Israel's efforts to stem a rising tide of recognition of a Palestinian state received a blow Tuesday afternoon, with Ireland's decision to upgrade the Palestinian diplomatic mission in Dublin to that of an embassy.

The announcement, broadcast by Israel Army Radio, followed a symbolic gesture of recognition by Peru on Monday.

Sources at Israel's foreign ministry said officials had been discussing the possibility, and foresaw even more states following suit.

"If the Palestinians spent one tenth of the time in serious negotiations that they do in largely meaningless gestures and attacking Israel in multilateral forums, then we could have probably realized an agreement," Deputy Foreign Minister Danny Ayalon told Xinhua, in the wake of the announcement.

"The only way for them to reach their aspirations is via the negotiating table. We call on the Palestinians once again to join us at the negotiating table, without preconditions on either side, where all issues are on the table," Ayalon said.

"Palestine is recognized as a free and sovereign state," Peruvian Foreign Minister Jose Antonio Garcia Belaunde said on Peruvian RPP radio. Belaunde, however, made no mention of where the borders of such a state would lie.

Peru's move comes in the wake of recent decisions by Argentina, Bolivia, Brazil, Chile, Ecuador, Guyana and Uruguay to unilaterally support Palestinian statehood -- a step that both Israel and the United States strongly oppose, saying it could derail any peace process.

However, Ireland's decision shows that Palestinian National Authority (PNA) officials' behind-the-scenes efforts trying to get European Union states' recognition are paying off.

According to a report broadcast on Tuesday on Army Radio, a foreign minister of an unnamed EU country two weeks ago told a senior Israeli ambassador that, "the U.S. has taken a step back and allowed us to take the reins in pressuring Israel, and I'm warning you that you will find yourselves isolated on the world stage, diplomatically as well as economically."

As well, Israeli foreign ministry officials believe that the U. S., according to the report, was "pulling the strings behind-the- scenes via Germany in order to influence the EU and the Quartet to sharply censure Israeli within the next ten days."

Belgium and Netherlands may be next in line to recognize a Palestinian State, according to ministry sources, the report said.

Israeli Vice Prime Minister Moshe Ya'alon, however, strongly denied the reports that Israel was heading towards international isolation, in an interview with host of a national morning news- talk program.

"We're not isolated internationally; I'm aware of the pressures, but -- to my great sorrow -- they stem from ignorance, or naivete about the nature of the Israeli-Arab conflict," Ya'alon said, referring to the report.

"We have to differentiate between the 'Palestinian narrative,' of the conflict, 'which is widely entrenched in Western capitals, and ... our own internal narrative -- details of which have been recently leaked," Ya'alon said, referring to the some 1,600 purported PNA papers published this week by the Al-Jazeera TV network and Britain's The Guardian newspaper.

"What is proved again and again is that (then-Prime Minister Ehud) Olmert's most 'defeatist' offers don't meet the most so- called 'defeatist' offers by the PLO, headed by Abu Mazen (the nom de guerre of PNA President Mahmoud Abbas)," Ya'alon said.