Mr Mugabe is accused by many of intimidating the opposition
The EU warned on Monday that President Robert Mugabe's Zanu-PF party must stop intimidating political opponents and allow European monitors in to observe next year's presidential election.
But Emmerson Mnangagwa of Zanu-PF and the speaker of parliament, told the BBC that apart from isolated incidents the country was peaceful, with no violence or farm invasions for a long time.
Mr Mnangagwa said it was not acceptable for any country or organisation to set its own terms for coming to observe the election.
EU ministers say Mr Mugabe has failed to honour a promise he made last month to end the violent occupation of white-owned farms.
Ministers meeting in Luxembourg decided to invoke special powers paving the way to sanctions.
Zimbabwe will be sent a formal letter demanding that they hold talks with Europe within 15 days.
European ministers said the time had come to act over Mr Mugabe's refusal to let European monitors observe the elections.
"We've moved from a benign position with Zimbabwe to one of active engagement," said UK Foreign Secretary Jack Straw.
"We're saying to them: 'We're very concerned about these problems, and we want to have really serious discussions with you'."
The ministers are using powers under the Cotonou agreement, which covers relations between the EU and African countries.
Their possible economic sanctions against Zimbabwe include the withdrawal of substantial amounts of EU aid.
European ministers have been concerned over a number of issues in Zimbabwe, including political violence, free elections and the occupation of mainly white-owned farms by squatters.
Last month, Mr Mugabe pledged to end the violent occupation of farms in return for British financial aid for land reform, but there has been concern at the apparent slow pace of progress.
The Luxembourg meeting comes immediately after a visit to Zimbabwe by a Commonwealth delegation which called on Harare to investigate alleged violations of human rights.