Israel has made clear it views the passage as a provocation and an attempt by Iran to exploit the recent instability in Egypt to expand its influence.