Mideast Peace Efforts in 'Crisis' as U.S. Fails in Settlement Freeze Bid

The Middle East peace process lay in tatters Wednesday after Washington admitted defeat in its efforts to secure an Israeli freeze on settlement building, the Palestinians' condition for resuming talks.

Speaking late on Tuesday, U.S. officials admitted top-level efforts to coax Israel into imposing new curbs on West Bank settlement construction had gone nowhere, prompting Palestinian president Mahmoud Abbas to declare a crisis in peace efforts but backslapping among Israeli hardliners.

Without a new freeze, the Palestinians have refused to negotiate, effectively deadlocking direct peace talks that opened on September 2 only to run into the ground just weeks later when building resumed in the settlements.

"We have been pursuing a moratorium as a means to create conditions for a return to meaningful and sustained negotiations," U.S. State Department spokesman Philip Crowley said in New York City.

"After a considerable effort, we have concluded that this does not create a firm basis to work towards our shared goal of a framework agreement," Crowley said.

Speaking on a visit to Athens, the Western-backed Palestinian leader said: "There is no doubt that there is a crisis."

A top Abbas aide said it was Israeli recalcitrance that had torpedoed U.S. efforts to rescue the direct talks.

"The policy and the efforts of the U.S. administration failed because of the blow it received from the Israeli government," Yasser Abed Rabbo told Voice of Palestine radio.

But a spokesman for Israeli Prime Minister Benjamin Netanyahu said that Washington's announcement marked a welcome acknowledgement by the administration of President Barack Obama that freezing settlement activity was not the way to achieve peace.

"We said from the outset that settlements were not the root of the conflict and that it was only a Palestinian excuse for refusing to talk," Nir Hefetz said.

Israeli and Palestinian officials are now expected to visit Washington next week for separate talks with the U.S. administration on ways to keep the peace process alive, Crowley said.

Israeli press reports said that U.S. Middle East envoy George Mitchell would meet separately with Palestinian chief negotiator Saeb Erakat and his Israeli counterpart Yitzhak Molho in the coming days.

The United States has for weeks been trying to convince the Israeli premier to impose a new moratorium on settlement construction in the occupied West Bank.

A previous 10-month freeze expired on September 26, shortly after the launch of new peace talks between Israel and the Palestinians -- the first direct negotiations in nearly two years.

It now appears the two sides are likely to return to some form of indirect, or "proximity" negotiations similar to those held between May and September, Crowley suggested.

"We will have further conversations on the substance with the parties, and we will continue to try to find ways to create the kind of confidence that will eventually, we hope, allow them to engage directly," he said.

The European Union, a co-sponsor of the peace process with the U.S., Russia and the United Nations, said it regretted Israel's rejection of a new freeze.

"We note with regret that the Israelis have not been in a position to accept an extension of the moratorium as requested by the EU, the US and the Quartet," said EU spokeswoman Maja Kocijancic.

"Our views on settlements are clear -- they are illegal under international law and an obstacle to peace."