Europeans did do as requested in relation to Hamas, but now the US is demanding the same treatment for Hezbollah. The European argument for not listing Hezbollah as a terrorist organisation:
…some European countries are questioning whether Hamas should remain listed now that some of its members have won elections in Gaza.
This argument, pressed by Britain and others, is that the best way to lure Hamas leaders into the political process and have them abandon their militancy and their policy of trying to eradicate Israel is to offer the carrot of removal from lists as terrorist organizations.
The Bush administration strenuously opposes any such action. Secretary of State Condoleezza Rice was said by U.S. and European officials to have pressed for listing Hezbollah as a terrorist organization in practically every stop in Europe last week.
The Europeans are fearful about the affect it might have on negotiations with Iran on nuclear energy/weapons. The report continues:
The United States has rebuffed European appeals to become more directly involved in discussions with Iran over its suspected nuclear program.
The Hezbollah dispute now gets added to a long list of matters that divide Europe and the United States despite the new campaign that they share broad values of freedom and liberty.
The other issues that should come to the fore on Bush’s visit are the negotiations with Iran over its suspected nuclear program and American opposition to Europe’s determination to lift an arms embargo imposed in 1989 on China.
Also dividing Europe and the United States is the the issue of European support for the Kyoto treaty on global warming and the International Criminal Court, both opposed by the United States, and American opposition to another term for Mohamed ElBaradei as head of the International Atomic Energy Agency.
The ElBaradei case, like Hezbollah, is related to the situation in Iran, because European diplomats are arguing that ElBaradei, a Muslim, is best suited to press the Iranians to cooperate with steps to dismantle its disputed uranium enrichment and plutonium reactor programs.