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Palestinian laborers work in a new section to the Jewish settlement of Kiryat Arbaa close to the West Bank town of Hebron in October. The Obama administration was working to persuade Israel to renew a settlement moratorium in the West Bank so Palestinians can return to talks, but those efforts appear to have failed.
The Obama administration has given up trying to persuade Israel to stop building in the West Bank, a State Department official says.
Palestinians have said they won't return to the table without a freeze on Jewish settlement construction. Now, it seems, the two sides will be back to indirect talks with the U.S. shuttling between them.
The peace talks that the U.S. launched in September broke down just a few weeks later over the settlement issue. Since then, the Obama administration has been working hard to entice Israeli Prime Minister Benjamin Netanyahu to renew a settlement moratorium so that Palestinians will return to talks.
Israelis say they were offered diplomatic guarantees and new military hardware, but in the end the U.S. and Israel couldn't finalize a deal. The State Department official said the U.S. will no longer seek a moratorium as a way to revive direct peace talks.
Analyst Robert Danin of the Council on Foreign Relations says the administration has lost time.
"I don't see this as necessarily a retreat, but as a shift in tactics and maybe it's wise at this point because they realize that the way in which they were going was not going to produce results and the price that they were going to potentially pay to get a settlement moratorium was far disproportionate to what it would have provided them," he said.
Danin says it is not optimal, but the U.S. for now will be back to what's called proximity talks, in which the parties don't talk to each other directly. Instead, they each talk to and negotiate bilaterally with the U.S.
Administration officials seem to think they can make progress on the borders of a future Palestinian state and deal with some of Israel's security concerns in such talks. One official said privately that the U.S. still thinks the two sides can reach a framework agreement on all of the core issues next year.
Woodrow Wilson Center Scholar Aaron David Miller says for now, the administration doesn't have much to show for its effort.
"The administration after 20 months of focusing on a freeze has no freeze, no negotiations, no process to launch serious negotiations and right now no prospects for an agreement," he said. "So right now it's not a happy ending, at least at this stage."
But that's not the end of the story, says Miller, an adviser to Republican and Democratic secretaries of state on Arab-Israeli negotiations.
"I don't think they've given up," he said. "I think the president really will continue to be seized with this both because he believes it's important and because others, just about everybody else, tells him repeatedly how important it is.
"The problem is that the options right now aren't great."
Israeli and Palestinian negotiators are expected to come to Washington next week. U.S. officials haven't given any indications of their negotiating strategy going forward. Secretary of state Hillary Clinton is to give a policy speech on the Middle East at the Brookings Institution on Friday.