European Union foreign ministers meeting in Italy have expressed alarm at the resignation of Palestinian Prime Minister Mahmoud Abbas. They say they fear it could be a severe setback to the Middle East peace process. At the same time the ministers agreed to blacklist the political wing of Hamas.

Meeting in the Italian resort of Lake Garda, the EU foreign ministers said there is a real risk of dangerous instability in the Palestinian leadership. Italy's Foreign Minister Franco Frattini said the 15-nation bloc was extremely worried about how this would affect the already-endangered Middle East peace process.

Mr. Abbas submitted his resignation on Saturday following a bitter power struggle with Palestinian leader Yasser Arafat over control of the Palestinian security services.

The EU's foreign policy chief, Javier Solana, said the Middle East peace process is now at a critical stage and everything possible should be done to try to salvage it.

European Commission President Romano Prodi warned that the Abbas resignation was a backward step, a clear demonstration that the more moderate side in the Palestinian leadership had lost.

U.S. Homeland Security chief Tom Ridge, also in Italy, said Mr. Abbas's departure would cause a delay in the peace process. He added, however, that it would not discourage President Bush's efforts to get Israelis and Palestinians around the conference table.

The EU, the U.S., the U.N. and Russia make up the "quartet" of mediators in the Middle East peace process. Italy, as rotating president of the EU, wants to bring the four parties together for a meeting later this month to discuss the stalled peace process.

In a separate development, the European Union ministers agreed Saturday to outlaw the Palestinian political wing of Hamas, describing it as a terrorist organization. Some EU members, including Britain, had pushed for the decision after Hamas claimed responsibility for a recent suicide bombing in Jerusalem which effectively ended a truce declared by Palestinian militant groups.

The blacklisting of the Hamas political wing is a first step toward all EU states freezing Hamas assets and possibly prosecuting its activists.