In a statement released through the Foreign and Commonwealth Office (FCO) on 9th December, Britain's Foreign Secretary expressed his "disappointment" at Israel's refusal to renew its partial freeze on Jewish settlement construction in occupied Jerusalem and the West Bank which has resulted in the current stand-off in the peace talks. William Hague reiterated that it was "Britain's longstanding view that settlements are illegal under international law and an obstacle to peace."

Mr. Hague's comments follow the confirmation on Tuesday by a senior US diplomat that Washington would be "ending the contacts to try and achieve another moratorium". This public admission of America's outright failure to persuade Israel on the need for an extension of such a freeze, despite having offered the Netanyahu government a handsome package of incentives, is yet another blow to US prestige and credibility as a peace broker. According to US State Department spokesman Philip Crowley, "After a considerable effort, (the US has) concluded that this does not create a firm basis to work towards our shared goal of a framework agreement."

International dismay and consternation at the US capitulation has been particularly keen in the Middle East. Egypt has suggested that negotiations should now focus on an "endgame" for resolving the issues while Palestinian parliamentarian Mustafa Barghouti asserted that "if the US fails to pressure Israel to abide by what… the international community demands – a complete freeze to settlement activities – then there is no peace process and the reason for this is Israel". Palestinian President Mahmoud Abbas, who is heading to Cairo to discuss the situation with the Egyptians and the Arab League, has said that the peace process is now "in crisis". He might have added, "again".

Representing the international Quartet of the United Nations, the United States, the European Union and Russia, Tony Blair called the US decision "sensible… in the light of the impasse that we reached".

After speaking to US Special Envoy to the Middle East Senator George Mitchell, "to underline Britain's support for work to find a way forward", William Hague asserted, "the leadership of the United States remains vital." Britain, said the Foreign Secretary, would "continue to work with the United States, the parties to the conflict and with our EU and UN partners to achieve a two-state solution." In addition, he said that Britain "will continue to press for an end to all settlement activity". Mr. Hague also asserted, "There is an urgent need for progress to secure a two state solution, based on 1967 borders, with Jerusalem as the future capital of two states and with a fair settlement for refugees. This is important for Israelis, for Palestinians and for the international community, including the UK."

However, the US announcement has delivered what amounts to a death blow to the peace process and realistic prospects for a two-state solution. US options and scope for action are now severely limited, as are those of any other party. Reeking of outright desperation, Washington's effort to secure the three-month extension freeze it wanted included offering Israel twenty F-35 fighter planes worth an estimated $3bn, as well as a promise not to pursue any future settlement freeze; the Obama administration also pledged to provide Israel with diplomatic cover, including vetoes of any "adverse" UN resolutions. All of these were promptly rejected by Israeli Prime Minister Benjamin Netanyahu who refused to put the proposal to his cabinet without certain written US guarantees, including what would amount to direct American endorsement of continued illegal settlement construction in East Jerusalem.

It was hoped that during this three-month window an outline agreement on borders could be reached between Israel and the Palestinian Authority, thus putting the settlement issue to rest once and for all. However, during direct talks in September, officials reported that Netanyahu refused to discuss anything of substance beside Israeli security guarantees; settlements were not the only or even the main stumbling block. Not only did he make demands such as the retention of control over the Jordan Valley but he also insisted that if an agreement were to be reached it must be implemented over 20 years along with demands that Israel be recognised as the Jewish State. It is widely believed that these negotiation ploys were used to buy time until the US mid-term elections, after which it was hoped that Obama would no longer be able to put meaningful pressure on Israel.

Despite having set a 12 month deadline back in September and staking considerable political capital on direct talks, in the light of US domestic considerations the latest developments will bring Obama's commitment to Middle East peace into serious doubt. After all, this is not the first time that his administration has backpedalled and capitulated in the face of Israeli intransigence. Around the same time last year, the US made a similar about turn on its demand for a settlement freeze as a pre-condition for the resumption of peace talks. It then backed Israeli assertions that preconditions were unnecessary and put pressure on the Palestinians to enter direct negotiations without any.

It is expected that US Secretary of State Hillary Clinton will reiterate America's commitment to seeking a peaceful solution to the conflict and emphasize the background to US efforts without addressing a new way forward. It is also thought that the US will once again seek to shift the focus away from settlements to bring it more in line with Israeli demands to deal primarily with issues related to security or "issues on which agreement might be easier". Will that include borders?

There are also now significant doubts about the right-wing Israeli coalition government's commitment to a peace agreement with the Palestinians, despite Netanyahu's September profession of a willingness to make "painful concessions". Mahmoud Abbas, whom Netanyahu has called his "partner for peace", has continued to maintain that a settlement freeze is essential as the "litmus test" of Israel's commitment to the peace process. A freeze would also indicate that the Israeli government is not just using delaying tactics while it plants yet more Jewish settler-colonists on occupied Palestinian land.
According to reports, Senator Mitchell is planning to meet with Palestinian Authority and Israeli negotiators in the coming days. However, it is thought that Mitchell has lost their trust by exaggerating the initial progress made during direct talks, putting an additional limit on possible US effectiveness.

This US foreign policy fiasco has not only highlighted just how spoilt America's client state Israel really is – its leaders had no compunction about repudiating US efforts and publicly humiliating its "closest ally"   but also the Zionist state's total disregard for international law. Moreover, it underscores the complete asymmetry in the balance of power between the two sides. Israel cannot be pressured by the US as it has nothing to fear or lose from it and once again the only way any "progress" can be made is through putting pressure on the weaker side – the Palestinians   and extracting additional concessions from them.

Faced with such US impotence and the lack of international actors able to take over its role, perhaps the only option left for the Palestinian leadership is to dissolve the authority in Occupied West Bank. That would put the ball firmly back in the Zionists' – in Tel Aviv and Washington.