JERUSALEM, Jan 14 (Reuters) - European nations may consider halting critical aid to Palestinians living on Israeli-occupied land if stalled peace talks fail to get going again, Norway's foreign minister was quoted as saying on Friday.

Europe has handed over an average 300 million euros each year over the past 17 years to Palestinian projects, helping keep the local economy afloat and easing social tensions.

Norway's Jonas Gahr Store told the Jerusalem Post that this aid was intended to help Palestinians build the infrastructure for a future state in land Israel captured in a 1967 war.

If that vision for some reason completely collapses or reaches a dead end, that argument will be challenged and we will keep hearing questions like why are we continuing to fund an (Israeli) occupation, Store said.

Middle East peace talks broke down in September just weeks after they were renewed in Washington, with the Palestinians walking out in protest at Israeli settlement building. There is no sign that the talks may resume anytime soon.

Store suggested that unless negotiations aimed at establishing a Palestinian state alongside Israel were resumed in a matter of months, Palestinians may win enough support to declare statehood unilaterally in the West Bank.

So far seven South American countries have recognised Palestinian statehood since the negotiations broke down, the latest of them being Guyana on Thursday.

Europe still preferred a negotiated settlement, Store said.

But if that process will enter a dead end, then I guess the climate can change throughout Europe, and we already see tendencies in that direction, he added, alluding to growing criticism of Israeli settlement building.

EU diplomats joined Washington this week in criticising Israel's recent demolition of buildings in East Jerusalem to make way for homes for Jewish families, as undermining the chances for peacemaking.

In a statement on Friday, Richard Falk, the United Nations Special Rapporteur on human rights, protested the deaths of four Palestinians this month in confrontations with Israeli troops, and Israel's razing of an historic Jerusalem building to make way for a new settlement.

Together these events demonstrate a general and unacceptable Israeli dispositon to use excessive force against Palestinians, Falk said.

It is time for the international community to step in and offer this long vulnerable Palestinian population protection against the violence perpetrated by Israeli authorities.