The EU ministerial meeting on Monday was intended to discuss the humanitarian crisis engulfing the Gaza Strip and the potential first steps towards a peaceful resolution to the long-term conflict between Israel and Palestine.
The bloc's foreign affairs chief Josep Borrell, who earlier in the day had described the gathering as "exceptional", said Katz's intervention during the meeting - where he pitched an artificial island in the Mediterranean Sea near the Gazan coast - was "irrelevant" to the discussions.
"I think that the minister could have used his time better to worry about the situation in his country, or the high death toll in Gaza," Borrell told reporters following the meeting.
Katz, who was recently appointed Israel's foreign minister, showed his European counterparts two videos during the meeting, Borrell said.
The first promoted a rail infrastructure project connecting Gaza with the occupied Palestinian territory of the West Bank. The second showed a proposal to build an artificial island in the Mediterranean Sea off the Gazan coast that would serve as a commercial hub linking the Gaza Strip with the rest of the world.
The infrastructure project dates back to Katz's time as Israel's transport minister and was first pitched in a 2017 video as "an answer to a reality that is bad for the Palestinians and not good for Israel," according to Reuters.
But according to a diplomatic source who spoke on condition of anonymity, Katz's decision to pitch the initiative during discussions centred around potential future peace negotiations had left EU ministers "perplexed."
Katz did not suggest the island could be used to house Gazans, nor did he link the initiative to the so-called two-state solution, the diplomatic source added.
But Borrell said the videos had "little, if not no relevance, to the question under discussion."
The gathering came just a day after Israeli Prime Minister Benjamin Netanyahu repeated his opposition to the creation of a Palestinian state as part of the so-called two-state solution after the war, which has been raging since the October 7 attack on Israel orchestrated by the Hamas militant group that controls the Gaza Strip.
The two-state solution – which would deliver statehood for the Palestinians – is the overarching goal desired by EU and Western allies after the war.
Borrell doubled down Monday on his own insistence that only the two-state solution can give Israelis and Palestinians the security guarantees they need. He also said that the EU and the wider international community had a "moral obligation" to find and propose a solution.
It comes after he made controversial comments on Friday claiming Netanyahu had been "personally boycotting" the two-state solution for the past three decades.
Foreign ministers representing the EU's 27 member states, who have at times shown disunity in their response to the war between Israel and Hamas, which is considered a terrorist organisation by the bloc, were unanimous in their support for the two-state solution, Borrell said.
"The member states have all told him (Katz), of course, that they believe that the solution for a permanent and lasting peace that guarantees Israel's security (...) comes about with the creation of a Palestinian state," Borrell explained.
"This surely didn't make him change his mind, but we didn't expect anything to the contrary," he added.